Saturday, June 06, 2009

Summary since the second quiz

I am still writing it, but, at the moment, the final looks like it will be approximately twice as long as one of our normal quizzes (so hopefully time will not be a significant issue).

Here's a list of major topics since the last quiz:

Market Failure (cont)
What is market failure?

How can each of the following generate market failure in labor markets: asymmetric information (adverse selection, moral hazard) and market power?

How do we try and solve (or minimize) the impacts of moral hazard (e.g., how might we solve the principal-agent problem)?

What are efficiency wages? Why might firms offer them?
Market Power

Key sources: Monopsony, Occupational Licensing, Unions
How do each of these key sources generate market power?

How (and why) does possession of market power affect the labor market (e.g., wages, compensation, employment levels)?

Do monoposonies, licenses, or unions generate benefits that offset the costs they may impose on the economy?

Distribution of labor market outcomes
What is the distribution of income in the US?

What explains individuals' positions in the distribution?

What choices affect individual labor market success?

What conditions are likely prompt individuals to invest in their human or social capital? E.g., what are the benefits and costs associated with such investments? [related: what is a discount rate and why is it relevant for this discussion?]

What exogenous factors (i.e., stuff outside of the individual's control) affect individual labor market success?

What is relatively more important for determining individual success, individual choices or exogenous factors? Why is this question important?

How has the distribution of income changed over time?

Why has it changed?

Do we care about the changes?

Labor market policies
Is the distribution of income important?

Does income affect happiness? If so, why; if not, why not?

If it wants to, how can society change the distribution of income? What are the benefits and costs associated with such policies?

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