ECON WK 6 EXAM 3

Which of the following statements best illustrates the concept of derived demand?

A decline in the demand for shoes will cause the demand for leather to decline.

The incidence of taxation refers to:

Who in society actually pays the tax

When only one buyer has access to a particular labor market:

A monopsony exists.

The progressive structure of the income-tax system is based on the:

Ability-to-pay principle

A major distinction between government purchases and government transfer payments is that:

Government purchases divert resources from private uses to public uses while transfer payments do not

A profit-maximizing firm employs resources to the point where:

MRP = MRC.

Suppose the demand for strawberries rises sharply, resulting in an increased price of strawberries. As it relates to strawberry pickers, we could expect the:

MRP curve to shift to the right.

The change in total revenue associated with one additional unit of input measures labor's:

MRP.

The Social Security tax is regressive because:

No Social Security tax is collected for incomes in excess of a "cap" income level

A person whose income has increased from $10,000 to $20,000 finds that her Federal marginal tax rate has increased from 18 percent to 22 percent. This is an example of a:

Progressive tax

A primary objective of unions is to:

Raise the wages of union members.

Which of the following is an example of an industrial union?

The United Auto Workers.

If government levies a tax or fee on hunting licenses and uses the resulting revenue for wildlife stocking programs, this would be an example of:

The benefits-received principle of taxation

In the United States professional football players earn much higher incomes than professional soccer players. This occurs because:

consumers have a greater demand for football games than for soccer games.

Compensating differences in wages:

are wage differences that compensate for differences in the desirability of jobs.

The idea of efficiency wages is that:

firms might get greater work effort by paying above-equilibrium wage rates.

To say that land rent performs no incentive function means that:

higher rental payments will not bring forth a larger quantity of land.

The labor supply curve for a particular occupation is upsloping because:

higher wages will be needed to attract workers from other occupations.

A firm hiring labor in a perfectly competitive labor market faces a:

horizontal labor supply curve and downward sloping labor demand curve.

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

marginal revenue product equals marginal resource (labor) cost.

If one worker can pick $30 worth of grapes and two workers together can pick $55 worth of grapes, the:

marginal revenue product of the second worker is $25.

Capital and labor:

may be either complementary or substitutable.

The economic term for a sole employer in a nonunion community is:

monopsonist

Interest is the:

price paid for the use of money.

The real interest rate can be estimated by:

subtracting the rate of inflation from the nominal interest rate.

The demand for farmland will increase if:

technological advances make land more productive.

Pure or economic profit is:

the amount by which total revenue exceeds total costs.

Marginal resource cost is:

the increase in total resource cost associated with the hire of one more unit of the resource.

If a firm is hiring a certain type of labor under purely competitive conditions:

the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.

Economic or pure rent is:

the price paid for the use of land and other nonreproducible resources.

Human capital is best defined as:

the productive skills and knowledge that workers acquire from education and training.

Employers will hire more units of a resource if:

the productivity of the resource increases.

The labor demand curve of a firm:

will shift to the left if the price of the product the labor is producing falls.