Midterm #3, Econ 11, Markets and Prices, 24x6=144 pts.

Dr. Fred E. Foldvary. May 31, 2002

Study Guide

1. If you and a friend are watching a show on your cable TV, besides being possibly a natural

monopoly as Mankiw says, the TV show

2. Local public goods such as transit used mostly by local people

3. Wages in the economic sense, as a payment for the labor factor,

4. "Land" in economics

5. Capital goods as a factor of production

6. The basic level of unskilled wages in an economy tends to be

7. The Lorenz curve measures:

8. A likely basic cause of massive poverty among the following possibilities is:

9. A major cause of unemployment, other than frictional, is

10) When unions have a monopoly on the labor supply in their industry, and the members wish to maximize their income, the effect on overall wages in the economy, leaving aside their influence over legislation, is:

11. The real interest rate is:

12. The market price for an asset such as land equals

13. On the Lorenz curve, a perfectly equal distribution of income is be represented by:

14. A Lorenz curve measures _________________ on the horizontal axis:

15. The U.S. official poverty line, adjusted for family size, is drawn at:

16. All Gini coefficients must be between:

17. Real interest, in economic substance,

18. If distribution of income A is (.5, .4, .1, 0) and B is (.7, .3, 0), which is more unequal?

19. If labor supply and demand curves are highly elastic and a minimum wage is imposed substantially above the market wage:

20. Suppose that there are two consumers, Richard and Jayme, who like micro-brew rootbeer. The current market price is \$P per bottle. Jayme would be willing to purchase only one 12 oz. bottle and would pay up to \$6 for it. Richard would be willing to pay \$9 for his first 12 oz. bottle, \$7 for his second bottle, and \$3 for his third bottle.

If a tax of \$X is levied on each bottle of micro-brew rootbeer, how much tax revenue will be generated from sales to Richard and Jayme?

21. To maximize profit, a competitive firm will hire another worker so long as the

22. A land-value tax (or tax on land rent)

23. Tax incidence means

24. Statistical patterns of income among various categories of workers