Test 5

Question 1

1st rule of labor markets

Answer 1

firms won’t pay more for a worker than they produce

Question 2

Marginal Product

Answer 2

Marginal product is the extra output generated by one additional unit of input, such as an additional worker

Question 3

Value

Answer 3

Marginal product of labor x price

Question 4

Marginal revenue product

Answer 4

Marginal product of labor x marginal revenue

Question 5

Derived demand

Answer 5

resource derived from other markets

e.g. demand for aluminum dependent on soda, housing, etc
or… demand for nurses encompasses geriatric nurses, pediatric nurses, emergency nurses, specific markets

Question 6

Efficiency labor rate

Answer 6

pay existing employees above market rate (discourage turnover)

Question 7

What shape is the labor curve and why?

Answer 7

backbending. as wages increase, there’s a cap on quantity supplied because people value leisure/life

Question 8

Monopsony

Answer 8

one buyer

e.g. professional baseball- you can only be employed by the MLB

Question 9

Bilateral Monopoly

Answer 9

monopoly and monopsony

Question 10

What right do workers have?

Answer 10

to organize! we want unions now!

Question 11

Why is union membership declining?

Answer 11

international trade, more service jobs, corruption

Question 12

What does it mean for a state to be “right to work”?

Answer 12

an employee can work at a business with a union, without joining the union

Question 13

Wildcat strike

Answer 13

leaving mid-work

Question 14

What are some possible explanations for the wage gap?

Answer 14

child bearing & career choices

Question 15

When does asymmetric information benefit sellers?

Answer 15

houses, cars

Question 16

When might asymmetric information benefit buyers?

Answer 16

estate sales, insurance

Question 17

How can asymmetric information be leveled out & what does that result in?

Answer 17

by asking questions, creating better market outcomes

Question 18

Imperfect information

Answer 18

flaws in the information, misinformation

Question 19

Utilitarianism

Answer 19

bring most utility to everyone

Question 20

Liberal

Answer 20

take care of people who are suffering

Question 21

Progressive

Answer 21

Extension of liberal, vision for the future

Question 22

Conservative

Answer 22

value traditions & like institutions

Question 23

Libertarian

Answer 23

society bad, individual rights/responsibility, no laws

Question 24

What are some issues with liberal and progressive viewpoints?

Answer 24

dependency, power imbalance of helping

Question 25

How can imperfect/asymmetric information be reduced?

Answer 25

money-back guarantees, warranties, occupational licenses

Question 26

Caveat emptor

Answer 26

let the buyer beware

Question 27

Moral hazard

Answer 27

people engage in riskier behavior with insurance

Question 28

How can moral hazard be reduced?

Answer 28

deductibles & copayments

Question 29

Adverse selection

Answer 29

consumers have more info (asymmetric info) on risk & act on it

Question 30

Median voter phenomenom

Answer 30

whoever gets the median voters wins- so politicians lie, conceal their beliefs

Question 31

Rational ignorance

Answer 31

we only have one vote, thus a cost-benefit analysis dictates doing adequate research is not worth the time

Question 32

What concepts did Kenneth Arrow propose?

Answer 32

Impossibility theorem & voting cycle

Question 33

Impossibility theorem

Answer 33

impossible to have perfectly fair election

Question 34

Voting cycle

Answer 34

difference in results depending on choices