Econ 2302
What is a pollution charge?
A type of tax that is levied on the quantity of pollution that a firm emits.
If a country can produce a good with fewer resources than another country, the first country is said to have a/an ________.
Absolute Advantage
When it comes to diminishing discrimination in the economy, which of these action would produce the most effective results?
Altering social patterns and creating laws against discrimination.
The social benefits from education
Are higher than the private benefits and therefore education leads to positive externalities.
Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's profit?
$-32 (The profit maximizing output is 4 units where Marginal cost equals marginal revenue. At that output the price is $24 and therefore revenue = 4x$24 = $96. At that output, total cost = 4x$32 = $128. The profit or loss in this case then is $96 - 128 = $-32)
Given the level of demand below, what is the marginal revenue of the third unit of production? Price Quantity 25 1 22 2 18 3 15 4 12 5
$10 (Using price and quantity, you would calculate total revenue and then calculate marginal revenue by taking the change in total revenue between total revenue for 2 units and total revenue for 3 units, divided by the change in quantity.)
Assuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's profit?
$48 (The profit maximizing output is 8 units where Marginal cost equals marginal revenue. At that output the price is $18 and therefore revenue = 8x$18 = $144. At that output, total cost = 8x$12 = $96. The profit then is $144 - $96 = $48)
If a market situation arises where the externality is so dangerous in even small quantities, which of the following strategies would be the most efficient?
A government controlled effluent standard
When anti-poverty programs from the government have declining benefits as people earn higher incomes, this has the possibility of leading to ________.
A poverty trap
The table below records what in the labor market is demanded and supplied in the labor for high school teachers, where the teachers belong to a union. If there were no teachers union in this market environment, what would the equilibrium salary be? Annual Salary $20,000, $30,000, $40,000, $50,000, $60,000, $70,000 Quantity of workers demanded 200, 180, 130, 110, 75, 50 Quantity of workers supplied 50, 70, 90, 110,120,150
$50,000 (A market without unions would reach the natural market equilibrium wage, which is $50,000.)
Argentina can produce 150 pounds of beef or 20 cars; in contrast the United States can produce 90 pounds of beef or 80 cars. Which country has the absolute advantage in producing beef?
Argentina
Guatemala produces an excess supply of coffee but has consumers demanding electronics. Mexico generates a large supply of electronics but its market demands more coffee. What would happen if both countries traded?
Assist both countries in reducing excess supply and satisfying market demand.
When wages and work conditions are agreed upon by business owners and a union, the process is called ________.
Collective Bargaining
Mollie Orshansky officially defined the poverty line in the U.S. based on the ________.
Cost of a healthy diet
What does a Lorenz curve graph?
Cumulative shares of income received by everyone up to a particular quintile.
The ________ determines if imports from other countries are being fairly traded in the U.S.
Department of Commerce
What Unites States government department determines if imports from other countries are being traded fairly?
Department of Commerce
Many residents of a particular town enjoy taking their dogs with them when they go to their local park for recreation and picnics. Everybody enjoys the park more when each group cleans up after themselves and their pets, but nobody enjoys the act of cleaning up after themselves or their dogs. In this situation, we can expect the park to be ________, due to a ________.
Dirty; prisoner's dilemma
Why does cut-throat competition happen between oligopolistic firms?
Each firm is tempted to increase production to raise their revenue and profit which leads to lower prices and profits for all firms.
Which countries will need to strike some balance between economic output and environmental quality as a prominent climate-change priority?
Every Country
Due to the ________, a firm strives to maximize its profits and will therefore never pay more for a worker than the value of his/her marginal product to the firm.
First rule of labor markets
The precursor to the World Trade Organization (WTO) was the ________.
General Agreement on Tariffs and Trade (GATT)
Samantha is a single mother raising two young children. In 2015, she was let go from her assembly line job at the car plant where she had worked for 15 years. She has a 15 hr a week job which pays $12,000.00 a year. She qualifies for and receives the earned income tax credit. What will happen to her earned income credit if Samantha gets in increase in her pay and earns $17,350 now?
Her EITC will not be decreased.
________ is firms' ability to make the same pricing decisions without consulting each other.
Implicit collusion
The effects of a poverty trap can be reduced by ________.
Initially decreasing the government payments by smaller amounts
What happens in the labor market when a labor union has market power?
It drives up wages in the market.
Where does an earning gap continue to exist in the U.S.?
It exists between both genders and race.
If a large firm plans to become more competitive in its market space and has already decreased its production costs using economies of scale, what would happen in relation to its intra-industry trade?
It would work to expand its competitive products into other countries and offer variety to customers.
One of the advantages of intra-industry trade is the division of labor which leads to ________.
Learning, innovation, and unique skills
The U.S. produces strawberries in Oregon, but also imports strawberries from Chile. The production costs are lower for strawberries from Chile. Instead of a free trade environment in the U.S., the U.S. government has imposed a value quota. What will the quota on strawberries from Chile do to the U.S. market?
Lower the price of strawberries in the U.S., and increase the quantity of strawberries sold in the U.S.
The households that derive the most benefit from buying the services of unskilled labor worker with lower wages are the ________ households.
Middle- and upper-income
A clothing store has a wide selection of clothing for women. Within the clothing racks are shirts, pants, dresses, skirts, blouses, etc. Clothing manufacturers such as Guess, Donna Karan, Levi, Calvin Klein, etc. have build up their brand names through marketing and advertising to differentiate their clothes in the mind of the consumer. This group of clothing manufacturers competes to sell similar but not identical products, they are engaging in ________.
Monopolistic Competition
What is one of the reasons nations trade with each other?
No country can create or produce everything its citizens desire.
The U.S. has been importing baby toys from China, but this year kids are getting sick from these toys. After testing the toys high dosages of lead are found in the paint used on these toys. The U.S. government now bans the import of these baby toys from China until they are deemed safe again. This is an example of a ________.
Nontariff Barrier
Why do economists use game theory to explain oligopolies?
Oligopolies are complex and varied and game theory allows economists to model different variations of competition and cooperation.
If a firm was receiving subsidies from its government to produce and lower its operating costs, what may happen when going to sell its products to other countries?
Other countries enacting protectionist policies to protect their own countries goods.
When a union in the U.S. is able to sell its labor to for-profit businesses, those business are likely to ________.
Pay wages above the market equilibrium for wages
In a(n) ________ output market, employment will be higher than in a ________ output market.
Perfectly competitive; imperfectly competitive
Which of these type of government actions would aggravate a poverty trap?
Set a timed deadline to cut off assistance at a certain date whether extra work or income has been achieved or not.
Externalities exist when
Social costs are different from private costs.
Markets are inefficient when
Social costs are different from private costs.
Looking at historical trends, what would you say is a long term trend in trade policies?
Tariffs continue to be reduced over time.
The ________ is the additional output produced when a firm hires one more worker.
marginal product of labor
There is a large park which is owned by the local city government with a food forest containing many fruit and nut trees. What will most likely happen to that food forest?
The food forest will be over-harvested.
Which of the following accurately describes government food stamps?
There are time limits which are not completely a work hindrance.
Suppose a government starts to phase out its antipoverty program payments more slowly in order for the near-poor to reach self-sufficiency. What would one of the criticism be about this policy?
This antipoverty program costs the government more money.
What is the General Agreement on Tariffs and Trade (GATT) role?
To negotiate agreements between trading nations in order to reduce barriers to trade.
Take the scenario where there are only a small number of business in a market and each of the have a different production process and cost structures. What pollution reducing strategy would fit this market most efficiently?
Tradable Permits.
Economies of scale and intra-industry trade combine to produce ________.
Variety for consumers
Which of the following is a potential source of income inequality?
Wage disparity
The small country of Benin has many international trading partners between not only countries close by, but also larger countries such as the U.S. What is one of the benefits that Benin receives from lowering its trading barriers?
Workers and firms in the country can now specialize in areas because other goods and services are found through trade.
Would raising the price of a product create a larger decline in quantity demanded for a monopolistic competitor than it would for a monopoly?
Yes, consumers will buy from competitors offering lower priced substitutes.
Which of the following are examples of positive externalities?
You are a bird watcher, and your neighbor puts up birdhouses and gardens to attract birds.