Micro Final Review

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The Lorenz curve

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plots graphically the distribution of income.

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An income tax is progressive if the

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percentage of income paid as taxes increases as income increases.

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Increases in the productivity of labor result partly from

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improvements in technology.

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The productivity and real wages of workers in industrially advanced economies have risen historically partly because

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workers have been able to use larger quantities of capital equipment.

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We say that the demand for labor is a derived demand because

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we demand the product that labor helps produce rather than labor service per se.

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Income mobility

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is the movement of individuals and households from one income quintile to another over time.

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The four-firm sales concentration ratio for an industry measures the

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extent to which the four largest firms dominate the production of a good.

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Monopolistic competition is characterized by firms

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producing differentiated products.

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In the short run, a profit-maximizing monopolistically competitive firm sets its price

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above marginal cost.

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Mutual interdependence means that each oligopolistic firm

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must consider the reactions of its rivals when it determines its price policy.