Exam 3 Flashcards
8, 9, 10
Pick the panel that would best model the following scenario: Working conditions become less pleasant
C
Pick the panel that would best model the following scenario: A significant number of immigrants enter the labor market
D
The labor-supply curve depicts the quantity of _________ at alternative _________
labor supplied; wage rates
The labor-supply curve relates the quantity of labor supplied to the
wage rate
Ceteris paribus, if additional immigrants come to the United States with marketable skills, and they decide to enter the labor market
the labor supply curve shifts to the right
An upward-sloping supply curve of labor reflects the
increasing opportunity cost of labor
An upward-sloping supply curve of labor illustrates that the
supply of labor and the wage rate are inversely related
Ceteris paribus, the willingness and ability to work specific amounts of time at alternative wage rates in a given period of time is
labor supply
A firm’s demand for labor is referred to as a derived demand because it is derived from the
demand for the product that labor produces
The quantities of labor employers are willing and able to hire at alternative wage rates is the
demand for labor
A firm should continue to hire workers until the marginal revenue product is equal to
the market wage rate
The decline in unionization can be explained by all of the following except
increased worldwide investment barriers
The marginal physical product is the change in
total output associated with an additional unit of labor
Which of the following is the correct formula for calculating the marginal revenue product of labor?
the change in total revenue divided by the change in the quantity of labor
The opportunity cost of working is the
value of leisure time that must be given up
Ceteris paribus, if the cost of daycare increases and some workers need to leave the labor market and stay home with their children
the labor-supply curve shifts to the left
Generally, as the number of hours worked increases, the marginal utility of leisure time tends to
increase
Which of the following does not affect labor demand?
the supply of labor
If consumers want to increase the wages and the number of jobs for strawberry pickers, they should
buy more strawberries
Assume a university pays the football coach significantly more than the university’s president. This is justified if the coach
brings more revenue to the university than the president
A higher wage rate causes
the opportunity cost of leisure to increase
The law of diminishing returns states that, ceteris paribus, the marginal physical product of labor declines as
more labor is employed
Other things being equal, higher wage rates will
decrease the quantity demanded of labor
If the demand for labor is a derived demand, then the demand for airplane pilots depends on the
desire for airline travel
The determinants of the market supply of labor include all of the following except
the market wage rate
Which of the following is not an example of market failure?
government intervention
The distinction between public goods and private goods is based on
the link between payment and consumption
The most desirable combination of output attainable with available resources, technology, and social values is known as the
optimal mix of output
The term externalities refers to
all costs and benefits of a market activity borne by a third party
Sources of microeconomic failure that may require government intervention include all of the following except
the need for private goods
Which of the following is an economic justification for a policy of laissez-faire?
the efficiency of the market mechanism
When public goods are marketed like private goods
too few goods are produced
An unregulated natural monopoly can lead to all of the following except
low prices for consumers
In a market economy, producers will produce the goods and services that
consumers demand
A public good is
the source of the free-rider dilemma
In order to reduce pollution, the government can use all of the following except
income transfers
A market failure is defined by a(n)
suboptimal mix of output
Noise generated by an airport best illustrates
an externality
In economics, a public good
cannot be denied to consumers who do not pay
Externalities are a type of market failure because
third parties bear the costs or benefits of a market activity
Which of the following is not considered to be a source of market power for a firm?
externalities
Subsidized vaccines for COVID-19 can be considered a
private good provided (subsidized) by the government
Which of the following is most likely to have social demand greater than market demand?
healthcare services
If market prices and sales are used to signal desired output, then the optimal mix of output would be determined by
the market mechanism
If the economy relies entirely on markets to answer the what question, it tends to
overproduce private goods and under produce public goods
The communal nature of a highway means that no one individual is motivated to pay for it because even those who do not pay will still benefit from using it. This is an example of
the free-rider dilemma
Social costs are
the full resource costs of an economic activity
The News Wire article in the text titled “Secondhand Smoke Kills More Than 600,000 a Year: A Study” addresses the true costs of tobacco use. Secondhand smoke is an example of
an externality
Externalities are the
generate a gap between social costs or benefits and private costs or benefits
Which of the following is a market incentive to discourage pollution?
emission charges
Which of the following is not a basic measure of macroeconomic performance?
public goods production rates
Which of the following is true during the expansionary phase of the business cycle?
Real GDP increases
People are unemployed if they are over 16 and not working due to
the inability to find a job even though they are looking
Joseph is unemployed. He was working at a thrift shop in Indiana but decided to go back to school full time to become an engineer. He would be classified as
not in the labor force
Alternating periods of growth and contraction in real GDP define
the business cycle
Deflation occurs when the
price decreases for some goods and services outweigh price increases on all other goods and services
Inflation is defined as
an increase in the average level of prices
When the economy is operating at full employment
the economy is operating at the lowest rate of unemployment consistent with price stability
Which of the following is characteristic of a downturn in the business cycle?
higher unemployment rates
The study of aggregate economic behavior is referred to as
higher unemployment rates
The study of aggregate economic behavior is referred to as
macroeconomics
Real income
reflects the purchasing power of money
When calculating nominal GDP, the volume of output is measured using
the current market value
A recession is technically _________ quarters or more of declining output or real GDP
2
To be officially counted as unemployed, one must be
actively seeking employment and currently not working
Which of the following is likely if an economy is headed for a recession?
an increase in unemployment
Real GDP measures changes in
output, but not prices
Nominal GDP is defined as the
value of output in current dollars
For a particular economy, the production-possibilities curve shows the
maximum potential output
Which of the following lists best represents the three basic measures of macroeconomic performance?
GDP growth, unemployment, and inflation
A decrease in the average level of prices of goods and services is known as
deflation
GDP is defined as
the market value of all final goods and services produced in a country in a year
If the number of dollars you receive every year is the same, but prices are rising, then your nominal income
stays the same, but your real income falls
The alternative combinations of goods and services that can be produced in a given time period with available resources and technology is referred to as
the production possibilities
Business cycles demonstrate that GDP, over time, follows
erratic growth and recessions of varying durations
The total value of goods and services produced within a nation’s borders, measured in constant prices refers to
real GDP
