Micro Test 3

Which of the following are true of statistical discrimination? There may be more than one correct answer.

"Ban the box" laws not allowing employers to ask potential employees whether or not they have been in jail is increasing discrimination against Black men, particularly those without a college degree. Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic.

The graph shows the marginal social cost, supply, and demand curves in the hand sanitizer market. At what quantity could the government set a quota to control this externality? Figure: Market 3

8

What is collusion?

Agreements between sellers to increase their market power

which of the following is an example of statistical discrimination?

An employer relies on stereotypes in making hirer decisions

What conditions must be met for private bargaining to be effective in resolving an externality?

Bargaining costs must be low, and property rights must be clear.

Which of the following statements describes the Coase Theorem?

If bargaining is costless, and property rights are clearly established and enforced, then externality problems can be solved through private bargaining.

The marginal revenue product of labor is equal to

MPL x P

In which market structure do the actions of a rival have a significant impact on your operations?

Oligopoly

Patents on drugs to treat AIDS were removed in South Africa. How would the market for these drugs have been different if there had never been patents on drugs?

The drugs would not have been developed.

in a natural monopoly, what deters new sellers from entering the market?

The new seller would have much higher costs than the existing large seller in the market.

Which of the following illustrates a positive externality?

The value of Maria's house rises when the city builds a park nearby, enhancing her view.

Which of the following is a characteristic of monopoly that is not present in other market structures?

There is only one seller.

Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

Yes, it was a good move because it added more to revenue than to cost.

workers on the night shift at a factory earn more money per hour than workers on the day shift, although their human's capital and productivity are the same. This is an example of:

a compensating differential

a tax designed to induce people to take account of the negative externalities that they cause is referred to as ___________ tax

a corrective

explain efficiency wage using your lecture notes

a higher wage paid to encourage greater work productivity

A market with many small sellers and a high level of product differentiation is known as

a monopolistically competitive market.

Walmart has a large aisle that displays many different kinds of toothpastes. This observation indicates that the toothpaste market is

a monopolistically competitive market.

an efficiency wage is NOT_____but rather_______.

a reward; a incentive

An externality is defined as:

a side effect of an activity that affects bystanders whose interests are not taken into account

Which of the following would be both nonrival and nonexcludable?

a siren tornado warning system

a signal is:

an action taken to credibly convey information that is hard for someone else to verify

Marjean walks to work every day along a busy road. As she does so, she breathes in the fumes of many cars, often arriving at work coughing. The economic term for the impact of the cars on Marjean is:

an externality.

A characteristic of oligopoly that is not present in any other market structure is that there

are a small number of sellers with considerable market power.

the marginal private benefit curve is also the:

demand curve

The labor demand is a/an_______demand

derived

a compensating differential is an:

difference in wages that offsets the desirable or un-desirable aspect of a job

Why does an employer's labor demand curve slope downward?

diminishing marginal product

The marginal private benefit is the:

extra benefit enjoyed by the buyer of one extra unit of a good or service.

the marginal product of labor is the

extra production that occurs from hiring an extra worker

When a seller is able to differentiate its product successfully, the seller

gains market power

the accumulated knowledge and skills that make a worker more productive are known as:

human capital

There is evidence that, despite antidiscrimination laws, discrimination _________in labor markets.

impact wages

when someone can enjoy the benefits of a good without bearing the the cost, the good.

is subject to the free rider program

The supply curve of a firm is also its __________ cost cover

marginal private

marginal revenue product is the

marginal revenue from hiring an additional worker

an employs labor demand curve is equal to the

marginal revenue product curve

The marginal revenue from hiring an additional worker is known as

marginal revenue product.

that marginal private benefit plus the marginal external benefit equals the _________ benefit.

marginal social

A good is characterized as _____ when one person's use of the good does not reduce another person's ability to use the same unit of the good.

nonrival

When a company has market power, it is _____ in its market.

not a price-taker

By contrast with a market that produces the socially optimal output, a market with negative externalities will:

overproduce.

What type of relationship exists between the level of a company's market power and the price that its owner is able to charge for its product?

positive

marginal social cost equals marginal__________ costs plus marginals _______ cost

private; external

when a good in nonrival and nonexcludable, the good is referred to as:

public goods

With a _____ number of sellers in a market, _____ market power tends to exist in the market.

smaller; more

The outcome that is most efficient for society as a whole — including the interests of buyers, sellers, and bystanders — is the _____ outcome.

socially optimal

A good has a free-rider problem when:

someone can enjoy the benefits of the good without bearing the costs.

The ________ measures how people respond to a change in relative price when the rage rises.

substitution effect

in a labor market, workers_________ labor, and employees_________ labor

supply; demand

An efficiency wage improves efficiency when:

the increase in worker effort and reduced turnover cover the cost of the higher wage

an employee should hire one more worker if

the marginal benefit exceeds the marginal cost

which of the following is the amount of corrective tax that would resolve a negative externality problem?

the marginal external cost

The Rational Rule for Society is that society should produce another unit of a good if:

the marginal social benefit exceeds the marginal social cost.

the government increases the training requirements to obtain an electrician's license. what impact will this have in the labor market for electricians?

the supply of electricians will decrease, resulting in higher wage and lower quantity of labor.

The Rational Rule for Employers implies that they keep hiring until

the wage equals the marginal revenue product of the last worker hired.

Externalities tend to occur because decision makers consider _____ and do NOT consider _____.

their own costs and benefits; the effects of their actions on others

In a perfectly competitive labor market, employers will not pay less than the market wage because at a wage below the equilibrium

they would not be able to hire anyone.

In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis.

wage; hours of labor

When making labor supply decisions, your options are

working or leisure

To avoid harm to society, the government often becomes the supplier of a good or service when the respective market

would be a natural monopoly, and the good or service is considered essential.