Exam 3

Question 1

Monopolistic characteristics

Answer 1

Relatively large number of sellers

Differentiated product

Question 2

Differentiated product allows

Answer 2

firms to have some monopoly power and price and drives demand

Question 3

Short Run Equilibrium

Answer 3

MR = MC

Question 4

Role of advertising

Answer 4

influence tastes and preferences and important in product differentiation

Question 5

Oligopoly characteristics (5)

Answer 5

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

Question 6

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

Answer 6

Collusion

Question 7

Group of two or more firms that act in unison

Answer 7

Cartel

Question 8

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

Answer 8

Nash Equilibrium

Question 9

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

Answer 9

Marginal Revenue Product

Question 10

Marginal Revenue Product =

Answer 10

Change in TR/Change in Quantity of the resource

Question 11

Land =
Labor =
Capital =
Entrepreneurial Ability =

Answer 11

Rent
Wages
Interest
Profit/Losses

Question 12

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

Answer 12

Marginal Resource Cost

Question 13

Marginal Resource Cost

Answer 13

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

Question 14

3 determinants for resource demand

Answer 14

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

Question 15

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

Answer 15

Derived Demand

Question 16

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

Answer 16

The price increases

Question 17

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

Answer 17

Total revenue increases

Question 18

If total revenue increases, what happens to MRP?

Answer 18

MRP increases

Question 19

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

Answer 19

The demand increases

Question 20

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

Answer 20

The demand increases

Question 21

Substitute-Resource price increases

Answer 21

resource demand increases

Question 22

Other replacement resources are more expensive

Answer 22

switch to this resource

Question 23

Substitute-Resource price decreases,

Answer 23

resource demand decreases

Question 24

Other replacement resources are less expensive

Answer 24

switch away from this resource

Question 25

Complementary-Resource price increases

Answer 25

resource demand decreases

Question 26

The marginal benefit of a resource demand on the

Answer 26

marginal product and price

Question 27

If MRP > wage | If MRP < wage

Answer 27

hire more workers | hire fewer workers

Question 28

Changes to MRP can change

Answer 28

wage rate

Question 29

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

Answer 29

productivity and price

Question 30

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

Answer 30

MB

Question 31

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

Answer 31

Nominal Wage

Question 32

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

Answer 32

Real Wage

Question 33

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

Answer 33

Purchasing Power

Question 34

Purchasing Power =

Answer 34

nominal wage / price

Question 35

Real Wage =

Answer 35

nominal wage/price of output

Question 36

What can change the labor supply curve?

Answer 36

- population growth or decline | - Immigration and migration

Question 37

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

Answer 37

Outsourcing

Question 38

Outsourcing globally

Answer 38

- ability to outsource increases pool of workers - decreases wages for domestic workers - unemployment in the industry rises

Question 39

Outsourcing winners

Answer 39

- Workers in country with increased labor demand | - Firm that is hiring cheaper labor

Question 40

Outsourcing losers

Answer 40

Workers who may have lost their job or experienced wage reductions

Question 41

Determinants of Wages

Answer 41

- Compensating differentials - Education and human capital - Location - Lifestyle - Unions - Efficiency Wages

Question 42

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

Answer 42

Wage discrimination

Question 43

what percent of wage differences is wage discrimination

Answer 43

3 to 5%

Question 44

Female workers earn ___ less than males

Answer 44

20%

Question 45

Trade balance =

Answer 45

total exports - total imports

Question 46

A positive trade balance, when exports > imports

Answer 46

trade surplus

Question 47

A negative trade balance, when imports > exports

Answer 47

trade deficit

Question 48

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

Answer 48

deficit

Question 49

Benefits of trade with other countries

Answer 49

- Lower cost alternatives - Increased diversity of choices - Access to resources

Question 50

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

Answer 50

Comparative Advantage

Question 51

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

Answer 51

lower than the domestic opportunity cost of other countries

Question 52

A country produces products for which it has a comparative advantage

Answer 52

Specialization

Question 53

Trade is mutually beneficial

Answer 53

Terms of trade

Question 54

The country under consideration is a

Answer 54

price taker