Question 1

Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:

Accepted Answer

A) the substitution effect implies that she will work less. 
B) if leisure is a normal good,the income effect implies that she will work less. 
C) if leisure is a normal good,the income effect will reinforce the substitution effect and she will work less. 
D) Lisa's marginal product of labor has decreased. 
A) the substitution effect implies that she will work less. 
B) if leisure is a normal good,the income effect implies that she will work less. 
C) if leisure is a normal good,the income effect will reinforce the substitution effect and she will work less. 
D) Lisa's marginal product of labor has decreased.

Question 2

Assume that perfect competition exists in output and factor markets.The P = MC rule for profit maximization implies the same level of labor use that would be implied by using the VMPL = W rule.

Accepted Answer

A) True 
 B)False

Question 3

Use the following to answer question:
Figure: The Demand for Bricklayers  
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day,but there is a new minimum wage of $120.Therefore:

Accepted Answer

A) 3 workers who otherwise would have been employed by this firm are now unemployed. 
B) 4 workers will now be hired by this firm. 
C) all bricklayers are better off. 
D) this firm will shut down. 
A) 3 workers who otherwise would have been employed by this firm are now unemployed. 
B) 4 workers will now be hired by this firm. 
C) all bricklayers are better off. 
D) this firm will shut down.

Question 4

Which statement is MOST likely an example of wage disparity due to differences in human capital?

Accepted Answer

A) The median earnings of White men are more than are the median earnings of African-Americans. 
B) People with graduate degrees usually have higher earnings than do people who did not graduate from high school. 
C) Nick Saban,the football coach at the University of Alabama,earns more than does an economics professor. 
D) Crab fishermen on the Bering Sea earn more than do clerks who sell goldfish at a pet store. 
A) The median earnings of White men are more than are the median earnings of African-Americans. 
B) People with graduate degrees usually have higher earnings than do people who did not graduate from high school. 
C) Nick Saban,the football coach at the University of Alabama,earns more than does an economics professor. 
D) Crab fishermen on the Bering Sea earn more than do clerks who sell goldfish at a pet store.

Question 5

If a firm hires labor such that W < VMPL,then profit:

Accepted Answer

A) is maximized. 
B) can be increased by hiring less labor. 
C) can be increased by hiring more labor. 
D) can be increased by increasing the wage. 
A) is maximized. 
B) can be increased by hiring less labor. 
C) can be increased by hiring more labor. 
D) can be increased by increasing the wage.

Question 6

The demand for a factor of production is a(n)_____ demand.

Accepted Answer

A) derived 
B) implicit 
C) direct 
D) distributional 
A) derived 
B) implicit 
C) direct 
D) distributional

Question 7

Unions are organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining with employers.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer question:  
-(Table: Workers and Corn Output)Use Table: Workers and Corn Output.Laura is a price-taking farmer who produces corn.Assume that the wage rate for workers is $130 and the price per bushel of corn is $10.Suppose that Laura is employing 2 workers.If she adds the third worker,her profits will:

Accepted Answer

A) increase by $79. 
B) decrease by $51. 
C) decrease by $19. 
D) increase by $80. 
A) increase by $79. 
B) decrease by $51. 
C) decrease by $19. 
D) increase by $80.

Question 9

One objection to the marginal productivity theory of income distribution is the absence of large disparities in income between men and women and various ethnic groups.

Accepted Answer

A) True 
 B)False

Question 10

In 2015,unions represent approximately _____% of employees of private businesses.

Accepted Answer

A) 1 
B) 7 
C) 19 
D) 29 
A) 1 
B) 7 
C) 19 
D) 29

Question 11

The invention of labor-saving appliances has decreased the supply of labor in the United States.

Accepted Answer

A) True 
 B)False

Question 12

Scott's wage is $25 per hour and he works 50 hours a week,which is his optimal labor supply at that wage.His marginal utility of one hour of leisure is equal to the:

Accepted Answer

A) marginal utility he gets from $25 worth of goods. 
B) marginal utility he gets from more than $25 worth of goods. 
C) marginal utility he gets from less than $25 worth of goods. 
D) substitution effect. 
A) marginal utility he gets from $25 worth of goods. 
B) marginal utility he gets from more than $25 worth of goods. 
C) marginal utility he gets from less than $25 worth of goods. 
D) substitution effect.

Question 13

An important assumption underlying the marginal productivity theory of income distribution is that:

Accepted Answer

A) product markets are monopolistically competitive. 
B) factor markets are perfectly competitive. 
C) the relevant value of the marginal product is not the equilibrium value. 
D) the firm does not own any land or physical capital. 
A) product markets are monopolistically competitive. 
B) factor markets are perfectly competitive. 
C) the relevant value of the marginal product is not the equilibrium value. 
D) the firm does not own any land or physical capital.

Question 14

A decrease in the demand for pastry chefs may come about because of an increase in the:

Accepted Answer

A) concern for healthy living. 
B) market wage rate for pastry chefs. 
C) productivity of pastry chefs. 
D) supply of other factors that pastry chefs use. 
A) concern for healthy living. 
B) market wage rate for pastry chefs. 
C) productivity of pastry chefs. 
D) supply of other factors that pastry chefs use.

Question 15

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

Accepted Answer

A) True 
 B)False

Question 16

José,a corn farmer operating in a perfectly competitive market,pays his workers $8 an hour.At his current level of labor use,the marginal product of an additional hour of labor is three bushels of corn.The market price of corn is $2.75.To maximize his profits,Jose should:

Accepted Answer

A) hire more labor. 
B) hire less labor. 
C) not change the amount of labor. 
D) This question cannot be answered without knowing the average product of labor. 
A) hire more labor. 
B) hire less labor. 
C) not change the amount of labor. 
D) This question cannot be answered without knowing the average product of labor.

Question 17

In the U.S.labor market,African-Americans have the lowest median earnings of any of the major demographic groups discussed in the chapter.

Accepted Answer

A) True 
 B)False

Question 18

A profit-maximizing firm will hire workers up to the quantity of labor where:

Accepted Answer

A) VMPL > W. B) VMPL = W. C) VMPL < W. D) MP × MR = VMPL. A) VMPL > W. B) VMPL = W. C) VMPL < W. D) MP × MR = VMPL.

Question 19

Which factor is an input in the production of croissants?

Accepted Answer

A) ovens 
B) pastry chefs 
C) flour 
D) dough mixers 
A) ovens 
B) pastry chefs 
C) flour 
D) dough mixers

Question 20

The opportunity cost of an hour of leisure:

Accepted Answer

A) is always assumed to be equal to the minimum wage. 
B) is the hourly wage rate. 
C) increases if the hour of leisure time is spent in an unproductive activity. 
D) decreases if the hour of leisure is spent in a productive activity. 
A) is always assumed to be equal to the minimum wage. 
B) is the hourly wage rate. 
C) increases if the hour of leisure time is spent in an unproductive activity. 
D) decreases if the hour of leisure is spent in a productive activity.

Exam 19: Factor Markets and the Distribution of Income

Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:

Assume that perfect competition exists in output and factor markets.The P = MC rule for profit maximization implies the same level of labor use that would be implied by using the VMPL = W rule.

Use the following to answer question: Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day,but there is a new minimum wage of $120.Therefore:

Which statement is MOST likely an example of wage disparity due to differences in human capital?

If a firm hires labor such that W < VMPL,then profit:

The demand for a factor of production is a(n)_____ demand.

Unions are organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining with employers.

One objection to the marginal productivity theory of income distribution is the absence of large disparities in income between men and women and various ethnic groups.

In 2015,unions represent approximately _____% of employees of private businesses.

The invention of labor-saving appliances has decreased the supply of labor in the United States.

Scott's wage is $25 per hour and he works 50 hours a week,which is his optimal labor supply at that wage.His marginal utility of one hour of leisure is equal to the:

An important assumption underlying the marginal productivity theory of income distribution is that:

A decrease in the demand for pastry chefs may come about because of an increase in the:

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

José,a corn farmer operating in a perfectly competitive market,pays his workers $8 an hour.At his current level of labor use,the marginal product of an additional hour of labor is three bushels of corn.The market price of corn is $2.75.To maximize his profits,Jose should:

In the U.S.labor market,African-Americans have the lowest median earnings of any of the major demographic groups discussed in the chapter.

A profit-maximizing firm will hire workers up to the quantity of labor where:

Which factor is an input in the production of croissants?

The opportunity cost of an hour of leisure:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters