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Economics unit 3
| Question | Answer |
|---|---|
| The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is | game theory |
| As the name monopolistic competition implies, a firm�s decisions in this setting will in certain ways resemble ______________ and in other ways resemble________________ | monopoly; perfect competition |
| _____________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry. | ologpoly |
| If a perfectly competitive firm raises its price, the quantity demanded of its product _____________. | should fall to zero |
| If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________. | decline |
| If a monopoly or a monopolistic competitor raises their prices, then | decline in quantity demanded will be larger for the monopolistic competitor. |
| What role can advertising play with respect to differentiated products? | shapes consumers intangible preferences |
| Perfect competition and monopoly stand at _____________ of the spectrum of competition. | opposite ends |
| Which of the following would be classified as a differentiated product produced by a monopolistic competitor? natural gas news channel 5 electricity tap water | news channel 5 |
| If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms, | they will be unable to earn higher-than-normal profits in the long run. |
| Why do U.S. economists commonly refer to externalities as an example of market failure? | externalities present a case where markets only consider some social costs |
| include both the private costs incurred by firms and also costs incurred by third parties outside the production process. | social costs |
| Using the term "spillover" is a less formal means of describing | an externality |
| Which of the following will need to strike some balance between economic output and environmental quality as a prominent climate change priority? | every country |
| ____________________ describes a situation where a third party, outside the transaction, suffers from a market transaction by others. | negative externality |
| A positive externality arises in a situation where a third party, outside the transaction, | benefits from a market transaction by others. |
| The term ____________ refers to a market exchange that affects a third party who is outside or external to the exchange. | spillover |
| Property rights are the legal rights of ownership on which others are | not allowed to infringe without paying compensation. |
| A pollution charge is a form of tax imposed on | the quantity of pollution that a firm emits. |
| Which of the following is the most appropriate response of public policy to a negative externality like pollution? | find ways to account for the social costs of the negative externality in economic decisions |
| Which of the following mechanisms will increase the rate of return that can be earned by inventors of new technology? | patents, copyrights, and each of the above |
| How does the cost of financial capital influence innovative research and development activities in a competitive market? | at a low cost, firms demand a large quantity, as R&D projects will likely return a higher rate. |
| The term "basic research" applies specifically to research pertaining to fundamental scientific breakthroughs that may offer commercial applications in the ______________. | distant future |
| Which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology? | to encourage a stream of invention that benefits the whole of society. |
| In economic terms, when a company invests in new technology innovations, | positive externalities arise. |
| In order for a good to be classified as ______________ , when one person uses the good, others are also able to use it. | nonrivalrous |
| Market competition can provide _______________ for _________________ , | the needed incentive; discovering new technologies |
| Once it's patent application has been accepted, a firm is able to earn ________ on its product, which _________ | monopoly profits; offers an incentive for research and development to take place |
| A public good is a good that is ____________________ , and thus is difficult for market producers to sell to individual consumers. | nonexcludable and nonrivalrous |
| If incomes rise for low-income workers but don�t change for high-income workers, | poverty and inequality will fall |
| If a rise in incomes for both low-income and high-income workers is higher for the high-income workers, | poverty will fall and inequality will rise |
| The group of government programs that provide assistance to the poor and the near-poor is synonymous with which of the following? | safety net |
| One common way of measuring income inequality is to rank all households by income, from lowest to highest, and then | to divide all households into quintiles |
| In circumstances dealing with poverty, the term ______________ means taking income from those with higher incomes and providing income to those with lower incomes. | redistribution |
| When reference is made to the ____________, it means the specific amount of income needed for a basic standard of living. | poverty line |
| If the income level falls for low-income workers, but remains unchanged for high-income workers, | poverty rise and inequality will fall |
| A Lorenz curve refers to a graphic illustration of the share of population on the _______________ and the cumulative percentage of total income received on the __________________ . | horizontal axis; vertical axis |
| If the poverty trap were made even more difficult to overcome because a working mother will have extra expenses like transportation and child care that a nonworking mother will not face, then | her economic gains from working will be even smaller |
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