ECON 201 Final review (Part 2/2)

only raise prices and raise profits

A cartel is characterized by firms that act together in order to

the marginal product of labor is greater than the wage

A firm is willing to hire a worker when

no market pricing power

A flat firm-level demand curve means

increases with the more consumers that use it

A network goods value to one consumer

business travelers more than vacationers

Airlines price discriminate prominently by charging

the cost was highly diffused and the benefits were very concentrated

The act for the $7 million bridge was passed because

to cheat

The best strategy is

they may cut costs to increase profitability the expense of the prisoner rehabilitation programs, civil rights and safety

The concern with private prisons is that

Africa

The demand for the anti-AIDS drug is low and inelastic in

above-normal profits will be eliminated by the entry of new firms into the industry

The elimination principal:

unemployment decreases or the economy gets better the summer before the election in November

The incumbent president is more likely to win reelection if

listen to voters on issues that voters care about

The median voter theorem implies that politicians have the incentive to

the highest one every time

The monopolistic optimal price will be

forests, fish and elephants

The tragedy of the commons is likely to apply to

overfishing

There is a lack of well-defined property rights over the stock of fish in the sea, which is causing

work harder, increase the firm's profitability, overstate the firm's financial status, and create enron-type scandals

Tying executive compensation to stock prices creates an incentive for CEO's to

they focus on the economic conditions in the year of the election not over the entire term of the presidency

Voters are generally considered myopic because

the free-rider problem is avoided because everybody pays for it

If there is an increase in the city's sales tax

India is a less productive economy

One reason workers are paid less in India than America to do the same job is that

describes, explains and predicts economic events

Positive economics

when each firm has virtually no influence over the price of its product

An industry is said to be perfectly competitive when

political behavior

Public choice is a field of study that uses economic tools to examine

there are few substitutes to the good they are producing

Cartels are more successful when

the shared collection of values and norms that govern how people interact in an organization or firm

Corporate culture is

government control or censorship of the media

Public ignorance is generally higher in less democratic countries the public is not well inform as a result of

inefficient; if people valued these things they should be willing to pay for them

Economists typically view government-supported programs such as arts and movies as

gains from trade over ethical intuitions

Economists who approve of exporting toxic waste or importing kidneys emphasize

out of low-value industries and into high-value industries

Entrepreneurs have the incentive to move resources

lowering prices and increasing production

Firms in a cartel have a large incentive to cheat on the agreement by

the price falls below the average cost

Firms should exit the market if

enjoy public goods without paying for them

Free riders

the study of strategic decision making

Game theory is

patents

GlaxoSmithKline owns a government grant of temporary monopoly rights on the AIDS drug Combivir due to

humanitarian reasons

GlaxoSmithKline was selling the anti-AIDS drug cheaper in Africa than Europe for

there is no profit motive for government bureaucracies

Government bureaucracy is less likely to cut costs than private companies because

value money more than their extra kidney

If kidney trades were legal than those who would trade their kidney for money must

the same price

In a perfectly competitive market each firm sells at

democracies are the wealthiest countries in the world and have the highest levels of freedom

In general;

export toxic waste to less developed countries

Larry Summers supports the decision to

take on too much risk

Lehman Brothers went bankrupt because their management had incentive to

government regulations or patent protection

Market power may result from

its product compatibility with a lot of other products

Microsoft's market power stems from

intrinsic motivation and social status

Monetary rewards are most successful when they are supported by

perfect competition and monopolies

Monopolistic competition combines features of

highly advertised

Monopolistic competitive products are usually

recommends what economic policies should look like

Normative economics

is a common resource

Ocean tuna

the time and effort it takes to attain this knowledge is more than the benefit received from having it

One of the main reasons Americans seemingly know little about the current government policies or the state of the economy is that

they gain millions if particular laws are passed and voters don't lose much, and it's not worth their time to oppose them

Special interest groups maintain power because

the costs of switching purchases from one firm to another. A firm will try to increase it's switching cost to prevent you from switching

Switching costs are