econ exam
Bilateral monopoly
A market structure consisting of a monopolist and a monopsonist
what is the demand curve for a firm that is perfectly competitive
MRP curve
Trade deflection
Moving partially assembled products into a member nation of a regional trade bloc, completing assembly, and then exporting the products to other nations within the bloc in order to benefit from preferences granted by the trade bloc
The association formed to lower trade barriers and encourage trade between Canada, the US, and Mexico is known as
NAFTA
What are copyrights designed to accomplish?
Protect intellectual property rights
equilibrium wage at perfectly competitive firm
Quantity of labor supplied by all workers = quantity of labor demanded by all firms
Which of the following statements is correct?
Social Security benefits are received by people who had contributed to the fund during their active work years
the international agreement on intellectual property administered by the WTO is known as
TRIPS
What is an argument used to justify protectionism
Tariffs and quotas protect infant industries
Which of the following is a drawback to the infant industry justification for protectionism
The industries under protection may never become effecient enough to compete with foreign firms
why do monopolists hire fewer workers
The marginal benefit to the monopolist of hiring an additional worker is affected by the fact that the monopolist faces a reduction in the price charged on all units in order to be able to sell more of the product
Which of the following statements is true about the market demand curve for labor?
The market demand curve depends upon labor productivity, the wage rate and the price of the final product.
What is a source of comparative advantage
The relative abundance of capital and labor
An agreement negotiated between two countries that places a numerical limit on the quantity of a good that can be imported by one country from another country is known as
Voluntary export restraint
The ______ is charged with overseeing and resolving International trade disputes involving information goods
World Trade Organization
union shop
a business that hires nonunion members and then make them join the union once the job starts
In the United States, income is distributed according to
a combination of the productivity standard and the needs standard
The World Trade Organization (WTO) determines that dumping has occurred if
a product is exported for a lower price than it sells for in a home market
When examining the financial status of households, wealth is
a stock variable and includes both tangible assets and human capital
determinants of income differences
age, marginal productivity, inheritance, discrimination
reasons for rising health care costs
aging us population, higher priced medical technologies, and third party financing of health care expenditures
A product produced in a foreign country and purchased by residents of the home country is called
an import
reasons for labor demand curve to shift in perfectly competitive market
change in demand for final product, change in labor productivity, and change in the price of related factors
Marginal product of labor
change in output resulting from the addition of one more worker
MFC equation
change in total cost/ change in amount of resources used
MP equation
change in total output accounted for by hiring the worker
reasons for labor supply curve to shift in perfectly competitive market
changes in wages in other industries, changes in working conditions, job flexibility
why can nations gain from specializing in production and engaging in International trade
comparative advantage
The General Agreement on Tariffs and Trade (GATT) was replaced by the World Trade Organization (WTO)
cover services and intellectual property
The problem of unauthorized copying of music, computer software, and videos is particularly acute in
developing countries
Critics of the North American Free Trade Agreement (NAFTA) suggest that much of the increase in exports from Mexico to the United States now involves goods that Mexico otherwise would have exported to other nations. Mexican firms choose to export the goods to the United States, the critics argue, solely because the items receive preferential treatment under NAFTA tariff rules. This can be described as
diversion of trade
In a perfectly competitive labor market, the labor supply curve facing the firm will be
downward sloping
What is the name given to the sale of a product for a price below its cost of production
dumping
Nations that use trade restrictions to pursue global environmental goals will:
encounter resistance from the WTO
If a goal of a nation's residents is to increase marginal productivity, they should increase
expenditures on education
Ultimately, imports are paid for by
exports
Will a monopolist employ fewer or more workers than a perfectly competitive industry
fewer
In the long run, imports are paid for by exports because
for the most part, foreigners want U.S. produced goods in exchange for the goods that are shipped to the United States
why are imports paid by exports in the long run
for the most part, foreigners want US produced goods in exchange for the goods that are shipped to the US
Since 1950, the volume of world trade and the volume of world real GDP
have both increased, but the volume of world trade has increased faster than the volume of world real GDP.
When a firm has monopoly power, it
hires fewer workers because its marginal revenue lies below the demand curve.
The contributive standard (merit standard) for distributing income implies that
income should be distributed according to the marginal productivity of workers.
The productivity standard fails to yield an equal distribution of income because
individuals have different abilities and skills
what are common arguments against free trade
infant industry, dumping, environmental concerns, national defense
The US has become increasingly interested in negotiating _____ when discussing International trade agreements
intellectual property rights
right to work laws
laws that make it illegal to require a union membership as a condition of employment
in a monoply is marginal revenue more than or less than price
less
taft hartley act of 1947
made all closed shops illegal and allowed union shops and allowed states to pass right to work laws
MRP equation
marginal product X marginal revenue
cost minimization equation
mp labor/ price of labor= mp of capital/ price of capital= mp of land/ price of land
The US economy is considered by the Institute for Managment Development to be the most competitive economy because
of widespread entrepreneurship
Monopsonist
one single buyer
Nearly all economies of the world are
open economies
In the US_____ pose a threat to the long term profitability of the entertainment industry
pirated movies and music
relative poverty
poverty defined according to the living standards of the majority in any given society
theories of desired income distribution
productivity standard and egalitarian
The use of trade barriers to shield domestic companies from foreign competition is called
protectionism
The purpose of the Earned Income Tax Credit Program (EITC) is to
provide rebates of Social Security taxes to low-income workers.
A numerical limit on the quantity of a good that can be imported is known as a
quota
All of the following are cited as factors in explaining U.S. competitiveness EXCEPT
reducing the federal deficit
Suppose an industry receives protection from the government in the form of tariffs. A number of years later, it is observed that the quantity supplied by domestic firms had decreased and that the domestic price was substantially greater than the world price. We could conclude that
removal of the tariff would cause domestic output to fall even further and the price to fall to consumers
closed shop
requiring employees to belong to the union before they can be hired
describe ways the nations restrict foreign trade
tariffs and quotas
One reason why protecting domestic jobs is a poor argument against free trade is because
the cost of protecting jobs is much higher than the value of the jobs
Marginal factor cost
the cost of using an additional unit of an input
All of the following are reasons for why health care costs have dramatically risen in the United States except
the increase in the supply of health care professionals
The firm's demand curve for labor is
the marginal revenue product curve for labor.
describe a lorenz curve to represent a nations income distribution
the more bowed a lorsez curve the more unequally income is distributed
absolute poverty
the point at which a household's income falls below the necessary level to purchase food to physically sustain its members
The principle that suggests that the distribution of income should be based on the contribution made by individuals to society's total output is known as
the productivity standard
role of third party payments in rising health care costs
third party financing provides an incentive to buy more healthcare than if all expenses were paid out of pocket
The original objective of Social Security was
to provide retirement fund for all persons
Suppose a new EU member begins substituting its imports from non-EU members to other EU members. This is an example of
trade diversion
Moral hazard in the health care industry increases as health care insurance deductibles decrease
true
Assume that a perfectly competitive firm faces a fixed wage rate of $4 and a constant per- unit cost of capital of $2. If the marginal product of labor and capital are 16 and 6, respectively, then to maximize profits the firm should
use relatively more capital
labor unions can ration jobs by
using a seniority system, lengthening the apprenticeship period, and instituting other rationing methods
how is wage determined in a perfectly competitive labor market
wage = MFC
why do younger workers make less than workers who are older
younger workers earn less because their productivity is lower than of older workers
