Question 1

Daniel Hammermesh and Stephen Donald studied the determinants of the earnings of college graduates years after they graduated.Which of the following is one result of their study?

Accepted Answer

A)  The earnings of identical twins were about 9 percent higher than the earnings of all other students.
B)  Students who had taken 15 credits of upper-division science and mathematics courses and earned high grades in these courses earned about 10 percent more than students who took no upper-division classes in these subjects.
C)  Students who took more Advanced Placement (AP) courses while still in high school earned significantly more income for each AP course they passed with a grade of 4 or 5.
D)  Students who took at least three economics courses earned about 9 percent more income than students who took no college economics courses. B

Question 2

The market supply curve for labor is

Accepted Answer

A)  derived from the market supply curve for the output produced with labor.
B)  perfectly inelastic if leisure is an inferior good.
C)  determined by adding up the quantity of labor supplied by each worker at each wage,holding constant all other variables that affect the willingness of workers to supply labor.
D)  determined by adding up the wages each worker is willing to work for at a given quantity supplied,holding constant all other variables that affect the willingness of workers to supply labor. C

Question 3

Table 17-2
  Table 17-2 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor,respectively.
-Refer to Table 17-2.What are the price and quantity of workers that result in the maximum amount of revenue Apple would earn from selling iPods?

Accepted Answer

A)  $180; 1
B)  $140; 2
C)  $120; 2
D)  $120; 4 D

Question 4

Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games).An example of capital used by teams to produce their products is

Accepted Answer

A)  the money teams earn from television contracts and ticket sales.
B)  the land on which baseball games are played.
C)  the labor of baseball players.
D)  the ballparks where the games are played.

Question 5

The marginal product of labor curve is the demand curve for labor.

Accepted Answer

A) True 
 B)False

Question 6

Increases in population shift the market supply curve for labor to the right.

Accepted Answer

A) True 
 B)False

Question 7

Along an upward sloping labor supply curve,as the wage rate increases,the opportunity cost of leisure ________,causing individuals to supply a ________ quantity of labor.

Accepted Answer

A)  increases; greater
B)  increases; lower
C)  decreases; greater
D)  remains constant,constant

Question 8

Marsha Murphy complained,"Many jobs that are filled mostly by men offer higher wages than most jobs that are typically filled by women.In many cases,the jobs men have require the same education and skills as the jobs women have.This is clearly unfair.Women should be paid the same wages as men are paid for jobs that are equivalent in terms of their qualifications." Which of the following statements describes Marsha's position?

Accepted Answer

A)  Marsha believes that women's wages should include a compensating differential.
B)  Marsha believes employers assume that men and women have different job preferences.
C)  Marsha believes that employers are reluctant to hire women for certain jobs because of cognitive dissonance.
D)  Marsha endorses a concept called comparable worth.

Question 9

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Accepted Answer

A) True 
 B)False

Question 10

Most economists believe that only a small gap between the wages of white males and the wages of other groups is due to education.Most of the gap is explained by discrimination.

Accepted Answer

A) True 
 B)False

Question 11

Holding the price of a firm's output constant,if the marginal product of labor increases

Accepted Answer

A)  the marginal revenue product of labor decreases.
B)  the marginal revenue product of labor also increases.
C)  the marginal products of other inputs also increase.
D)  the marginal revenue product of labor may increase or decrease.

Question 12

The demand for capital is similar to the demand for labor in that

Accepted Answer

A)  the marginal product of labor is derived from the marginal product of capital.
B)  the marginal revenue product curve for labor is the same as the marginal revenue product curve for capital.
C)  both are derived demands.
D)  both are inelastic at high prices and elastic at low prices.

Question 13

Compensating differentials are associated most closely with which of the following?

Accepted Answer

A)  hazardous jobs
B)  comparable worth
C)  economic discrimination
D)  differences in education

Question 14

Figure 17-2 
-Refer to Figure 17-2.Which of the following is true at W2?

Accepted Answer

A)  The income effect is larger than the substitution effect.
B)  The substitution effect is larger than the income effect.
C)  The income effect and the substitution effect are equal.
D)  The supply curve is positively sloped.

Question 15

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

Accepted Answer

A)  differences in education
B)  geographic location
C)  differences in experience
D)  differing preferences for jobs

Question 16

Companies often find it to be more profitable to use a commission or piece-rate system of compensation rather than a salary system,yet many firms continue to pay their workers salaries.List three reasons why a firm would choose a salary system of compensation.

Accepted Answer

The answer of Companies often find it to be more...

Question 17

Wally,Vijay,Sandra and Consuela make up a software development team at Javasoft.The firm is considering implementing one of two incentive compensation schemes.In scheme A,each programmer receives an annual bonus if he or she meets all individual programming deadlines.In scheme B,members of the team share equally in a joint bonus if the team meets all of its product delivery deadlines.All four employees are equally talented but Wally is a slacker who does as little work as he can get away with.Which scheme might team members prefer? Which scheme will management prefer?

Accepted Answer

The answer of Wally,Vijay,Sandra and Consuela make up a software...

Question 18

Table 17-1
  Hotspur Incorporated,a manufacturer of microwave ovens,is a price taker in its input and output markets.The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80.Table 17-1 shows the relationship between the quantity of labor it hires and the quantity of microwave ovens it produces.
-Refer to Table 17-1.What is the amount of revenue added as a result of hiring the fourth worker?

Accepted Answer

A)  $1,200
B)  $7,200
C)  15 microwaves
D)  90 microwaves

Question 19

How will an increase in labor productivity affect equilibrium in the labor market?

Accepted Answer

A)  The supply of labor will increase and the equilibrium wage and quantity of labor will increase.
B)  The demand for jobs will increase and the equilibrium wage and quantity of labor will increase.
C)  The demand for labor will increase and the equilibrium wage and quantity of labor will increase.
D)  The demand for labor will decrease because fewer workers will be needed to produce the same output.The equilibrium wage and quantity of labor will decrease.

Question 20

If the income effect of a wage increase equals the substitution effect,the labor supply curve is horizontal at the equilibrium wage.

Accepted Answer

A) True 
 B)False

Exam 17: The Markets for Labor and Other Factors of Production

Daniel Hammermesh and Stephen Donald studied the determinants of the earnings of college graduates years after they graduated.Which of the following is one result of their study?

The market supply curve for labor is

Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games) .An example of capital used by teams to produce their products is

The marginal product of labor curve is the demand curve for labor.

Increases in population shift the market supply curve for labor to the right.

Along an upward sloping labor supply curve,as the wage rate increases,the opportunity cost of leisure ,causing individuals to supply a quantity of labor.

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Most economists believe that only a small gap between the wages of white males and the wages of other groups is due to education.Most of the gap is explained by discrimination.

Holding the price of a firm's output constant,if the marginal product of labor increases

The demand for capital is similar to the demand for labor in that

Compensating differentials are associated most closely with which of the following?

Figure 17-2 -Refer to Figure 17-2.Which of the following is true at W2?

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

Companies often find it to be more profitable to use a commission or piece-rate system of compensation rather than a salary system,yet many firms continue to pay their workers salaries.List three reasons why a firm would choose a salary system of compensation.

How will an increase in labor productivity affect equilibrium in the labor market?

If the income effect of a wage increase equals the substitution effect,the labor supply curve is horizontal at the equilibrium wage.