Kent State University Microeconomics Exam Questions and Answers
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Kent State University Microeconomics
Institution
Kent State University Microeconomics
Kent State University Microeconomics Exam Questions and Answers
They will hire another worker when... - Answer-MRPL is > or = wage (w)
market labor demand - Answer-add up all of the firms quantity demanded for labor at each wage
Shifters of labor supply - Answer-wealth- if wealth goes ...
Kent State University Microeconomics
Exam Questions and Answers
They will hire another worker when... - Answer-MRPL is > or = wage (w)
market labor demand - Answer-add up all of the firms quantity demanded for labor at
each wage
Shifters of labor supply - Answer-wealth- if wealth goes up you will work less (shifts left)
increase in population- shifts market labor supply to the right
changing demographics- more women in work force (shift to right)
changing alternatives- less bank jobs now (shifts to the left)
What happens when labor supply shifts? - Answer-when increases/ shifts right-
equilibrium wage decreases and equilibrium number of workers increases.
when decreases/ shifts left- equilibrium wage increases and equilibrium number of
workers decreases.
Shifts of labor demanded - Answer-anything that affects the price of the product good or
anything that increases P or MPL.
anything that increases P or MPL will shift demand to the right.
more firms in the market.
What happens when labor demanded shifts? - Answer-when labor demand increases
(shifts to the right)- equilibrium wage increases and equilibrium number of workers
increases
when labor demand decreases(shifts to the left- equilibrium wage decreases and
equilibrium number of workers decreases
Discrimination in wages - Answer-paying someone lower or not hiring someone due to
an observable and irrelevant characteristic
Labor unions - Answer-organization of employees with legal rights to bargain with firms
about wages and working conditions
asymmetric information - Answer-a situation in which one party to an economic
transaction has less information than the other party
Adverse selection - Answer-situation in which one party to an economic transaction has
more information and exploits this information
Moral Hazard - Answer-after the transaction one party will act in a way to make the
other party worse off
, Tax incidence - Answer-the manner in which the burden of a tax is shared among
participants in a market
Equity - Answer-refers to fairness
Efficiency - Answer-refers to using resources in the best way possible
Transfers - Answer-money given to individuals without work of goods given in return
Individual income taxes - Answer-federal, state, and local government tax wages,
salaries, income, and profits
largest source of federal revenue
Social insurance taxes - Answer-federal government also taxes wages and salaries to
raise funds for Social Security and Medicare system ("payroll taxes")
Social security
Medicare
Social Security - Answer-payments to retired and disabled
Medicare - Answer-health insurance for those 65+
Medicaid - Answer-health insurance for the poor
Sales taxes - Answer-state and local government tax sales of most retail products
Property taxes - Answer-local government tax homes, offices, factories, and land
largest source of funding for public schools
Excise taxes - Answer-federal government have excise taxes on specific goods
ex: beer, gasoline, cigarettes
Externality - Answer-the uncompensated impact of one person's actions on the well-
being of a bystander
externalities can be both positive and negative depending on if the impact on others is
good or bad
Negative Externality - Answer-when there in an additional cost from producing or
consuming a good that IS NOT included in the marginal private cost
MSC>MPC
Marginal Private Cost (MPC) - Answer-The cost of a good suffered solely by the
producer.
Marginal Social Cost (MSC) - Answer-The cost of a good on society
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