Question 1

Figure 17-2  Figure 17-2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.
-Refer to Figure 17-2. Suppose the market price of bracelets falls to $2. What happens to the curve given in the diagram?

Accepted Answer

A)  Nothing, because labor's productivity has not changed. 
B)  There will be a movement along the curve. 
C)  The curve shifts to the left. 
D)  We cannot answer the question without knowing if Becca would want to hire more workers.

Question 2

Table 17-1
 
-Refer to Table 17-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor?

Accepted Answer

A)  $1,050 
B)  $360 
C)  $210 
D)  $150

Question 3

Table 17-4
  Table 17-4 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 17-4. What are the quantity of labor and marginal revenue product of labor that will maximize the profit Apple would earn from selling iPods?

Accepted Answer

A)  2; $160 
B)  3; $340 
C)  2; $680 
D)  3; $140

Question 4

Figure 17-3 
-Refer to Figure 17-3. Panel D is appropriate when used to represent

Accepted Answer

A)  the quantity of labor demanded by an input price taker. 
B)  the labor supply curve facing an input price taker. 
C)  the quantity of labor supplied by someone working a fixed number of hours. 
D)  the highly-skilled labor market supply curve.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

According to two economists, George Ackerlof and William Dickens, how can cognitive dissonance affect workers' perceptions of their jobs?

Accepted Answer

A)  Cognitive dissonance makes workers believe that measures to improve their health and safety in the workplace are ineffective. 
B)  Cognitive dissonance causes workers to perceive they are victims of discrimination when, in fact, they are not. 
C)  Cognitive dissonance might cause workers to underestimate the true risks of their jobs. 
D)  Cognitive dissonance causes a worker to believe his marginal revenue product is greater than it really is.

Question 7

If the labor supply curve shifts to the left and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The answer of If the labor supply curve shifts to...

Question 8

Figure 17-3 
-Refer to Figure 17-3. In Panel A, at high wages (segment iii),

Accepted Answer

A)  the price of leisure is rising relative to the price of labor. 
B)  the price of leisure is falling relative to the price of labor. 
C)  laborers work more as wages increase. 
D)  labor suppliers take more leisure as wages increase.

Question 9

Wage differences can be explained by all of the following except

Accepted Answer

A)  compensating differentials. 
B)  differences in marginal revenue products. 
C)  economic discrimination. 
D)  comparable worth.

Question 10

Some superstar athletes in the sports industry earn very high levels of income relative to other occupations, and over time the wage differential has been increasing. What could have caused this?

Accepted Answer

A)  The supply of star athletes has decreased. 
B)  The supply of star athletes has increased due to college athletic programs. 
C)  Technological advances such as cable television has increased the demand for sports entertainment. 
D)  The market power of athletes' unions has increased.

Question 11

Marginal productivity theory implies that in a perfectly competitive market economy, a worker will receive income

Accepted Answer

A)  equal to the value of her marginal contribution to the production process. 
B)  that is greater than the value of her marginal contribution to production process. 
C)  that is less than the value of her marginal contribution to the production process. 
D)  greater than, less than, or equal to the value of her marginal contribution to the production process, depending on her ability to negotiate with employers.

Question 12

Figure 17-2  Figure 17-2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets.
-Refer to Figure 17-2. If Becca can sell her bracelets at $3 each, what is the marginal product of the 4th worker?

Accepted Answer

A)  $36 
B)  12 bracelets 
C)  36 bracelets 
D)  $144

Question 13

Figure 17-4 
-Refer to Figure 17-4. Which of the following is true at W0?

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 14

The term "derived demand" refers to

Accepted Answer

A)  the demand for financial products called derivatives. 
B)  the demand for a factor of production that is derived from the demand for the good the factor produces. 
C)  a firm's estimated demand curve derived from sales data. 
D)  a demand curve that derives from the availability of resources.

Question 15

Figure 17-4 
-Refer to Figure 17-4. Which of the following is true if the wage rate increases from W0 to W1?

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 unit-elastic.

Question 16

Consider the market for blackjack dealers in Las Vegas. In each of the following cases, explain what happens to the equilibrium wage rate and the quantity of blackjack dealers hired.
a. Three new large resort casinos open in Las Vegas.
b. Fewer students are attending classes to learn to become blackjack dealers.
c. Traditionally, blackjack dealing is a field that attracts foreign workers. However, changes in immigration laws have made it more difficult for foreign workers to come to Las Vegas to obtain jobs. The demand for blackjack dealers, however, does not change.
d. Advances in technology have increased the popularity of electronic blackjack machines and decreased the popularity of live table games which require the use of a dealer.

Accepted Answer

The answer of Consider the market for blackjack dealers in...

Question 17

A firm's primary interest when it hires an additional worker is

Accepted Answer

A)  the cost of hiring the additional worker. 
B)  how the average output of the firm will be affected by this new worker. 
C)  the extra revenue the firm realizes from hiring that worker. 
D)  whether or not the new worker gets along with the firm's existing workers.

Question 18

The typical labor supply curve is upward-sloping but it is possible for the curve to be backward bending-negatively sloped-at very high wage levels. Which of the following would cause a backward bending supply curve?

Accepted Answer

A)  This would occur when the income effect from an increase in the wage becomes larger than the substitution effect. 
B)  This would occur when the substitution effect from an increase in the wage becomes larger than the income effect. 
C)  This would occur if leisure is an inferior good. 
D)  This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure.

Question 19

Because leisure is a normal good, an increase in the wage rate will result in

Accepted Answer

A)  an increase in the quantity of labor supplied because of both the substitution effect and the income effect. 
B)  a decrease in the quantity of labor supplied because of the substitution effect and an increase in the quantity of labor supplied because of the income effect. 
C)  an increase in the quantity of labor supplied because of the substitution effect and a decrease in the quantity of labor supplied because of the income effect. 
D)  an increase in the quantity of labor supplied because of the substitution effect. At low wages the income effect causes an increase in the quantity of labor supplied, but at high wages the income effect causes a decrease in the quantity of labor supplied as the wage rises.

Question 20

The benefit to the firm from hiring one additional worker is called the

Accepted Answer

A)  marginal revenue product of labor. 
B)  marginal revenue. 
C)  marginal profit. 
D)  total revenue.

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

Figure 17-2 Figure 17-2 shows the marginal revenue product for Becca's Baubles, a producer of hand-beaded bracelets. -Refer to Figure 17-2. Suppose the market price of bracelets falls to $2. What happens to the curve given in the diagram?

Table 17-1 -Refer to Table 17-1. If the output price is $3, what is the marginal revenue product of the fifth unit of labor?

Figure 17-3 -Refer to Figure 17-3. Panel D is appropriate when used to represent