Micro Econ Test 3

Graph D

(Figure : Labor Supply) Which graph shows the income effect dominating labor supply decisions at high but not low wages?

Graph A

(Figure: Labor Supply) Which graph shows the substitution effect dominating labor supply decisions?

substitution; income; positive

A backward-bending labor supply curve entails that a relatively low wages, the ________ effect dominates the ________ effect, and the supply curve has a ________ slope.

income; substitution; negative

A backward-bending labor supply curve entails that at relatively high wages, the ________ effect dominates the ________ effect, and the supply curve has a ________ slope.

are a small number of seller with considerable market power.

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

difference in wages that offsets the desirable or undesirable aspects of a job.

A compensating differential is a(n):

marginal external

A corrective tax designed to resolve a negative externality problem is typically set at an amount equal to the ________ cost.

monopolistically competitive.

A market characterized by many producing a similar yet differentiated product would be considered:

many firms producing somewhat differentiated products.

A monopolistically competitive industry consists of:

produces a product with no close substitutes.

A monopoly:

outcomes; of one player's possible outcomes; each of the other player's possible outcomes

A payoff table lists all possible _____, with a row for each ______ and a column for ______.

whose side effects benefits bystanders.

A positive externality is an activity:

the highest price that a customer is willing to pay for a product.

A reservation price is

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

A signal is:

a corrective

A tax designed to induce people to take account of the negative externalities that they cause is referred to as _____ tax.

there is overproduction of aluminum.

An aluminum mining operation discharges waste products into a river, causing higher costs and discomfort for downstream users of the water for which they are not compensated. In this case:

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

An efficiency wage improves efficiency when:

a reward; an incentive

An efficiency wage is NOT _____ but rather _____.

above the equilibrium wage and paid to provide incentivize greater worker productivity.

An efficiency wage is:

the marginal benefit exceeds the marginal cost.

An employer should hire one more worker if

marginal revenue product curve.

An employer's labor demand curve is equal to the

Nash equilibrium.

An equilibrium in which the choice that each player makes is a best response to the choices other players are making is the definition of a:

the side effect of an activity affects bystanders whose interest aren't taken into account.

An externality exists when:

a higher wage paid to encourage greater worker productivity by increasing workers effort and reducing worker turnover.

Explain efficiency wage using your lecture note:

the marginal external benefit.

For all economies, the extra external benefit accruing to bystanders from one extra unit of production is:

the marginal external cost.

For all economies, the extra external cost imposed on bystanders from one extra unit of production is:

the science of making good decisions in situations involving strategic interactions.

Game theory is:

Unions increase productivity by improving communication between workers and management.

How might the formation of a union impact the productivity of a company?

the accumulated knowledge and skills that make a workforce more productive.

Human capital is:

marginal benefit of one more hour of leisure equals the wage.

If Bella uses the Rational for Workers, she will keep choosing work and less leisure until the:

$144.

If the marginal product of labor at Sam's Waffle House is 12 customers per hour, and the price of a metal is $12, then the marginal revenue product of labor is:

hours of work bought or sold.

In a labor market, the quantity is the:

the price of labor

In a labor market, the wage is:

supply; demand

In a labor market, workers _____ labor, and employers _____ labor.

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

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

the actions of one firm depend on the actions of other firms.

In an oligopoly:

oligopoly

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

price-takers.

Individuals in a market who take the market price as given are:

cannot affect the price of a good in the market.

Jackson operates in a perfectly competitive market. As a price-taker, he:

monopolistic competition.

Man companies manufacture reusable water bottles, differentiating themselves by producing bottles made of various materials, such as glass, steel, and plastic, combined with numerous optional feature, such as insulation, size, and shape.

marginal revenue that occurs from hiring an extra worker.

Marginal revenue product is the

private; external

Marginal social cost equals marginal _____ cost plus marginal _____ cost.

the inability of any one firm to influence price.

Perfect competition is characterized by:

charging each customer their reservation price.

Perfect price discrimination consists of

product differentiation.

Planet Fitness, a large club franchise, a distinguishes itself from competitor gym facilities, such as Gold's Gym, Equinox, 24-Hour Fitness, and crossFit, by promoting affordable membership prices and a "Judgment Free Zone." This strategy is called:

group pricing.

Price discrimination by charging different prices to different groups of people is called

price discrimination.

Selling the same good at different prices to different buyers is

collusion.

Several years ago, a group of former undergraduates sued 16 prestigious universities, alleging that they engaged in price fixing by agreeing to limit financial aid, thereby raising the price of attendance. If the accusation were deemed true, the universities would be guilty of:

equal to

The Rational Rule for Society is to produce that amount of good where the marginal social benefit of pollution is ________ the marginal social cost of pollution.

monopoly.

The Tennessee Valley Authority (TVA) is the sixth-largest power supplier in the United States, supplying hydroelectric energy to power companies in several Southeastern states. In many rural towns, the TVA provides the only source of electricity. The market structure for electricity in these towns is:

intersection of the labor demand and labor supply curves

The ______ determine(s) the wage in a labor market.

substitution effect

The _________________ measures how people respond to a change in relative prices when the wage rises.

human capital.

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

the wage you will earn during the hour.

The benefit of working one more hour is:

profit by charging each customer the highest price he is willing to pay

The goal of price discrimination is to increase

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

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

slope downward.

The labor demand curve in a labor market:

Derived

The labor demand is a/an _____________ demand

slope upward.

The labor supply curve in a labor market:

demand curve.

The marginal private benefit curve is also the:

marginal social

The marginal private benefit plus the marginal external benefit equals the ____ benefit.

extra production that occurs from hiring an extra worker.

The marginal product of labor is the

MPL(Marginal Product of Labor) x P.

The marginal revenue product of labor is equal to:

the marginal private cost plus marginal external cost from one extra unit of pollution.

The marginal social cost of a unit of pollution is:

ability to raise its price without losing many of its customers to competing businesses.

The market power of a firm is its:

oligopoly.

The options for rideshare transportation in your city are Uber and Lyft. The market structure is:

the quantity at which the marginal social cost of pollution equals the marginal social benefit of pollution.

The socially optimal quantity of pollution is:

marginal private

The supply curve of a firm is also its _____ cost curve.

impacts wages

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

decrease in the quantity of labor supplied.

Through the income effect, a higher wage causes a:

$4; $4

Use the table with data for Maria and Jose to answer the question. If Maria charges $8, the Jose should charge _______. If Maria charges $4, then Jose should charge ______.

$4; $280

Use the table with data for Maria and Jose to answer the question. If Maria charges $8, then Jose's best option would be to charge _______ in order to earn _______.

statistical discrimination

Using observations about the average characteristics of a group to make inferences about an individual member of the group is known as:

an agreement between sellers to increase their market power

What is collusion?

not a price-taker

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

public good.

When a good is nonrival and nonexcludable, the good is referred as a(n):

a public good.

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

gains market power.

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

working or leisure.

When making labor supply decisions, your options are

a larger output; a greater range of prices

When price discrimination is practiced, a company sells _______ and charges _______ compared to what it would do without practicing price discrimination.

subject to the free-rider problem.

When someone can enjoy the benefits of a good without bearing the cost, the good is:

is subject to the free-rider problem.

When someone can enjoy the benefits of a good without bearing the cost, the good:

only whose overcome the obstacle that the seller specifies will get a lower price.

When the hurdle method is used to price a product across buyers,

increase; increase

When wages ________, if the substitution effect dominates, the quantity of labor supplied will ________.

Your neighbor has an ornamental pond that breeds mosquitoes.

Which statement BEST describes a negative externality?

Edwin buys a run-down house, renovates it, and increases the property values of all the houses in the neighborhood.

Which statement describes a positive externality?

Without market power, a seller would lose customers if he tried to charge a higher price.

Why is market power necessary for price discrimination?

smaller; more

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

a compensating differential.

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

tax equal to marginal external cost.

You are an economist for the state of California, where the government has already implemented a cap-and-trade program for greenhouse gas emissions. However, the California Air Resources Board has identifies an additional pollutant it would like to reduce. Working with the Board, your analysis reveals a marginal external cost of $2 but not the socially optimal quantity. Your recommendation is to introduce a: