Unions may cause unemployment if:
A. outsiders push wages down.
B. insiders force real wages higher than the market-clearing level.
C. outsiders are subject to minimum-wage legislation.
D. insiders are fired and outsiders are hired.
Ans: B. insiders force real wages higher than the market-clearing level.
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If you pay $2,000 in taxes on an income of $20,000, and a tax of $3,000 on an income of $30,000, then over this range of income the tax is
A) regressive. B) proportional. C) progressive. D) There is insufficient information to answer the question.
Arnold Harberger was the first economist to estimate the loss of economic efficiency due to market power. Harberger found that
A) the loss of economic efficiency in the U.S. economy due to market power was small around 1973, about 1 percent of the value of production, but has since grown to about 10 percent. B) because of the increase in the average size of firms since World War II, the loss of economic efficiency has been relatively large, about 10 percent of the value of total production in the United States. C) the loss of economic efficiency in the U.S. economy due to market power was less than 1 percent of the value of production. D) although the number of monopolies was small, the large number of other non-competitive firms in the United States resulted in a large loss of economic efficiency, about 20 percent of the value of total production.