ECON 202 Final Exam

If each mining company is forced to cut its debris in half, the respective cost to Kip and Yale will be

$30, $20

arises when firms act together and form an organization in order to reduce output and keep prices high.

A cartel

________________ occurs when market forces and other circumstances have allowed several large firms to have all or most of the sales in an industry.

An oligoply

Which of the following may not characterize an oligopoly?

Many firms

To address a common poverty trap problem for many low-paid Americans whose jobs pay enough that a family could lose its eligibility for_ , yet those jobs don't offer either, some states guaranteed that children would not lose their coverage if their parents worked.

Medicaid; health insurance benefits

___________________ describes a situation where a third party, outside the transaction, suffers from a market transaction by others.

Negative externality

The equilibrium price and quantity when only private costs are taken into account are

Price = $30, Quantity = 80

The equilibrium price and quantity when social costs are taken into account are

Price = $55, Quantity = 30

A concentration ratio measures the

Proportion of industry output produced by the largest firms.

The concept of a poverty line raises a number of complex questions. Which of the following represents such a question?

Should the national poverty line be applied in all states?

_________________________ include both the private costs incurred by firms and also costs incurred by third parties outside the production process.

Social costs

Which of the following is a safety net that could provide a decent standard of living and/or incentives to work?

Supplemental Security Income and the above

Market share can be computed by dividing

The amount sold by a single firm by the total sold in the market.

An industry's market structure refers to

The number and size of the firms in the industry.

Identify the Nash equilibrium outcome for this game. What outcome and strategies will the firms choose in equilibrium? Firm A will [a] and Firm B will [b].

a) price low b) price low

Poverty is measured by the number of people who fall below

all the above are correct.

Using the term "spillover" is a less formal means of describing

an externality

A positive externality arises in a situation where a third party, outside the transaction

benefits from a market transaction by others.

Command-and-control regulation is a body of law that

can include both b and c

Which of the following would be classified as a positive externality?

converting a derelict empty lot to a public vegetable garden

Why did inequality of household income increase in the United States in recent decades?

demand for high-skilled labor at higher wages increased and b and c

In a monopolistic competitive industry, firms can try to differentiate their products by

enhancing product's physical aspects and all of the above.

Why do U.S. economists commonly refer to externalities as an example of market failure?

externalities present a case where markets only consider some social costs

Market failure describes a situation in which the market itself ________________________ in a way that balances social costs and benefits.

fails to allocate resources efficiently

An individual who wants others to pay for public goods, but plans to use those goods for their own purposes, is often referred to as a

free rider

Which of the following would most likely create the setting for an oligopoly?

government grants Alex, Trent, and Alyse each a patent for their respective molybdenum based electric car batteries

A Lorenz curve refers to a graphic illustration of the share of population on the and the cumulative percentage of total income received on the .

horizontal axis; vertical axis

A situation of arises when one group receives a higher share of total income or wealth than others.

inequality

I'mAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity required to run its computers if there were some form of guarantee that if it succeeded,

it could sell the new computers as a monopoly for at least a few years.

If a steel manufacturer considers the costs of labor and materials, as well as the broader costs of environmental injuries resulting from its manufacturing processes,

it is factoring in the social costs of the pollution it generates.

With respect to market forces and/or labor markets that determine peoples' wages, which of the following is a true statement?

labor markets create considerable inequalities relating to income

Rather than arguing over whether the ultimate goal is zero pollution or a reasonable level of pollution, the immediate focus should be to tackle the environmental issues where the ___________________ and the _______________.

marginal benefits are greatest; marginal costs are least

Shopping malls typically lease retail space to a large number of clothing stores. When this group of retailers competes to sell similar but not identical products, they engage in what economists call .

monopolistic competition

When it is costly or impossible to exclude someone who hasn't paid to use a particular good from using it, then that good is classified as being

non-excludable

A public good is a good that is _________ ___________ , and thus is difficult for market producers to sell to individual consumers.

non-excludable and non-rivalrous

In order for a good to be classified as ____________ , when one person uses the good, others are also able to use it.

nonrivalrous

Which of the following would most likely be recognized as a defining characteristic of a public good?

nonrivalrous and non-excludable

When reference is made to the , it means the specific amount of income needed for a basic standard of living.

poverty line

For a positive externality, than the social benefits.

private benefits of an action are less

For a negative externality, the _______________________ than the costs imposed on society as a whole.

private costs of an action are less

A method often used by economists to look at distribution of income in a society's economy involves

quintiles, or dividing a whole group into fifths.

Government has a variety of policies that allow inventors to _____________ , such as the granting patents and ______________________ .

receive an increased rate of return; subsidization of research and development

In circumstances dealing with poverty, the term means taking income from those with higher incomes and providing income to those with lower incomes.

redistribution

Cathy can take either of two separate roads to drive to work. The first is a lightly used new toll road that is rarely congested. The second road is a local road with no tolls, but it is often congested and has many potholes. In this instance, the toll road is

rivalrous and nonexcludable

There is a skating rink in your city that is open to anybody to use at any time. They even provide skates for people who don't own any. This is an example of a good that is

rivalrous and nonexcludable

Traditionally, policies for environmental protection in the U.S. have focused on__________________ pollutant could be emitted.

setting limits for how much of each

Generally, market competition and technology can

sometimes support or sometimes oppose each other

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A positive externality that can result is

the bees helping to pollinate the orchard, leading to more fruit.

A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. A negative externality that can result is

the possibility of the bees stinging the students at the school.

Some economists argue that if privately owned firms were required to pay the social costs of their pollution, the result would be:

the price of goods will rise and a and b above

If large numbers of individuals choose to behave as free riders,

the public good may never be provided.

If a society decides to reduce the level of economic inequality, which of the following sets of tools can it use?

the three mains sets of tools it can use include all of the above

If no externalities of pollution exist in a particular industry, the interaction of demand and supply___________________________ .

will coordinate social costs and benefits