ECON 103 Test 2

Immoral act
Classified as- or with- murder/theft simply depends on who is evaluating
Illegal acts
Designated by the criminal justice system.
legislative bodies, such as city councils, state legislatures, and congress. Some acts may be unacceptably offensive or ignorant. This type of act is a criminal act and is one that society has decided that is better off without and it may or may not be immoral
Free rider
This is an individual that consumes benefits from a public good/service but who pays no part of its cost
If a free rider is found to exist, what is something that the government can do to correct it?
The government can correct the free-rider problem by requiring all who receive the benefits of a public good/service to pay appropriate taxes for it
Public goods are:
national defense, crime prevention, SPACE EXPLORATION, some aspects of public health, and most anti-population measures
Society has a rule it can follow relative to knowing at what point crime prevention activities can be expanded and then pursued no farther.
Cost-benefit analysis as a widely useful economic tool that can help us identify the optimal level of expenditures on crime prevention activities, but it requires good estimates of the benefits and costs of these activities. Cost-benefit analysis indicates that well-being will be enhanced through an increase in crime prevention activities so long as the benefit society derives from the increase is at least as great as the cost of the increased activities.
An interesting “rule of thumb” in determining how a city’s crime prevention budget should be allocated is:
The equimarginal principle.
Psychic income
Benefits an individual receives form a business endeavor in the form of personal satisfaction rather than in the form of money. EX. taking a pay cut prefer to move to SC rather than Alaska
Equimarginal principle
An efficient allocation of a budget exists when the last dollar spent on any one facet of the budget yields the same marginal social benefit as the last dollar spent on any other facet
What is an example of both illegal and immoral acts?
Murder
What can you tell your brother, who thinks higher educate is stupid, about his earnings if he starts working right after high school?
High school graduates can expect to earn $1.2 million during their working years
How much can your brother earn if he goes to college?
College graduates can expect to earn $2.1 million during their working years; this is $1.0 million more than a high school graduate
If your brother earns a professional degree, his work-life earnings might be?
With a professional degree, you can earn $4.4 million over your lifetime
Math scores in 2007
middle
The US Spent, per a pupil, approximately how much on education?
$9,000 per pupil internationally
What percent of GDP did the US spend on education?
3.9%
In the US educational system, it is predominately public or private?
Public
What % of school aged children attend public schools in 2003?
90% of US Children attended public schools in 2003
marginally speaking, eduation’s benefit should increase? do you agree?
Increased education has benefits what are they?
What is a positive externality in consumption and can you think of an example?
As the number of years of education increases, spillover benefits should decrease. Do you agree?
Can you think of some benefits that come from having an education?
What is a charter school?
Schools in which parents/other groups were permitted to create a new school with state funding and were given control over operations
The cream skimming argument is used in the case against the voucher system program because:
Students who choose a voucher program will be those from higher income families
In most countries, do students go to school longer than they do in the US?
No, the length of school year in other countries is no longer than in US
THere are how many school-aged children in the US in 2003?
50 million
How do professional sports clubs differ from other business firms?
The organizational structure of the professional team sports industry and the unique relationship between the sports club and their most important employees, the players, have created a number of economic and social issues that have captured public attention.
Two different types of markets:
Product market: Buyer and sellers engage in the exchange of final goods and services: Sell services
Resource market: Buyers and seller engage in the exchange of the factors of production ex. hire their players
Cartel
A group of firms that formally agree to coordinate their production and pricing decision in a manner that maximizes joint product
NFL, NHL, and NBA have what in common?
examples of cartels
Cartels are homogeneous or heterogeneous?
Homogeneous output
Cartel arrangement?
Cartel maximize joint profits at with point?
A cartel will only have to set the market price and output such that the markets marginal revenue equal market marginal cost
Monopsony?
A market with only one buyer or employer. Example: NY Giants the club is the Giants and the players are its employees
Marginal cost of labor
THe change that occurs in a firms total labor costs due to hiring an additional worker per unit of time
Monopsonistic profit
The difference between the workers contribution to a monoponistic firms receipts and wages.
Monopolistic profit
The difference between the workers contribution to a monoponistic firms receipts and their wages
Free agency
The process of being a free agent after a lapse of a certain amount of time, a player can now go elsewhere.
Free agents
A player whose contract is no longer held exclusively by one professional sports club
Labor union
A formal organization of workers that bargains on behalf of its members over the term and conditions of employment
Strike
A work stoppage initiated by labor–> employers
Lockout
A work stoppage initiated by management –> manager
Salary caps
a rule that limits the amount of money that any team can spend on player compensation. It is just another cartel rule –> intended to maximize the joint profits of the leagues
High salaries paid to professional athletes reflect what?
Contribution to the clubs revenue
Why do average baseball players make a higher salary than the average college professor?
BC fans are willing to pay to enjoy their performances