Exam 4 Flashcards
Broadly defined, technological advances
comprises new and improved goods and services and new and improved ways of producing or distributing
In economists’ models, technological advance occurs in
a very long run
Technological advance in a three - step process involving
Invention, Innovation, diffusion
The successful commercial introduction of a new product, the use of a new method, or the creation of a new form of business enterprise is called
Innovation
the first discovery, as opposed to the first commercial application, of the water - soluble material used in contact lens is an example of
Invention
About ____ percent of business R&D spending is for basic research
6
Entrepreneurs
often form small companies
Process innovation causes an upward shift in a firm’s total product curve and
downward shift in its average total cost curve
process innovation can be depicted as
upward shift in a firms total product curve
as it relates to R&D, the imitation problem is that
Firms rival may be able to imitate its new product or process greatly reducing the originators profit from its R&D
All of the following increase the expected rate of return on R&D expenditures except
Imitation by others
Legal protections against direct copying of written material are called ____ Legal protection against using a product’s name are called ____-
Patents and trademarks
Which pair of market structures provide firms with the greatest ability to finance R&D out of retained earnings
Oligopolies and pure monopoly
Which of the following market structures do economist generally agree is the least conductive to R&D and innovation
Pure monopoly
In the invented U - theory
R&D expenditures first rise a percentage of firm sales as industry concentration increases, but then fall as higher industry concentration occurs
In a purely competitive resource market, a firm that hires labor is
Wage takers
the strength of the demand for a resource depends on the
Productivity of the resources
an increase in the demand for computers leads to an increase in demand for computer programmers. this situation arises because
The demand for programmers is a derived demand
Why is the demand for labor, referred to as a “derived” demand
Demand for labor is derived from the production and demand for the product being demanded, if demand for product 1) price will increase 2) demand for production labor will increase until equilibrium price and production numbers are met
Refer to the above graph, where TP= labor input. The marginal revenue product of labor MRP for a purely competitive firm
decreases
Marginal revenue product describes the
Revenue received for the output produced by the last unit of labor employed
If the marginal revenue product (MRP) of labor is less than the wage rate
Less labor should be employed
Refer to the above table. At a wage rate of $11, the firm will choose to employ
5
Which is an example of a change in product demand that increases labor demand
Tourism increases in popularity, increasing the demand for workers at tourist resorts
Gambling increases in popularity, thus increasing the demand for card dealers at casinos. this would be caused by which change in a determinant of labor demand
an increase in product demand
A technological improvement that causes an increase in the marginal product of resource will
Increase in the marginal revenue product
Suppose capital is readily substitutable for labor and that the price of capital falls. we can conclude that
Substitution effect tends to reduce the demand for labor
If capital and labor are used in a rigidly fixed proportions and the price of capital falls, it can be concluded that
can be made as to effect on labor demand (increase)
In percentage terms, which occupation is expected to be the fastest growing from 1998 to 2008
personal care aids
The more inelastic the demand for a resource the
The more (fewer) good substitute resource available
If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will
Decrease by 2 percent
Productivity measures (such as output per worker - hour) and wage rates adjusted for inflation in the United States are
Directly but not closely related
A characteristic of a purely competitive labor market would be
Money firms competing in hiring workers “Wage takers:
In pure competition, a profit maximizing firm will equate the marginal revenue product of labor with the
Wage rate
Refer to the above table and information. What is the marginal revenue product of the fifth worker
$9
Refer to the above table and information. What will be the equilibrium wage rate?
the equilibrium is $8 and the firm will employ 150
Refer to above table and information. What will be the marginal labor cost and wage rate for the individual firm?
$5 and hire 5 workers
The best example of a monopsonist is
A large army post in a small community
The level of employment in the labor market shown above will be
B
A craft union
Organized workers who have similar jobs in an industry/ labor union of people of the same skill set
The best example of an industrial union is the
United auto workers
Refer to the above graph. A monopsonist will set the wage at
Wm
In a bilateral monopoly there is
Monopsonist facing a monopolist
Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would
Increase unemployment in the labor market
In the labor market shown above, if a minimum wage level is set at Wm, it will cause
Employment will decrease from B to A
