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EC 201 > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

Monopolistic characteristics

A

Relatively large number of sellers

Differentiated product

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2
Q

Differentiated product allows

A

firms to have some monopoly power and price and drives demand

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3
Q

Short Run Equilibrium

A

MR = MC

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4
Q

Role of advertising

A

influence tastes and preferences and important in product differentiation

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5
Q

Oligopoly characteristics (5)

A
  • Few large producers
  • Standardized or differentiated product
  • Entry barriers
  • Price makers
  • Mutually interdependent
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6
Q

A situation in which individuals, firms, or any group of actors coordinate their actions to achieve a desired outcome

A

Collusion

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7
Q

Group of two or more firms that act in unison

A

Cartel

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8
Q

An outcome in which, unless the players can collude, neither player has an incentive to change his or her strategy

A

Nash Equilibrium

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9
Q

The additional revenue that is generated as result of using one more unit of a variable resource

A

Marginal Revenue Product

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10
Q

Marginal Revenue Product =

A

Change in TR/Change in Quantity of the resource

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11
Q

Land =
Labor =
Capital =
Entrepreneurial Ability =

A

Rent
Wages
Interest
Profit/Losses

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12
Q

The additional cost incurred as a result of using one more unit of a variable resource

A

Marginal Resource Cost

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13
Q

Marginal Resource Cost

A

Change in Total Resource Cost/Change in Quantity of the resource

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14
Q

3 determinants for resource demand

A
  • The demand for the good or service that resource is used to produce
  • Productivity
  • The price of another resource
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15
Q

A type of demand specific to resources that occurs as a result of the demand for the goods and services produced by those resources

A

Derived Demand

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16
Q

If demand for a good increases, what happens to the price?

A

The price increases

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17
Q

If the price of a product increases, what happens to the total revenue?

A

Total revenue increases

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18
Q

If total revenue increases, what happens to MRP?

A

MRP increases

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19
Q

If MRP increases, what happens to the demand for the resource?

A

The demand increases

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20
Q

If MRP increases, what happens to the demand for the resource?

A

The demand increases

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21
Q

Substitute-Resource price increases

A

resource demand increases

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22
Q

Other replacement resources are more expensive

A

switch to this resource

23
Q

Substitute-Resource price decreases,

A

resource demand decreases

24
Q

Other replacement resources are less expensive

A

switch away from this resource

25
Q

Complementary-Resource price increases

A

resource demand decreases

26
Q

The marginal benefit of a resource demand on the

A

marginal product and price

27
Q

If MRP > wage

If MRP < wage

A

hire more workers

hire fewer workers

28
Q

Changes to MRP can change

A

wage rate

29
Q

The wage rate people can garner is a product of two variables:

A

productivity and price

30
Q

The entrepreneur can afford to pay a MC up to the level of the

A

MB

31
Q

The actual number of dollars received in exchange for one’s labor

A

Nominal Wage

32
Q

The quantity of goods and services that can be bought with one’s nominal wage

A

Real Wage

33
Q

The value of a monetary amount expressed in terms of the goods and services it can buy

A

Purchasing Power

34
Q

Purchasing Power =

A

nominal wage / price

35
Q

Real Wage =

A

nominal wage/price of output

36
Q

What can change the labor supply curve?

A
  • population growth or decline

- Immigration and migration

37
Q

The shifting of jobs from within the firm to an outside company

A

Outsourcing

38
Q

Outsourcing globally

A
  • ability to outsource increases pool of workers
  • decreases wages for domestic workers
  • unemployment in the industry rises
39
Q

Outsourcing winners

A
  • Workers in country with increased labor demand

- Firm that is hiring cheaper labor

40
Q

Outsourcing losers

A

Workers who may have lost their job or experienced wage reductions

41
Q

Determinants of Wages

A
  • Compensating differentials
  • Education and human capital
  • Location
  • Lifestyle
  • Unions
  • Efficiency Wages
42
Q

Occurs when workers of the same ability are not paid the same because of race, sex, age, etc.

A

Wage discrimination

43
Q

what percent of wage differences is wage discrimination

A

3 to 5%

44
Q

Female workers earn ___ less than males

A

20%

45
Q

Trade balance =

A

total exports - total imports

46
Q

A positive trade balance, when exports > imports

A

trade surplus

47
Q

A negative trade balance, when imports > exports

A

trade deficit

48
Q

The U.S. has had a trade ___ since 1975

A

deficit

49
Q

Benefits of trade with other countries

A
  • Lower cost alternatives
  • Increased diversity of choices
  • Access to resources
50
Q

Ability to produce a good or service at a lower relative opportunity cost than another producer

A

Comparative Advantage

51
Q

A country has a comparative advantage in the production of a good or service if its domestic opportunity cost of production is

A

lower than the domestic opportunity cost of other countries

52
Q

A country produces products for which it has a comparative advantage

A

Specialization

53
Q

Trade is mutually beneficial

A

Terms of trade

54
Q

The country under consideration is a

A

price taker

EC 201 (5 decks)

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