econ final elzenga section 11

Question 1

Post tax income

Answer 1

interest and dividends (+), Profits (+), Gov’t, charity (+), Wages (+), Taxes (-)

Question 2

In kind income

Answer 2

access to company place, bodyguard

Question 3

Income is a ***** variable

Answer 3

flow

Question 4

Wealth is a ** variable

Answer 4

stock

Question 5

Lorenz curve

Answer 5

Lorenz curve
the curve that illustrates income distribution

Question 6

Gini Coefficient

Answer 6

A/A+B (A is 45 degree line)

Question 7

Labor demand

Answer 7

derived

Question 8

Labor Supply Determinants

Answer 8

culture, population, health, tax rates, wage rate

Question 9

Tournament characteristic

Answer 9

one person (not necessarily better) gets everything

Question 10

Labor union

Answer 10

works best with inelastic demand curves

Question 11

Economic rent

Answer 11

amount of income it would take to get you to work

Question 12

Holding wealth

Answer 12

consumer durables, human capital, housing, other assets, financial instruments

Question 13

Stocks

Answer 13

shares of ownership in a company

Question 14

Bond

Answer 14

a formal contract to repay borrowed money with interest at fixed intervals

Question 15

Mutual fund

Answer 15

fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets

Question 16

Index fund

Answer 16

A mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index

Question 17

EMH

Answer 17

Efficient Market Hypothesis says no one can predict the market

Question 18

Income effect

Answer 18

reduction in quantity demanded because the increase in price makes us poorer

Question 19

Substitution effect

Answer 19

reduction in quantity demanded because relative price has risen

Question 20

conspicuous consumption

Answer 20

only buy goods to show off

Question 21

Herfindahl Index

Answer 21

square of individual market shares of all firms

Question 22

Adverse selection

Answer 22

occurs when buyers and sellers have different amounts of information about the good for sale and use that information in detriment of the other

Question 23

Moral hazard

Answer 23

Arises when people behave recklessly because they know they will be saved if things go wrong

Question 24

Signaling

Answer 24

revealing information to the other party

Question 25

Screening

Answer 25

hides from other party