Micro Final
When calculating the worthiness of a college education, one must use ___________ because the costs and benefits accumulate over time
discounted values
A pure public good is one that is _______ nonrival and nonexcludable
highly
A firm is unlikely to ____ a worker if the worker's contribution to the firm's revenue is less than his or her wage
hire
Taken together, factors like education, training, experience, intelligence, and work habits are known as
human capital
When the government transfers resources to the poor in the form of a good or service, it is called an
in-kind transfer
Arguments against programs that tax income to redistribute wealth include the one that argues these programs penalize people who are
productive
If taxpayers pay a smaller fraction of their income in taxes as their incomes rise, the tax is regressive and if taxpayers pay a larger fraction of their income in taxes as their income rise, the tax is _________ as income rises
progressive
Suppose that firms that had high rates of injury had to pay more for workers' compensation than firms with lower rates of injury This change would provide an incentive for firms to reduce
risk of injury
Concerns about relative income encourage some workers to accept risk in exchange for higher wages, and that strategy can lead to an inefficient outcome is an argument in favor of enacting workplace
safety regulations
HMO's might provide lower levels of medical treatment because they receive a fixed payment for medical services regardless of the amount of
services provided
The major difficulty with using a tax on pollution instead of a fixed percentage reduction regulation is establishing the optimal
size of the tax
Logrolling refers to the practice whereby legislators support each other's pork barrel
spending
If all firms were to pay the same premium per worker into the workers' compensation system, then firms with high injury rates would
benefit
The general rule governing the hiring of workers is to equate marginal labor costs to marginal labor
benefits
One reason that some people oppose the government's high __________ is that they believe that it will drive up interest rates and undermine the ability of private firms to invest This argument is based on crowding out
deficit spending
_________ is an example of a good that is largely nonrival and nonexcludable
Clean air
Trends in inequality is focused on the income gap between the top 1% and the bottom 20%
US families
Medical insurance covering routine medical care became common after
World War II
The greater the degree of labor market mobility and competition, the less likely the exploitation view of work place safety is
accurate
As fewer families choose to purchase insurance, the cost of premiums will rise, ensuring that fewer, and sicker, families buy insurance; this is an example of
adverse selection
A good or service that is rival but is to some extent nonexcludable is called a commons good, and a good or service that is nonrival but is excludable is referred to as a
collective good
A crowded beach without any entrance fee is a
commons good
Differences in wage rates associated with differences in working conditions are called __________ wage differentials
compensating
If a labor market does not meet the conditions of a perfectly competitive market wages may be either higher or lower than they would be in a
competitive market
According to the text, the only sensible criterion for allocating scarce health care resources is a
cost-benefit test
When private firms cancel investment programs because of increases in the interest rate caused by government borrowing it is called
crowding out
Private market incentives will tend to under provide immunization against contagious disease because external benefits will not be taken into account by
decision makers
A negative income tax involves giving all citizens a substantial lump sum payment that is reduced at a rate of less than 100% as income is
earned
If all relevant private and social costs and benefits are included in the demand and supply curves for a particular good, then imposing a tax will reduce production and consumption below the
efficient level
A reduction in the workers' marginal productivity would result in a reduction in the
equilibrium wage rate
Pay-per-view movies are an example of a nonrival but _________ good
excludable
The problems of externalities and poorly formed property rights are among several rationales for the
existence of government
Marginal product is the extra output received from the hiring of an
extra worker
Insurance that pays for all expenses generated by the insured's activity is known as_______ insurance coverage
first-dollar
The major characteristic of an HMO is medical treatment is provided for a
fixed annual payment
The combination of pork barrel spending and logrolling leads to inefficiently large
government spending
If all taxpayers pay the same amount of tax, the tax is termed a
head tax
A great deal of medical expenditure inflation, from 4% in 1940 to 14% today, has to do with the emergence of
health insurance
A group of physicians that provide healthcare services to members for a fixed annual fee is termed a
health maintenance organization
In a competitive labor market, it is observed that the equilibrium wage rate and employment level have both risen One can infer that the demand for labor has
increased
-Direct regulation of workplace safety by the Occupational Safety and Health Administration (OSHA) will result in
inefficient outcomes
he effect of widespread insurance covering routine medical care is to reduce the marginal cost of routine medical care to the
insured
Workers' compensation is a government insurance plan that provides benefits to workers injured on the
job
In competitive labor markets, firms demand labor and workers supply
labor
A group of workers who collectively bargain with employers for higher wages and better working conditions is called a
labor union
A winner-take-all labor market is one in which small differences in human capital translate into __________ in wages
large differences
Workplace safety laws are common in developed countries because policy makers believe that labor markets are not perfectly competitive and so firms may not provide the optimal
level of safety
The demand function curve for workers is dependent on the demand for the product that they
make
Using the economist's definition, to say that the amount of crime control is efficient means that the marginal benefit of the last dollar spent on crime control equals the
marginal cost
Kyle works for a perfectly competitive firm where he receives a wage rate of $15 one can infer that Kyle's value of __________ is at least $15
marginal product
The optimal number of workers for a perfectly competitive firm to hire occurs when the wage rate equals the value of
marginal product of the last worker
Pollution permit policies achieve an efficient outcome because firms have an incentive to
minimize costs
An example of a pure public good is
national defense
If a good can be consumed by one person without reducing the availability of the good to others, this good is a ________ good
non rival
If it is impossible or highly costly to prevent consumers from consuming a good when they have not paid for it, the good is a __________ good
nonexcludable
HBO shows movies without commercial interruption to people who pay for their service, this is because HBO can exclude _______ viewers
nonpaying
The union wage premium refers to the amount by which union wages exceed
nonunion wages
A labor union in the labor market is analogous to a cartel in the
output market
Compared to the taxing of pollution, pollution permits offer the advantage of allowing the public to influence the amount of pollution allowed through the purchasing of
permits
Government subsidizes education because education is thought to have
positive externalities
Water flowing in a river is a public good, but a single serving bottle of water is a _____ good
private
A good or service which is both rival and excludable is a
private good
Beyond the provision of public goods, government exists to address externalities and
property rights
A _________ tax results in the same percentage of income going to taxes as income rises
proportional
A good or service that is both highly nonrival and highly nonexcludable is a pure public good and a good or service that possesses some degree (but not a high degree) of being both nonrival and nonexcludable is a
public good
The deadweight loss from imposing a tax on a market without an externality is justified if the tax revenue creates a larger surplus gain from the provision of a
public good
If low-income households spend a larger share of their budget on food than do high-income households a tax on food is a
regressive tax
School districts in which relatively more parents choose to not have their children immunized have higher rates of the diseases for which immunization is normally
required
A minimum wage law prohibits employers from paying workers less than a specified hourly wage If the minimum wage is above the equilibrium wage there will be excess
supply of labor
Showing the movie as pay-per-view television, so viewers are charged a fee to watch programming is inefficient because pay-per-view results in loss in
surplus
An economic argument in favor of providing medical care through HMOs is that they reduce incentives for providing _________ care
unnecessary or excessive
In a competitive labor market, if a firm pays a worker less than that worker's VMP, then in the long run competing firms will be able to hire the worker away, driving wages
up to VMP
Pork barrel spending is legislation that significantly benefits a particular group of voters but costs more than the benefits to all
voters
In the market for labor, the demand function describes the number of workers a firm is willing to hire at each
wage
The system of government insurance that pays benefits to workers injured on the job is referred to as
workers' compensation