micro test 4
asymmetric information
one party in an exchange knows more about the value of the good than the party
a rival good is one where
one person's use prevents another person's ability to use the same good at the same time
a good is excludable if
people who do not pay can be easily prevented from using the good.
moral hazard example
Brenna got her computer fixed and they ended up selling her a bunch of stuff she didn't need along with it.
special interest issue
an issue that generates substantial benefits to a small group of individuals while imposing a small cost on many others
markets work best when
both buyers and sellers know what is being exchanged
a person _______ be cheaply prevented from using national defense, a ________ good
cannot, nonexcludable
adverse selection example
car market with lemons and plums
ocean tuna is an example of
common resource
sugar quotas
cost the typical family about $6 per year but provide millions of dollars of benefits to Florida sugar producers
A newly imposed binding minimum wage _____ employment
decreases
a newly imposed binding minimum wage ______ employment
decreases
unions raise wages by
decreasing supply of labor in the industry
principle agent problem
disconnect between the incentives of the agent and the principle
which type of the following types of discrimination tends to break down most eaasily
discrimination by employers
3 variables for elections
disposable income, the inflation rate, and years in office for the party in power
if the marginal product of labor is constant in labor, then a market labor demand curve is
flat
a firm is willing to hire a worker when the marginal product of labor is ________ wage
greater than the
when labor demand increases, the wage is expected to
increase
unions may _______ the wages of their members but they might _______ the wages of everyone else
increase; decrease
technology can lead to the hiring of more labor if it
increases the marginal product of labor
discrimination by customers
means that some customers might not want to do business with firms that hire certain workers
personal supply curve
is upward sloping, but can become downward sloping
if employers discriminate against red heads
it becomes more profitable to hire red heads
club
nonrival, excludable
public good
nonrival, nonexcludable
rational ignorance
the benefit of becoming fully informed is lower than the cost.
private good
rival, excludable
common resource
rival, nonexcludable
positive effects of democracy
standard of living, famine, growth
a firm will continue to hire workers as long as
the marginal product of labor is greater than the wage
if higher wages give the incentive for some workers to work fewer hours
the quantity of labor supplied in the market will still rise as new workers enter the market
public choice
the study of political behavior using economics
if window cleaning become safer
the supply for window cleaners will increase, causing the equilibrium wage to fall below $16
The market supply curve for labor is
upward sloping
excludable means
you have to pay for it to use it