Quiz 19: Factor Markets and the Distribution of Income
Business
Q 1Q 1
G.Reecy's Hamburger Joint is a fast-food restaurant.Which factor is associated with production?
A)the raw meat used for the hamburgers
B)the hamburger buns
C)the cook
D)the concentrate that is diluted to make the soft drinks
Free
Multiple Choice
C
Q 2Q 2
Human capital:
A)consists of man-made resources such as buildings and machines.
B)is the improvement in labor produced by education and knowledge that is embodied in the workforce.
C)has become less important because of the progress in technology.
D)is the improvement in labor produced by education,which has become less important because of the progress in technology.
Free
Multiple Choice
B
Q 3Q 3
Which factor is NOT associated with production at a college?
A)the faculty
B)classroom buildings
C)electricity
D)the computer labs
Free
Multiple Choice
C
Q 4Q 4
Which factor is associated with production at a college?
A)the faculty
B)lab concentrations to use in experiments
C)electricity
D)Scantron sheets
Free
Multiple Choice
Q 5Q 5
Which factor is an input in the production of croissants?
A)ovens
B)pastry chefs
C)flour
D)dough mixers
Free
Multiple Choice
Q 6Q 6
The key distinction between a factor of production and an input is that:
A)an input is an enduring source of income,but a factor of production is used up in production.
B)a factor of production earns income from selling its services over and over again,but an input does not.
C)an input earns income from selling its services over and over again,but a factor of production does not.
D)a factor of production has limited earning potential.
Free
Multiple Choice
Q 7Q 7
Human capital is the improvement in _____ produced by _____.
A)physical capital;technology
B)labor;education and knowledge
C)labor;physical capital
D)labor;management
Free
Multiple Choice
Q 8Q 8
Manufactured resources such as equipment,buildings,and tools are also known as:
A)human capital.
B)labor.
C)physical capital.
D)natural resources.
Free
Multiple Choice
Q 9Q 9
Now that Naila has her bachelor's degree,she has decided to pursue her master's degree.Naila's choice of additional education is called an investment in:
A)natural resources.
B)human capital.
C)physical capital.
D)labor.
Free
Multiple Choice
Q 10Q 10
When the demand for automobiles is high,the demand for workers who build automobiles is high.This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called:
A)the marginal productivity theory of income distribution.
B)a compensating differential.
C)the factor distribution of income.
D)a derived demand.
Free
Multiple Choice
Q 11Q 11
The demand for factors of production is called a derived demand because it is:
A)derived from the demand for the outputs that are produced by the factors of production.
B)derived from the available supply of factors,such as land,that can be overexploited.
C)not easy to determine and must be derived by a technical (and often complicated)process.
D)derived on the basis of questions posed to residents during the census.
Free
Multiple Choice
Q 12Q 12
The demand for a factor of production is a(n)_____ demand.
A)derived
B)implicit
C)direct
D)distributional
Free
Multiple Choice
Q 13Q 13
Factor demand is called derived demand because it:
A)requires the use of other factors.
B)depends on demand for the product that the factor produces.
C)has a downward-sloping demand curve.
D)has a constant marginal factor cost.
Free
Multiple Choice
Q 14Q 14
The category "compensation of employees":
A)includes the earnings of proprietors.
B)doesn't include benefits such as health insurance.
C)refers in large part to the return on human capital.
D)includes payments in kind that are common in rural areas.
Free
Multiple Choice
Q 15Q 15
The category "compensation of employees" doesn't capture the full income of labor because:
A)it doesn't include the earnings of proprietors.
B)it doesn't include benefits such as health insurance.
C)a sizable fraction of it can be attributed to the return on human capital.
D)it excludes payments in kind that are common in rural areas.
Free
Multiple Choice
Q 16Q 16
In the United States in 2015,approximately _____% of total income in the economy took the form of compensation of employees.
A)40
B)9
C)90
D)70
Free
Multiple Choice
Q 17Q 17
The LARGEST component of the factor distribution of income in the United States is:
A)interest and rents.
B)taxes.
C)corporate profits.
D)compensation of employees.
Free
Multiple Choice
Q 18Q 18
In terms of contribution to total income in the United States,the single MOST important factor of production is:
A)capital.
B)labor.
C)land.
D)entrepreneurship.
Free
Multiple Choice
Q 19Q 19
Which statement is NOT true about the factor distribution of income?
A)It is the division of total income among labor,land,and capital.
B)Labor receives the bulk of the income in the modern U.S.economy.
C)The returns to human capital are easily measured.
D)A part of the proprietor's income should be considered wages that the business owners pay themselves.
Free
Multiple Choice
Q 20Q 20
In the United States in 2015,approximately 70% of total income,by far the largest share,took the form of:
A)compensation of employees.
B)corporate profits.
C)interest income.
D)rental income.
Free
Multiple Choice
Q 21Q 21
In terms of contribution to total U.S.income,the factor of production that receives the SMALLEST share is:
A)capital.
B)labor.
C)land.
D)entrepreneurship.
Free
Multiple Choice
Q 22Q 22
When labor is hired in a competitive market,the value of the marginal product of labor is computed by:
A)multiplying the price of the output by the marginal product of labor.
B)multiplying the price of the output by the wage paid to labor.
C)multiplying the wage paid to labor by the marginal product of labor.
D)dividing the marginal product of labor by the price of the output.
Free
Multiple Choice
Q 23Q 23
Liyun owns a small flower shop,and the industry is perfectly competitive.She is considering whether to hire an additional worker.The wage rate for the worker is $500 per week;the marginal product of the additional worker would be 100 units per week;and the price of the units is $10 each.Liyun should:
A)hire the additional worker.
B)not hire the additional worker.
C)raise the price of the flower arrangements that she sells.
D)Not enough information is given to answer the question.
Free
Multiple Choice
Q 24Q 24
As a rule,a profit-maximizing restaurant owner employs each factor of production up to the point at which the value of the marginal product of the _____ unit of the factor employed is _____ that factor's price.
A)first;greater than
B)last;equal to
C)first;equal to
D)last;less than
Free
Multiple Choice
Q 25Q 25
Using standard economic theory,a firm should continue hiring workers until:
A)the marginal product of labor times price equals demand.
B)the quantity of labor supplied equals the quantity of labor demanded.
C)the marginal product of labor times price equals the workers' wage.
D)the marginal product of labor times the workers' wage wage equals price.
Free
Multiple Choice
Q 26Q 26
The value of the marginal product is equal to:
A)marginal product times the wage rate.
B)average product times the wage rate.
C)marginal product times the price per unit of output.
D)average product times the price per unit of output.
Free
Multiple Choice
Q 27Q 27
(Table: Droids and Moisture Output)Use Table: Droids and Moisture Output.Luke Skywalker uses droids to operate a moisture farm in a perfectly competitive market on the planet Tatooine.A barrel of moisture sells for 50 republic credits.A droid costs 675 republic credits per month to rent.How many droids should Luke rent?
A)one
B)two
C)three
D)four
Free
Multiple Choice
Q 28Q 28
(Table: Workers and Art Output)Use Table: Workers and Art Output.Suppose that you achieve your dream of opening an art studio specializing in selling mud statues.You pay $10 in fixed costs for equipment and $9 per day to each of your workers who make the mud statues.The industry is perfectly competitive,with a current market price of $1.How many statues should you produce?
A)25
B)35
C)43
D)3
Free
Multiple Choice
Q 29Q 29
The amount by which the use of an additional unit of a factor of production increases a firm's total revenue during a period is called the:
A)value of the marginal product.
B)average product.
C)marginal factor cost.
D)marginal physical product.
Free
Multiple Choice
Q 30Q 30
The value of the marginal product is the:
A)change in total output resulting from a unit change in the quantity of a factor.
B)change in total revenue resulting from a unit change in the quantity of a factor.
C)change in total cost resulting from a unit change in the quantity of a factor.
D)ratio of total revenue to the quantity of a factor employed.
Free
Multiple Choice
Q 31Q 31
If the extra output that is produced by hiring one more unit of labor adds more to _____ than to _____,the firm will increase its profit by increasing the use of labor.
A)total cost;total revenue
B)total revenue;total cost
C)marginal cost;marginal revenue
D)marginal product;marginal cost
Free
Multiple Choice
Q 32Q 32
The Bountiful Bakery is considering hiring another pastry chef.The bakery knows the average product of its chefs currently is 15 dozen croissants per day.It also believes that the next chef hired will produce an extra 12 dozen croissants per day.A dozen croissants sell for $30.The bakery should hire another worker:
A)only if the new chef's marginal product is 12 dozen or more.
B)only if the new chef's daily wage is $450 or less.
C)only if the new chef's daily wage is $360 or less.
D)because the marginal product is below the average product.
Free
Multiple Choice
Q 33Q 33
The amount by which an additional unit of a factor increases a firm's total _____ during a period is the _____.
A)revenue;value of the marginal product
B)revenue;marginal factor cost
C)cost;value of marginal product
D)cost;marginal product
Free
Multiple Choice
Q 34Q 34
Which expression BEST describes the value of the marginal product?
A)the change in total output generated by a unit change in the quantity of a factor
B)the change in total revenue generated by a unit change in the quantity of a factor
C)the change in marginal cost generated by a unit change in the quantity of a factor
D)the ratio of total revenue to the quantity of a factor employed
Free
Multiple Choice
Q 35Q 35
The value of the marginal product is calculated as:
A)MP / MR.
B)MP / P.
C)MP × P.
D)MR / MP.
Free
Multiple Choice
Q 36Q 36
The amount that an additional unit of a factor adds to a firm's total revenue is called the:
A)marginal revenue.
B)marginal cost.
C)additional revenue product.
D)value of the marginal product.
Free
Multiple Choice
Q 37Q 37
The marginal product times product price equals the:
A)marginal revenue.
B)value of the marginal product.
C)additional revenue product.
D)marginal cost.
Free
Multiple Choice
Q 38Q 38
Which formula is CORRECT?
A)VMPL = MC × P.
B)VMPL = MPL × P.
C)MPL = VMPL × P.
D)VMPL / MC = TR.
Free
Multiple Choice
Q 39Q 39
Which statement is TRUE?
A)The marginal product is the change in total revenue divided by a one-unit change in a factor.
B)The marginal revenue is the change in total output divided by the change in output.
C)The value of the marginal product is the marginal product times the price.
D)The marginal cost is equal to the average total cost.
Free
Multiple Choice
Q 40Q 40
Which statement is TRUE?
A)The value of the marginal product of labor equals the marginal product of labor times price.
B)The value of the marginal product of labor equals a one-unit change in a factor divided by the change in total revenue.
C)Marginal cost equals change in total revenue divided by the one-unit change in a factor.
D)The value of the marginal product of labor equals the change in the quantity of a factor times the price of the factor.
Free
Multiple Choice
Q 41Q 41
A profit-maximizing firm will base its decision to hire workers on the additional costs and benefits of each worker.If the extra output that is produced by hiring one more unit of labor adds more to _____ than to _____,the firm will increase its profit by increasing the use of labor.
A)total cost;total revenue
B)total revenue;total cost
C)marginal cost;marginal revenue
D)marginal cost;total cost
Free
Multiple Choice
Q 42Q 42
A firm has hired the profit-maximizing number of workers when the wage is:
A)less than the price of the product.
B)greater than the average product of the last worker hired.
C)equal to the average product of the last worker hired.
D)equal to the value of the marginal product of labor of the last worker hired.
Free
Multiple Choice
Q 43Q 43
Suppose that Billy Bud's Bucking Broncos employs 20 workers at a daily wage of $60 each.The average product of labor is 30 bucking broncos per day;the marginal product of the last worker is 12 bucking broncos per day;and total fixed cost is $3,600 for equipment.What is the marginal cost of the last bucking bronco produced?
A)$0.20
B)$5.00
C)$240.00
D)$720.00
Free
Multiple Choice
Q 44Q 44
To maximize profits,a firm will employ workers until for the last worker employed:
A)marginal product of labor is equal to the nominal wage rate.
B)the value of the marginal product of labor is equal to the wage rate.
C)the value of the marginal product of labor is equal to the price per unit of output.
D)the value of the marginal product of labor is as high as possible.
Free
Multiple Choice
Q 45Q 45
Maria operates a persimmon orchard in southeastern Oklahoma.She pays her workers $248 per week to pick and process persimmons,and she sells her persimmons for $6 per bushel.If she adds one more worker and that worker can pick and process 44 bushels per week,what will be the profit for Maria from hiring that worker?
A)$0
B)$16
C)$264
D)$544
Free
Multiple Choice
Q 46Q 46
For the Tampa Bay Rays baseball team,the value of the marginal product curve is the team's labor _____ curve.This means the marginal product curve has a _____ slope.
A)demand;positive
B)supply;positive
C)demand;negative
D)supply;negative
Free
Multiple Choice
Q 47Q 47
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:
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.
Free
Multiple Choice
Q 48Q 48
Barry's Brewpub is considering hiring more brewmasters.The market wage for a brewmaster is $120 per day.The average brewmaster produces 40 pints of beer per day,but Barry expects the next brewmaster to produce only 20 pints per day.Assuming the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if:
A)a pint of brew sells for $3.
B)the new brewmaster can produce 40 pints.
C)a pint of brew sells for $2.
D)a pint of brew sells for $6 or more.
Free
Multiple Choice
Q 49Q 49
Barry's Brewpub is considering hiring more brewmasters.A pint of brew sells for $3.The market wage of a brewmaster is $150 per day.Assuming that the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if Barry believes the new brewmaster will:
A)produce the same number of pints per day as the last brewmaster hired.
B)produce 50 or more pints per day.
C)raise average production to 50 or more pints per day.
D)increase the marginal product by $150 per day.
Free
Multiple Choice
Q 50Q 50
Mary is considering hiring another worker in an assembly line for Bluetooth speakers.Mary knows the average product of labor is 15 speakers per day.She also believes that the next worker hired will produce an extra 12 speakers per day.A speaker sells for $10.Assuming that the market for speakers is perfectly competitive,Mary should hire another worker:
A)only if the new worker's marginal product is 12 or more.
B)only if the new worker's daily wage is $150 or less.
C)only if the new worker's daily wage is $120 or less.
D)since the marginal product is below the average product.
Free
Multiple Choice
Q 51Q 51
The individual producer's labor demand curve is the:
A)marginal product of labor curve.
B)value of the average product of labor curve.
C)average product curve.
D)value of the marginal product of labor curve.
Free
Multiple Choice
Q 52Q 52
All perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour.If the government raises the minimum wage to $8 per hour:
A)the value of the marginal product will exceed the wage,and firms will hire more workers.
B)the value of the marginal product will be less than the wage,and firms will lay off some workers.
C)firms will increase their prices to keep the value of the marginal product equal to the wage.
D)firms will have to exit the industry since the value of the marginal product is always less than the wage.
Free
Multiple Choice
Q 53Q 53
As the _____ of labor used in production increases,ceteris paribus,eventually the _____ of labor will _____.
A)price;supply;increase
B)quantity;marginal product;fall
C)quantity;marginal product;rise
D)quantity;value of the marginal product;rise
Free
Multiple Choice
Q 54Q 54
When a firm is a perfect competitor in the product market,its demand curve for labor will _____ because the _____ product declines as additional workers are hired.
A)slope downward;marginal
B)be horizontal;average
C)slope upward;marginal
D)slope downward;average
Free
Multiple Choice
Q 55Q 55
A firm's demand curve for labor is:
A)the upward-sloping portion of its value of the marginal product curve.
B)the downward-sloping portion of its marginal product curve.
C)the downward-sloping portion of its value of the marginal product curve.
D)horizontal for the firm in perfect competition.
Free
Multiple Choice
Q 56Q 56
The quantity demanded of labor will decrease if:
A)the price of the product that the labor produces increases.
B)the productivity of labor increases.
C)the price of labor rises.
D)there is an increase in the supply of a factor labor uses.
Free
Multiple Choice
Q 57Q 57
Suppose there are diminishing returns to labor.If the _____ of labor hired by a firm increases,holding everything else constant,the _____ labor will _____.
A)price;demand for;increase
B)quantity;marginal product of;fall
C)quantity;marginal product of;rise
D)quantity;value of the marginal product of;rise
Free
Multiple Choice
Q 58Q 58
If the marginal product is _____,the value of marginal product must be _____.
A)rising;falling
B)falling;falling
C)falling;rising
D)rising;zero
Free
Multiple Choice
Q 59Q 59
A firm's demand curve for labor is:
A)its marginal cost curve.
B)its marginal product curve.
C)its value of the marginal product of labor curve.
D)horizontal if it is in perfect competition.
Free
Multiple Choice
Q 60Q 60
A profit-maximizing firm will hire workers up to the quantity of labor where:
A)VMPL > W.
B)VMPL = W.
C)VMPL < W.
D)MP × MR = VMPL.
Free
Multiple Choice
Q 61Q 61
If a firm hires labor such that W > VMPL,then profit:
A)is maximized.
B)can be increased by hiring less labor.
C)can be increased by hiring more labor.
D)can be increased by decreasing the price of the output.
Free
Multiple Choice
Q 62Q 62
If a firm hires labor such that W < VMPL,then profit:
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.
Free
Multiple Choice
Q 63Q 63
If a firm hires labor and with its current employees W = VMPL,then profit:
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 rate.
Free
Multiple Choice
Q 64Q 64
Which statement is TRUE?
A)If W < VMPL,the firm should hire more labor.
B)If W > VMPL,the firm should hire more labor.
C)If W = VMPL,the firm should hire more labor.
D)If W > 0,the firm should shut down.
Free
Multiple Choice
Q 65Q 65
A firm's demand curve for labor in a perfectly competitive market is the downward-sloping portion of its _____ curve.
A)marginal revenue
B)average total cost
C)value of the marginal product of labor
D)total revenue
Free
Multiple Choice
Q 66Q 66
If the wage rate rises,firms will find that:
A)their labor demand curve shifts leftward.
B)their labor demand curve shifts rightward.
C)they move upward and to the left along the labor demand curve.
D)they move downward and to the right along the labor demand curve.
Free
Multiple Choice
Q 67Q 67
Suppose the labor market for plumbers is in equilibrium.Which occurrence might DECREASE the wage for plumbers?
A)An economic boom increases the demand for new homes.
B)The plumbers union establishes a rigorous certification test that is difficult for aspiring plumbers to pass.
C)Unemployed manufacturing workers attend technical schools to learn the plumbing trade.
D)A minimum wage is imposed in the market for plumbers.
Free
Multiple Choice
Q 68Q 68
An increase in the market demand for electricians in the factor market might occur if the:
A)price of electrical repair and installation services rises.
B)demand for new houses falls.
C)price of copper electrical wiring increases.
D)wage for electricians falls.
Free
Multiple Choice
Q 69Q 69
Benny employs people to sell candy bars at intersections.Assume that Benny can obtain candy bars to sell for no cost.The marginal product of the last worker Benny hired is 20 candy bars per hour.Benny pays $7 per worker per hour and sells the candy bars for $1 each.If the price of candy bars rises to $2,then the:
A)demand for labor increases.
B)demand for labor decreases.
C)quantity demanded of labor increases,but the demand for labor curve does not shift.
D)quantity demanded of labor decreases,but the demand for labor curve does not shift.
Free
Multiple Choice
Q 70Q 70
Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print.If the market wage rises to $70,then the:
A)demand for labor increases.
B)demand for labor decreases.
C)quantity demanded of labor increases,but the demand for labor curve does not shift.
D)quantity demanded of labor decreases,but the demand for labor curve does not shift.
Free
Multiple Choice
Q 71Q 71
Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print.Now suppose that,during the holiday season,the price of poster-size copies increases to $12.What happens?
A)The demand for labor increases.
B)The demand for labor decreases.
C)The quantity demanded of labor increases,but the demand for labor curve does not shift.
D)The quantity demanded of labor decreases,but the demand for labor curve does not shift.
Free
Multiple Choice
Q 72Q 72
The government increases the sales tax on all goods but does not change the tax on income earned from labor.What happens?
A)The quantity of labor demanded decreases,but the demand for labor does not shift.
B)The demand for labor decreases.
C)The supply of labor increases.
D)There is no change in the labor market.
Free
Multiple Choice
Q 73Q 73
Over the past several years,the demand for phone operators has fallen dramatically.Which factor would account for this development?
A)an increase in the number of automated answering services
B)a decrease in the quality of the technology associated with phone equipment
C)an increase in the supply of phone operators
D)higher prices for long-distance service
Free
Multiple Choice
Q 74Q 74
Labor with a particular skill level and training is used in only two industries: grape cultivation and cranberry cultivation.Which occurrence is likely to cause an INCREASE in the demand for this type of labor?
A)improved technology that leads to more efficient machines for grape picking
B)publication of a report asserting that drinking two glasses of grape or cranberry juice every day improves digestion and heart health
C)a report by the USDA that an increasing proportion of grapes are contaminated with unacceptable pesticides
D)a decrease in the acreage of cranberry bogs
Free
Multiple Choice
Q 75Q 75
A factor demand curve will shift because:
A)of a change in the price of the good the factor produces.
B)the elasticity of demand for the final product is high.
C)of a change in the proportion of the factor's cost relative to total cost.
D)the slope of the MP curve is negative.
Free
Multiple Choice
Q 76Q 76
There will be an increase in factor demand because of a(n)_____ in the price of the _____.
A)increase;factor
B)increase;good the factor produces
C)decrease;factor
D)decrease;good the factor produces
Free
Multiple Choice
Q 77Q 77
A factor demand curve will shift to the left because of a(n)_____ in the price of the _____.
A)increase;factor
B)increase;good the factor produces
C)decrease;factor
D)decrease;good the factor produces
Free
Multiple Choice
Q 78Q 78
An increase in the demand for autoworkers may come about because of a(n):
A)decrease in the price of cars.
B)decrease in the productivity of autoworkers.
C)decrease in the supply of other factors that autoworkers use in production.
D)increase in the price of cars.
Free
Multiple Choice
Q 79Q 79
An increase in the demand for autoworkers would NOT come about because of a(n):
A)increase in the price of cars.
B)decrease in the market wage rate.
C)increase in the productivity of autoworkers.
D)increase in the supply of other factors that autoworkers use in production.
Free
Multiple Choice
Q 80Q 80
A decrease in the demand for pastry chefs may come about because of an increase in the:
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.
Free
Multiple Choice
Q 81Q 81
An increase in the demand for construction workers may come about because of a(n):
A)increase in the demand for new housing.
B)decrease in the market wage rate for construction workers.
C)decrease in the productivity of construction workers.
D)decrease in the supply of other factors that construction workers use.
Free
Multiple Choice
Q 82Q 82
A shift in demand for a given factor of production will NOT occur if:
A)the price of that factor falls.
B)the productivity of that factor increases.
C)the productivity of that factor decreases.
D)there is a decrease in the price of a substitute factor.
Free
Multiple Choice
Q 83Q 83
A firm's demand curve for labor will shift because of:
A)a decrease in the wage rate.
B)an increase in the wage rate.
C)changes in preferences and the cultural norms that define how much we work.
D)a change in the product's price.
Free
Multiple Choice
Q 84Q 84
According to the _____,in a perfectly competitive economy each factor of production is paid its equilibrium value of the marginal product.
A)theory of labor supply
B)efficiency-wage model
C)theory of compensating differentials
D)marginal productivity theory of income distribution
Free
Multiple Choice
Q 85Q 85
Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market.The workers and their value of the marginal product of labor are Noe,$40;Barbara,$35;Calvin,$27;and Diana,$15.According to the marginal productivity theory of income distribution,which statement is TRUE?
A)In equilibrium,each worker is paid his or her value of the marginal product of labor.
B)Each worker is paid a wage equal to the highest value of the marginal product of labor .
C)Each worker is paid $15.
D)We need to know the product price before we can figure out the wage rate.
Free
Multiple Choice
Q 86Q 86
An important assumption underlying the marginal productivity theory of income distribution is that:
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.
Free
Multiple Choice
Q 87Q 87
The marginal productivity theory of income distribution says that:
A)each factor is paid the equilibrium value of the output generated by the last unit of that factor employed in the factor market as a whole.
B)each factor is paid an amount greater than the value of the output generated by the last unit of that factor employed in the factor market as a whole.
C)each factor is paid an amount less than the value of the output generated by the last unit of that factor employed in the factor market as a whole.
D)the payment to each factor does not correspond to the marginal product of the factor.
Free
Multiple Choice
Q 88Q 88
The labor demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labor curves.
A)marginal
B)value of the marginal
C)marginal physical
D)average physical
Free
Multiple Choice
Q 89Q 89
Use the following to answer questions 89-91:
Figure: Equilibrium in the Labor Market
-(Figure: Equilibrium in the Labor Market)Use Figure: Equilibrium in the Labor Market.In the figure,an increase in the productivity of labor,when everything else stays the same,will lead to a(n)_____ in the equilibrium quantity of labor and a(n)_____ in the equilibrium price of labor.
A)decrease;increase
B)increase;decrease
C)decrease;decrease
D)increase;increase
Free
Multiple Choice
Q 90Q 90
Use the following to answer questions 89-91:
Figure: Equilibrium in the Labor Market
-(Figure: Equilibrium in the Labor Market)Use Figure: Equilibrium in the Labor Market.In the figure,a decrease in the price of the good produced,when everything else stays the same,will lead to a(n)_____ in the equilibrium quantity of labor and a(n)_____ in the equilibrium price of labor.
A)increase;increase
B)decrease;increase
C)increase;decrease
D)decrease;decrease
Free
Multiple Choice
Q 91Q 91
Use the following to answer questions 89-91:
Figure: Equilibrium in the Labor Market
-(Figure: Equilibrium in the Labor Market)Use Figure: Equilibrium in the Labor Market.In the figure,a decrease in population that decreases the number of workers,when everything else stays the same,will lead to a(n)_____ in the equilibrium quantity of labor and a(n)_____ in the equilibrium price of labor.
A)increase;increase
B)decrease;increase
C)increase;decrease
D)decrease;decrease
Free
Multiple Choice
Q 92Q 92
According to the marginal productivity theory of income distribution,every factor of production is paid _____ the equilibrium value of its _____ product.
A)exactly;marginal
B)more than;marginal
C)less than;marginal
D)exactly;average
Free
Multiple Choice
Q 93Q 93
The marginal productivity theory of income distribution assumes that factor markets are:
A)monopolies.
B)oligopolies.
C)perfectly competitive.
D)allowed to pay only the wages that government approves.
Free
Multiple Choice
Q 94Q 94
The equilibrium value of the marginal product of a factor is the additional value produced by the _____ unit of that factor employed in the factor market as a whole.
A)first
B)last
C)most productive
D)least productive
Free
Multiple Choice
Q 95Q 95
According to the marginal productivity theory of income distribution,if a unit of labor is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the _____ product of labor is _____ product of capital.
A)marginal;greater than the marginal
B)marginal;less than the marginal
C)average;greater than the average
D)average;less than the average
Free
Multiple Choice
Q 96Q 96
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This difference is due to the fact that the:
A)marginal productivity theory of income distribution does not apply in this case.
B)value of the marginal product of the last machinist hired is less than the average of all machinists employed.
C)value of the marginal product of the last machinist hired is greater than the average of all machinists employed.
D)value of the marginal product of the last machinist hired is equal to the average of all machinists employed.
Free
Multiple Choice
Q 97Q 97
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This difference is due to the fact that the:
A)marginal productivity theory of income distribution does not apply in this case.
B)equilibrium wage rate includes other costs,such as employee benefits,that have to be subtracted from the $70,000 salary.
C)equilibrium wage rate includes other costs,such as employee benefits,that have to be added to the $70,000 salary.
D)value of the marginal product of the last machinist hired is equal to the average of all machinists employed.
Free
Multiple Choice
Q 98Q 98
Use the following to answer questions 98-101:
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $10 each.What is the value of the marginal product for the fourth worker?
A)5 cakes
B)$50
C)$210
D)21 cakes
Free
Multiple Choice
Q 99Q 99
Use the following to answer questions 98-101:
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $10 each.If Debbie must pay each worker $40 per day,how many workers will she hire to maximize profit?
A)3
B)4
C)5
D)6
Free
Multiple Choice
Q 100Q 100
Use the following to answer questions 98-101:
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $8 each.Debbie must pay each worker $45 per day.How many workers will she hire to maximize profit?
A)2
B)3
C)4
D)5
Free
Multiple Choice
Q 101Q 101
Use the following to answer questions 98-101:
-(Table: Total Product of Labor at Debbie's Bakery)Use Table: Total Product of Labor at Debbie's Bakery.Debbie can sell cakes at $10 each.Debbie must pay each worker $30 per day.Now suppose the government imposes a minimum wage law that all bakeries must pay no less than $50 per day.Debbie _____ employment from _____ workers to _____ worker(s).
A)reduces;6;1
B)reduces;6;5
C)reduces;6;4
D)increases;1;4
Free
Multiple Choice
Q 102Q 102
Use the following to answer questions 102-106:
-(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:
A)increase by $79.
B)decrease by $51.
C)decrease by $19.
D)increase by $80.
Free
Multiple Choice
Q 103Q 103
Use the following to answer questions 102-106:
-(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 $125 and the price per bushel of corn is $10.To maximize profits,Laura should employ _____ workers.
A)2
B)3
C)4
D)6
Free
Multiple Choice
Q 104Q 104
Use the following to answer questions 102-106:
-(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 $125 and the price per bushel of corn is $10.Suppose that Laura is employing 7 workers.If she reduces employment to 6 workers,her profits will:
A)increase by $20.
B)decrease by $970.
C)increase by $105.
D)increase by $90.
Free
Multiple Choice
Q 105Q 105
Use the following to answer questions 102-106:
-(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 $250 and the price per bushel of corn is $20.Laura should hire _____ workers to maximize profits.
A)1
B)2
C)4
D)7
Free
Multiple Choice
Q 106Q 106
Use the following to answer questions 102-106:
-(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 acquires more land and as a result the output that can be produced by any given number of workers doubles.Laura should hire _____ workers to maximize profits.
A)4
B)5
C)6
D)7
Free
Multiple Choice
Q 107Q 107
Use the following to answer questions 107-110:
-(Table: Employment and Output)Use Table: Employment and Output.In the table,if the price of a bushel of wheat is $10,then the value of the marginal product of the third worker is:
A)$15.
B)$150.
C)$170.
D)$510.
Free
Multiple Choice
Q 108Q 108
Use the following to answer questions 107-110:
-(Table: Employment and Output)Use Table: Employment and Output.In the table,if the price of a bushel of wheat is $10,then the value of the marginal product of the fifth worker is:
A)$11.
B)$110.
C)$90.
D)$750.
Free
Multiple Choice
Q 109Q 109
Use the following to answer questions 111-114:
Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,if the market wage rate increases,then the:
A)VMPL curve will shift to the right.
B)profit-maximizing quantity of labor will increase.
C)VMPL curve will shift to the left.
D)profit-maximizing quantity of labor will decrease.
Free
Multiple Choice
Q 110Q 110
Use the following to answer questions 111-114:
Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,the VMPL curve will shift to the right if:
A)the wage rate increases.
B)a technological advance makes labor more productive.
C)the price of the good that the labor produces decreases.
D)the wage rate decreases.
Free
Multiple Choice
Q 111Q 111
Use the following to answer questions 111-114:
Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,if a technological advance makes labor more productive and everything else stays the same,then the profit-maximizing quantity of labor: \\
A)will increase.
B)will decrease.
C)will stay the same.
D)cannot be determined.
Free
Multiple Choice
Q 112Q 112
Use the following to answer questions 111-114:
Figure: The Value of the Marginal Product Curve
-(Figure: The Value of the Marginal Product Curve)Use Figure: The Value of the Marginal Product Curve.In the figure,if the price of the good increases and everything else stays the same,then the profit-maximizing quantity of labor:
A)will increase.
B)will decrease.
C)will stay the same.
D)cannot be determined.
Free
Multiple Choice
Q 113Q 113
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2,the value of the marginal product for the fifth worker is:
A)$0.
B)$20.
C)$40.
D)$60.
Free
Multiple Choice
Q 114Q 114
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2,the value of the marginal product for the third worker is:
A)$2.
B)$10.
C)$60.
D)$80.
Free
Multiple Choice
Q 115Q 115
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2 and the market wage rate is $20 per hour,the profit-maximizing quantity of labor is _____ workers.
A)2
B)4
C)6
D)8
Free
Multiple Choice
Q 116Q 116
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2 and the market wage rate is $60 per hour,the profit-maximizing quantity of labor is _____ workers.
A)0
B)2
C)4
D)6
Free
Multiple Choice
Q 117Q 117
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2 and the market wage rate is $100 per hour,the profit-maximizing quantity of labor is _____ workers.
A)0
B)2
C)4
D)6
Free
Multiple Choice
Q 118Q 118
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $4 and the market wage rate is $80 per hour,the profit-maximizing quantity of labor is _____ worker(s).
A)1
B)3
C)5
D)7
Free
Multiple Choice
Q 119Q 119
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $4 and the market wage rate is $120 per hour,the profit-maximizing quantity of labor is _____ workers.
A)0
B)2
C)3
D)4
Free
Multiple Choice
Q 120Q 120
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.The price of a power cord is $2,the market wage rate is $40 per hour,and 8 workers are hired.Profit can be maximized by hiring _____ worker(s).
A)1 more
B)2 more
C)1 fewer
D)3 fewer
Free
Multiple Choice
Q 121Q 121
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.The price of a power cord is $2,the market wage rate is $40 per hour,and 4 workers are hired.Profit can be maximized by hiring _____ worker(s).
A)1 more
B)2 more
C)1 fewer
D)2 fewer
Free
Multiple Choice
Q 122Q 122
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.The price of a power cord is $2,the market wage rate is $20 per hour,and 8 workers are hired.Profit can be maximized by hiring _____ worker(s).
A)1 more
B)2 more
C)1 fewer
D)2 fewer
Free
Multiple Choice
Q 123Q 123
Use the following to answer questions 115-125:
-(Table: Value of the Marginal Product of Labor and Demand)Use Table: Value of the Marginal Product of Labor and Demand.In the table,the total product of labor is shown for the hourly production of power cords.Assume that the market for power cords is perfectly competitive.If the price of a power cord is $2 and the wage rate is $90 per hour,the profit-maximizing quantity of labor is _____ workers.
A)0
B)2
C)4
D)6
Free
Multiple Choice
Q 124Q 124
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the equilibrium market wage for bricklayers is $100 per day,_____ bricklayers will be hired by this masonry firm.
A)4
B)5
C)6
D)There is insufficient information to make this decision.
Free
Multiple Choice
Q 125Q 125
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is determined by:
A)the firm hiring the bricklayers.
B)demand and supply in the market for bricklayers.
C)the government.
D)where VMPLbricklayers = MPbricklayers × P of output.
Free
Multiple Choice
Q 126Q 126
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100.For a profit-maximizing firm at the equilibrium level of output,the VMPLbricklayers:
A)is $200.
B)is equal to the market wage rate.
C)is irrelevant since the firm is a price taker.
D)cannot be determined from the information provided.
Free
Multiple Choice
Q 127Q 127
Use the following to answer questions 126-138:
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 a minimum wage of $130 a day for bricklayers is set by the government.As a result:
A)6 workers will now be hired by the firm.
B)three workers who would have been employed at the previous $100 market wage are now unemployed.
C)all bricklayers are better off.
D)construction firms will shut down.
Free
Multiple Choice
Q 128Q 128
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.Which statement is TRUE?
A)Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than or equal to the market wage rate of bricklayers.
B)The profit-maximizing condition for firms hiring bricklayers is where VMPLbricklayers is less than the market wage rate.
C)The profit-maximizing condition for firms hiring bricklayers is where MPbricklayers equals the market wage rate.
D)Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers.
Free
Multiple Choice
Q 129Q 129
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the price for bricks laid in the wall is $0.10 a brick,the marginal product of the second bricklayer is _____ bricks.
A)1,500
B)1,400
C)1,300
D)1,200
Free
Multiple Choice
Q 130Q 130
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the price for bricks laid in the wall is $0.10 a brick,the total production of bricks by the first three bricklayers is _____ bricks.
A)1,500
B)2,900
C)4,200
D)5,400
Free
Multiple Choice
Q 131Q 131
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the equilibrium market wage rate for bricklayers rises from $80 to $100,the _____ bricklayers will _____.
A)demand for;rise
B)quantity demanded of;rise
C)demand for;fall
D)quantity demanded of;fall
Free
Multiple Choice
Q 132Q 132
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the equilibrium market wage for bricklayers falls from $110 to $100,the _____ bricklayers will _____.
A)demand for;rise
B)quantity demanded of;rise
C)demand for;fall
D)quantity demanded of;fall
Free
Multiple Choice
Q 133Q 133
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If there is an increase in technology that increases the productivity of bricklayers,then the value of the marginal product of the sixth bricklayer will be _____ than _____.
A)less;$80
B)greater;$100
C)less;$60
D)greater;$110
Free
Multiple Choice
Q 134Q 134
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If a shortage in the market for mortar lowers bricklayers' productivity,then the value of the marginal product of the eighth bricklayer will be:
A)less than $80.
B)greater than $100.
C)equal to $100.
D)greater than $80.
Free
Multiple Choice
Q 135Q 135
Use the following to answer questions 126-138:
Figure: The Demand for Bricklayers
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the equilibrium market wage for bricklayers is $80 per day,then this masonry firm will hire _____ bricklayers.
A)4
B)6
C)5
D)8
Free
Multiple Choice
Q 136Q 136
Use the following to answer questions 126-138:
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:
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.
Free
Multiple Choice
Q 137Q 137
Which group had the HIGHEST median earnings in the U.S.labor market in 2015?
A)White men
B)women,regardless of ethnicity
C)African-Americans
D)Hispanics
Free
Multiple Choice
Q 138Q 138
Which group had the LOWEST median earnings in the U.S.labor market in 2015?
A)White men
B)women,regardless of ethnicity
C)African-Americans
D)Hispanics
Free
Multiple Choice
Q 139Q 139
In 2015,women,regardless of ethnicity,earned:
A)the same as White men.
B)about twice as much as White men.
C)about 75% of the earnings for White men.
D)about 25% of the earnings for White men.
Free
Multiple Choice
Q 140Q 140
Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:
A)efficiency wages.
B)market power.
C)compensating differentials.
D)discrimination.
Free
Multiple Choice
Q 141Q 141
Which example illustrates wage disparity due to compensating differentials?
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.
Free
Multiple Choice
Q 142Q 142
Sam and Bob have the same educational background.Both have been policemen in Memphis for 10 years.Sam works from 11 P.M.until 7 A.M. ,and Bob works from 7 A.M.until 3 P.M.Sam's salary is $800 per month higher than Bob's salary.This example illustrates a wage disparity due to:
A)efficiency wages.
B)market power.
C)compensating differentials.
D)discrimination.
Free
Multiple Choice
Q 143Q 143
Which statement is MOST likely an example of wage disparity due to differences in talent and ability?
A)The median earnings of White men are more than are the median earnings of African-Americans.
B)Clerks at a Gap in New York City earn more than do clerks at a Gap in Topeka,Kansas.
C)Nick Saban,the football coach at the University of Alabama,earns more than does the local high school football coach.
D)Crab fishermen on the Bering Sea earn more than do clerks who sell goldfish at a pet store.
Free
Multiple Choice
Q 144Q 144
Which statement is MOST likely an example of wage disparity due to differences in human capital?
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.
Free
Multiple Choice
Q 145Q 145
Actual wage differentials can be partially explained by which factor(s)? I.differences in talent
II.different amounts of human capital
III.compensating differentials
A)I only
B)I and II only
C)III only
D)I,II,and III
Free
Multiple Choice
Q 146Q 146
Which statement describes a compensating differential?
A)Tiger Woods gets paid more than does a college professor.
B)A window washer working in a suburban residential subdivision gets paid less than does one who is washing windows on the outside of a skyscraper.
C)A nuclear scientist gets paid more than does a janitor working in the same building.
D)On average,White men get paid more than do women of all ethnicities.
Free
Multiple Choice
Q 147Q 147
A new teacher often makes less than a teacher with 20 years' experience because of:
A)discrimination.
B)differences in human capital.
C)efficiency wages.
D)differences in physical capital.
Free
Multiple Choice
Q 148Q 148
Which factor does NOT partially explain wage differentials?
A)different amounts of human capital
B)compensating differentials
C)differences in talent
D)differences in capital
Free
Multiple Choice
Q 149Q 149
A nurse willing to work the midnight to 8 A.M.shift may make more than one who works 8 A.M.to 4 P.M.because of:
A)discrimination.
B)market power.
C)compensating differentials.
D)efficiency wages.
Free
Multiple Choice
Q 150Q 150
A small college employs two economists.Rob has been employed by the college for 15 years,and Nasrin has been employed for 1 year.Rob's salary is significantly higher than is Nasrin's,although both have their doctoral degrees in economics.Each professor averages one publication per year,and both are excellent teachers.Given this information,the wage difference is BEST explained by:
A)compensating differentials.
B)differences in human capital.
C)discrimination.
D)differences in talent.
Free
Multiple Choice
Q 151Q 151
Employers can sometimes organize to pay lower wages when:
A)efficiency wages are used to drive down morale and break up a labor union.
B)health maintenance organizations (HMOs)organize to get groups of doctors to work together at lower wages than they would earn on their own.
C)labor unions are not allowed to engage in collective bargaining.
D)corporations force the minimum wage down.
Free
Multiple Choice
Q 152Q 152
In 2015,unions represent approximately _____% of employees of private businesses.
A)1
B)7
C)19
D)29
Free
Multiple Choice
Q 153Q 153
Which statement about unions is TRUE?
A)Laws allow unions to discriminate on the basis of gender and ethnicity.
B)Unions bargain for better working conditions at the cost of higher wages.
C)Unions cause a surplus of labor by bargaining for wages that are higher than the value of the marginal product of labor.
D)Unions cause compensating differentials.
Free
Multiple Choice
Q 154Q 154
In the past 30 years,the ability of unions to increase wages and improve working conditions for their members has:
A)increased.
B)decreased.
C)remained constant.
D)proved the marginal productivity theory of income distribution to be false.
Free
Multiple Choice
Q 155Q 155
Above-equilibrium wages paid by some employers as an incentive for better performance are called:
A)efficiency wages.
B)market power wages.
C)compensating differentials.
D)discrimination.
Free
Multiple Choice
Q 156Q 156
Because the efficiency wage is _____ the equilibrium wage,it may lead to a _____ of labor.
A)below;shortage
B)below;surplus
C)above;shortage
D)above;surplus
Free
Multiple Choice
Q 157Q 157
An efficiency wage is:
A)above the equilibrium wage and is paid to provide workers with an incentive to increase productivity.
B)efficient because it is exactly equal to the wage rate implied by the marginal productivity theory.
C)determined by collective bargaining between unions and management.
D)equal to the value of the marginal product of labor adjusted so as to make the structure of compensation more equitable.
Free
Multiple Choice
Q 158Q 158
According to the efficiency wage model,efficiency wages do NOT:
A)reduce unemployment.
B)represent a response to a type of market failure.
C)get set above the equilibrium wage.
D)reduce worker turnover.
Free
Multiple Choice
Q 159Q 159
Suppose that Mike wants to pay efficiency wages to help in the construction of his beach home.If the prevailing wage rate for electricians is $22 per hour in his area,one possible efficiency wage he could pay would be:
A)$22.
B)$26.
C)$18.
D)the minimum wage.
Free
Multiple Choice
Q 160Q 160
According to the _____,workers may earn a wage rate higher than the value of their marginal product because it provides an incentive to perform efficiently.
A)marginal productivity of income distribution theory
B)efficiency-wage model
C)diminishing-returns theory
D)increasing-returns model
Free
Multiple Choice
Q 161Q 161
One reason that wage discrimination based on gender or ethnicity can continue is:
A)market interference or market failure associated with above-equilibrium wages.
B)market competition making it profitable to engage in discrimination.
C)it is justified by the marginal productivity theory of income distribution.
D)because,as the South African experience with apartheid showed,discrimination leads to more rapid economic growth.
Free
Multiple Choice
Q 162Q 162
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:
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.
Free
Multiple Choice
Q 163Q 163
The more work people do,all other things unchanged,the:
A)more their free time.
B)greater their nonmarket use of time.
C)less income they have.
D)less leisure they have.
Free
Multiple Choice
Q 164Q 164
The price of an extra hour of leisure is:
A)$1.
B)the hourly wage rate.
C)the same as the price of money.
D)the total utility of labor.
Free
Multiple Choice
Q 165Q 165
The opportunity cost of an extra hour of leisure is:
A)$1.
B)the hourly wage rate.
C)the same as the price of money.
D)always less than the value of the marginal product of labor.
Free
Multiple Choice
Q 166Q 166
A _____ wage will _____ the _____ leisure.
A)lower;increase;opportunity cost of
B)higher;always decrease;amount of time spent on
C)higher;increase;opportunity cost of
D)lower;not affect;amount of time spent on
Free
Multiple Choice
Q 167Q 167
Gabriella often faces a trade-off between time at the beach and time working as a model.She earns $40 per hour as a model and values going to the beach at the same price.When explaining this to her parents,she says,"The marginal utility per hour working is the same as the marginal utility per hour of going to the beach." This example illustrates:
A)indifference curves.
B)the substitution effect.
C)the income effect.
D)optimal time allocation.
Free
Multiple Choice
Q 168Q 168
The opportunity cost of an hour of leisure:
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.
Free
Multiple Choice
Q 169Q 169
John is an entrepreneur who owns an auto body repair shop.John's business is booming,and his salary is rising.John's labor supply curve will be _____ if the substitution effect is _____ the income effect.
A)upward sloping;smaller than
B)downward sloping;smaller than
C)horizontal;equal to
D)vertical;greater than
Free
Multiple Choice
Q 170Q 170
Suppose that Professor Jones receives a promotion and an increase in her annual salary.Her labor supply curve will be _____ if the substitution effect is _____ than the income effect.
A)upward sloping;greater
B)upward sloping;smaller
C)downward sloping;greater
D)vertical;greater
Free
Multiple Choice
Q 171Q 171
Suppose that the government increases the child tax credit,which increases the after-tax income of families with children.How will this decision affect the amount of labor supplied by parents,assuming that leisure is a normal good?
A)Since the income and substitution effects move in the same direction,the amount of labor supplied will increase.
B)Since the income effect will dominate the substitution effect,the amount of labor supplied will decrease.
C)We don't know what will happen to the quantity of labor supplied,since we don't know whether the income effect or substitution effect will dominate.
D)The labor supply curve will shift right,so the quantity of labor will also increase.
Free
Multiple Choice
Q 172Q 172
André has asked his boss for a pay raise.His boss is concerned that,if he increases André's wage,André might work less.In other words,André's boss is concerned that leisure is a normal good for André and that his:
A)income and substitution effects might move in the same direction.
B)income effect might be greater than his substitution effect.
C)substitution effect might be greater than his income effect.
D)income and substitution effects might cancel out to zero.
Free
Multiple Choice
Q 173Q 173
Tim works 51 hours per week,and his wage is $35 per hour.If his wage increases to $70 per hour:
A)the substitution effect implies that he will work less.
B)if leisure is a normal good,the income effect implies that he will work more.
C)if leisure is a normal good,the income effect will reinforce the substitution effect and he will work more.
D)the substitution effect implies that he will work more.
Free
Multiple Choice
Q 174Q 174
Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:
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.
Free
Multiple Choice
Q 175Q 175
Lakisha's labor supply curve is downward sloping for wage rates greater than $40 per hour and upward sloping for wage rates less than $40 per hour.If leisure is a normal good for Lakisha and if the wage is _____,the substitution effect of a wage increase is _____ than the income effect.
A)greater than $40;greater
B)equal to $18;less
C)greater than $40;less
D)greater than $20;less
Free
Multiple Choice
Q 176Q 176
Which statement is TRUE?
A)Leisure is usually a normal good.
B)Leisure is usually an inferior good.
C)All other things unchanged,an increase in income will decrease the demand for leisure.
D)The demand for leisure is perfectly inelastic.
Free
Multiple Choice
Q 177Q 177
The _____ effect of a _____ wage causes individuals to substitute _____.
A)substitution;higher;labor for leisure
B)income;higher;labor for leisure
C)substitution;lower;labor for leisure
D)complementary;constant;leisure for labor
Free
Multiple Choice
Q 178Q 178
A wage _____ raises the quantity of labor supplied through a strong _____ effect.
A)decrease;substitution
B)increase;substitution
C)increase;income
D)decrease;complement
Free
Multiple Choice
Q 179Q 179
A higher wage _____ the price of _____ and _____ workers' incomes.The result pulls the quantity of labor supplied in _____ direction(s).
A)increases;leisure;increases;opposite
B)increases;leisure;increases;the same
C)reduces;work effort;reduces;opposite
D)reduces;labor;increases;the same
Free
Multiple Choice
Q 180Q 180
Assume that Stan just received a promotion and raise.In terms of labor supply,the substitution effect of a higher wage will lead him to:
A)supply fewer hours of labor.
B)supply more hours of labor.
C)substitute leisure for work.
D)reduce work time to zero.
Free
Multiple Choice
Q 181Q 181
In terms of labor supply,the income effect of a higher wage causes a(n):
A)decrease in leisure time.
B)increase in the quantity of labor supplied.
C)decrease in the quantity of labor supplied.
D)reduction of leisure time to zero.
Free
Multiple Choice
Q 182Q 182
A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect,and the supply curve has a _____ slope.
A)income;substitution;positive
B)income;substitution;negative
C)substitution;income;positive
D)substitution;income;negative
Free
Multiple Choice
Q 183Q 183
A backward-bending supply curve of labor shows that at relatively high wages the _____ effect dominates the _____ effect,and the supply curve has a _____ slope.
A)income;substitution;positive
B)income;substitution;negative
C)substitution;income;positive
D)substitution;income;negative
Free
Multiple Choice
Q 184Q 184
The _____ effect of a _____ wage causes individuals to substitute _____.
A)substitution,higher;labor for leisure
B)income;lower;leisure for labor
C)substitution;lower;labor for leisure
D)complementary;constant;leisure for labor
Free
Multiple Choice
Q 185Q 185
A wage _____ reduces the quantity of labor supplied through the _____ effect.
A)decrease;income
B)increase;substitution
C)increase;income
D)decrease;complement
Free
Multiple Choice
Q 186Q 186
The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the _____ effect.
A)production
B)elasticity
C)income
D)complementary
Free
Multiple Choice
Q 187Q 187
The trade-off between work and leisure underlying the supply of labor involves the income effect and the _____ effect.
A)substitution
B)elasticity
C)production
D)wage
Free
Multiple Choice
Q 188Q 188
In terms of labor supply,the substitution effect of a higher wage causes a(n):
A)increase in leisure time.
B)increase in the quantity of labor supplied.
C)substitution of leisure for work.
D)reduction of work time to zero.
Free
Multiple Choice
Q 189Q 189
In terms of labor supply,the substitution effect of a higher wage causes a(n):
A)increase in leisure time.
B)decrease in the quantity of labor supplied.
C)substitution of work for leisure.
D)reduction of work time to zero.
Free
Multiple Choice
Q 190Q 190
Beyond some point,a higher wage may induce an individual to work _____,and the labor supply curve may then _____.
A)more;bend backward
B)less;bend backward
C)more;slope downward
D)harder;become vertical
Free
Multiple Choice
Q 191Q 191
Consider the labor market for accountants.As more people earn accounting degrees,we should expect to see a(n):
A)shift to the right of the labor supply curve.
B)shift to the right of the labor demand curve.
C)increase in labor along a stable labor supply curve.
D)increase in labor along a stable labor demand curve.
Free
Multiple Choice
Q 192Q 192
An increase in wealth will cause the labor supply curve to:
A)shift leftward if leisure is a normal good.
B)slope downward if the substitution effect dominates the income effect.
C)slope upward only if leisure is an inferior good.
D)bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good.
Free
Multiple Choice
Q 193Q 193
A leftward shift in the labor supply curve will result if:
A)people begin to value leisure more highly.
B)people have less nonlabor income.
C)transit costs to and from work decline.
D)the population increases.
Free
Multiple Choice
Q 194Q 194
Which factor will NOT shift the labor supply curve?
A)a change in attitude toward work
B)changes in a spouse's income
C)changes in expectations about future wealth
D)a change in the wage rate
Free
Multiple Choice
Q 195Q 195
A leftward shift in the labor supply curve might result from:
A)people valuing leisure more highly.
B)people having less wealth.
C)increasing work opportunities for women and minorities.
D)an increase in the population.
Free
Multiple Choice
Q 196Q 196
Which factor will NOT shift the labor supply curve?
A)a change in preferences and social norms
B)changes in wealth
C)changes in opportunities
D)a change in the wage rate
Free
Multiple Choice
Q 197Q 197
An input differs from a factor of production in that the former gets used up in production,while the latter is an enduring source of income for its owner.
Free
True False
Q 198Q 198
Capital,the factor of production,includes physical capital (such as buildings and machines),human capital (improvement in labor by education and knowledge),and financial capital (such as stock market investments).
Free
True False
Free
True False
Free
True False
Q 201Q 201
Suppose that the factor market for computer engineers is competitive in India and the United States,but Indian engineers earn one-fifth of what American engineers earn.This means that engineers in India are price takers,but engineers in America are not.
Free
True False
Q 202Q 202
A profit-maximizing producer employs each factor of production up to the point at which the value of the marginal product of the last unit of the factor employed is equal to the price per unit of output.
Free
True False
Q 203Q 203
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.
Free
True False
Q 204Q 204
Your boss is trying to decide whether to buy out a rival company and asks for your advice.The boss says that she will buy the rival if there is evidence that the rival is operating inefficiently.(Your company will then improve its efficiency and increase profits. )She will not buy the rival if there is evidence that the rival is already operating efficiently.Your boss gives you the following data on the rival's operations: The average product of labor is 4,the marginal product of the last worker hired is 10,the wage is $20,and the price of output is $5.Based on this information,you should tell your boss to buy the rival.
Free
True False
Q 205Q 205
If a perfectly competitive firm chooses its level of output so that price equals marginal revenue,the value of the marginal product of labor will equal the wage rate.
Free
True False
Q 206Q 206
If the demand for orange juice increases,the derived demand for orange grove workers will decrease.
Free
True False
Q 207Q 207
Although improved technology can either increase or decrease the demand for a factor of production,the usual effect of technological progress is to reduce demand for labor,holding everything else constant.
Free
True False
Q 208Q 208
The clearest sign of discrimination against an individual is that that individual is paid less than the value of his or her marginal productivity.
Free
True False
Q 209Q 209
According to the marginal productivity theory of income distribution,in a competitive economy each factor of production is paid its equilibrium value of the marginal product.
Free
True False
Q 210Q 210
The marginal productivity theory of income distribution is based on the assumption that factor markets are perfectly competitive.
Free
True False
Q 211Q 211
According to the marginal productivity theory of income distribution,every factor of production is paid a wage equal to the equilibrium value of its average product.
Free
True False
Q 212Q 212
According to the marginal productivity theory of income distribution,every factor of production is paid a wage equal to the equilibrium value of its marginal product.
Free
True False
Q 213Q 213
The marginal productivity theory of income distribution assumes that factor markets are oligopolies.
Free
True False
Q 214Q 214
The marginal productivity theory of income distribution assumes that factor markets are perfectly competitive.
Free
True False
Q 215Q 215
The equilibrium value of the marginal product of a factor is the additional value produced by the most productive unit of that factor employed in the factor market as a whole.
Free
True False
Q 216Q 216
The equilibrium value of the marginal product of a factor is the additional value produced by the last unit of that factor employed in the factor market as a whole.
Free
True False
Q 217Q 217
According to the marginal productivity theory of income distribution,if a unit of labor is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the marginal product of labor is equal to the value of the marginal product of capital.
Free
True False
Q 218Q 218
According to the marginal productivity theory of income distribution,if a unit of labor is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the marginal product of labor is proportionately greater than the value of the marginal product of capital.
Free
True False
Q 219Q 219
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This difference means that the marginal productivity theory of income distribution doesn't hold.
Free
True False
Q 220Q 220
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This is partially because diminishing returns to labor cause the value of the marginal product of the last machinist hired to be greater than the average of all of the machinists employed.
Free
True False
Q 221Q 221
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This is partially because diminishing returns to labor cause the value of the marginal product of the last machinist hired to be less than the average of all of the machinists currently employed.
Free
True False
Q 222Q 222
At Hamill Manufacturing of Pennsylvania,highly skilled senior machinists are paid $70,000,excluding benefits,but the average skilled machinist generates approximately $137,000 in value added.This is due partially to the fact that the wage rate includes other costs,such as employee benefits,that have to be added to the $70,000 salary.
Free
True False
Free
True False
Q 224Q 224
One objection to the marginal productivity theory of income distribution is the existence of large disparities in income between factors of production that should receive the same payment.
Free
True False
Q 225Q 225
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.
Free
True False
Q 226Q 226
An objection to the marginal productivity theory of income distribution is that many people believe it is a moral justification for the unequal distribution of income.
Free
True False
Q 227Q 227
Wage differences between men and women and among various ethnic groups are proof that the marginal productivity theory of income distribution is invalid.
Free
True False
Q 228Q 228
The U.S.labor market shows large differences in the median earnings of workers across ethnicities and gender.
Free
True False
Q 229Q 229
In the U.S.labor market,women of all ethnicities have the highest median earnings of any of the major demographic groups discussed in the chapter.
Free
True False
Q 230Q 230
In the U.S.labor market,Hispanic men have the highest median earnings of any demographic group.
Free
True False
Q 231Q 231
In the U.S.labor market,African-Americans have the lowest median earnings of any of the major demographic groups discussed in the chapter.
Free
True False
Q 232Q 232
In the U.S.labor market,Hispanics have the lowest median earnings of any of the major demographic groups discussed in the chapter.
Free
True False
Q 233Q 233
Median earnings in the U.S.labor market are highest for White men,followed by African-Americans,followed by women (regardless of ethnicity),and then Hispanics.
Free
True False
Q 234Q 234
In the United States,the median earnings of Hispanics are greater than the median earnings of African Americans.
Free
True False
Q 235Q 235
Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.
Free
True False
Q 236Q 236
Wage differences across jobs reflecting the fact that some jobs are less pleasant or safe than others are called efficiency wages.
Free
True False
Q 237Q 237
Wage differences across jobs reflecting the fact that some jobs are less pleasant or safe than others are called compensating differentials.
Free
True False
Q 238Q 238
The fact that Tom Brady,the quarterback of the New England Patriots,is paid more than is a high school football coach is an example of a wage disparity caused by compensating differentials.
Free
True False
Q 239Q 239
The fact that Tom Brady,the quarterback of the New England Patriots,is paid more than is a high school football coach is an example of a wage disparity most likely caused by differences in ability and talent.
Free
True False
Q 240Q 240
A lumberjack cutting giant redwoods in California being paid more than is a person cutting and selling small Christmas trees is an example of wage disparity due primarily to compensating differentials.
Free
True False
Q 241Q 241
A lumberjack cutting giant redwoods in California being paid more than is a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.
Free
True False
Q 242Q 242
Holly and Emily both have a bachelor's degree in nursing from the same college.Both have been nurses for eight years.Holly works from 11 P.M.until 7 A.M. ,and Emily works from 7 A.M.until 3 P.M.Holly's salary is $1,000 per month higher than is Emily's salary.This is an example of an efficiency wage disparity.
Free
True False
Q 243Q 243
Holly and Emily both have a BS in nursing from the same college.Both have been nurses for eight years.Holly works from 11 P.M.until 7 A.M. ,and Emily works from 7 A.M.until 3 P.M.Holly's salary is $1,000 per month higher than is Emily's salary.This is an example of a wage disparity due to a compensating differential.
Free
True False
Q 244Q 244
Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.
Free
True False
Q 245Q 245
Differences in the attractiveness of different types of jobs resulting in differences in wages is not consistent with the marginal productivity theory of income distribution.
Free
True False
Free
True False
Q 247Q 247
Regardless of gender and ethnicity,more education is associated with higher median earnings.
Free
True False
Q 248Q 248
Unions are organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining with employers.
Free
True False
Q 249Q 249
The fact that members of labor unions often have higher wages than do workers who are not members of a union is proof that the marginal productivity theory of income distribution is not valid.
Free
True False
Q 250Q 250
In 2015,the median weekly earnings of union members was roughly 25% higher than the median weekly earnings of workers not represented by unions.
Free
True False
Q 251Q 251
In 2015,the median weekly earnings of union members was actually lower than the median weekly earnings of workers not represented by unions.
Free
True False
Free
True False
Q 253Q 253
An efficiency wage is higher than the equilibrium wage to motivate the employee to work hard.
Free
True False
Q 254Q 254
Above-equilibrium wages paid by some employers as an incentive for better performance are called compensating differentials.
Free
True False
Q 255Q 255
Above-equilibrium wages paid by some employers as an incentive for better performance are called efficiency wages.
Free
True False
Free
True False
Free
True False
Free
True False
Free
True False
Q 260Q 260
When interferences in the labor market raise the wage above the equilibrium level,employers may discriminate because there are more job applicants than jobs.
Free
True False
Q 261Q 261
Firms that engage in discrimination are usually more profitable than firms that don't discriminate.
Free
True False
Q 262Q 262
The opportunity cost of an hour of leisure is always assumed to be equal to the minimum wage.
Free
True False
Q 263Q 263
The opportunity cost of an hour of leisure increases if the hour of leisure time is spent in an unproductive activity and decreases if the hour of leisure time is spent in a productive activity.
Free
True False
Free
True False
Q 265Q 265
Decisions about labor supply result from decisions about time allocation,which deals with determining how many hours to spend on different activities.
Free
True False
Free
True False
Free
True False
Q 268Q 268
In markets for goods and services,households demand goods and services and firms supply goods and services.
Free
True False
Free
True False
Q 270Q 270
If John's wage increases from $10 to $12 per hour,his opportunity cost of leisure has decreased.
Free
True False
Q 271Q 271
If John's wage increases from $10 to $12 per hour,his opportunity cost of leisure has increased.
Free
True False
Q 272Q 272
If John's wage increases from $10 to $12 per hour,his opportunity cost of leisure has decreased or increased,depending on what he does with an hour of leisure.
Free
True False
Q 273Q 273
When wages increase,if the substitution effect dominates,the quantity of labor supplied will increase.
Free
True False
Q 274Q 274
When wages increase,if the income effect dominates,the quantity of labor supplied will increase.
Free
True False
Q 275Q 275
If the hourly wage increases from $8 to $10 an hour and in response Jim increases the number of hours that he works from 44 to 46,the substitution effect is dominant.
Free
True False
Q 276Q 276
If the hourly wage increases from $8 to $10 an hour and in response Jim increases the number of hours that he works from 44 to 46,the income effect is dominant.
Free
True False
Q 277Q 277
Judy's individual labor supply curve is positively sloped,so for Judy,the income effect dominates the substitution effect.
Free
True False
Q 278Q 278
Andy's individual labor supply curve is positively sloped,so for Andy,the substitution effect dominates the income effect.
Free
True False
Q 279Q 279
If an individual labor supply curve is negatively sloped,the substitution effect dominates the income effect.
Free
True False
Q 280Q 280
An example of the substitution effect dominating the income effect occurs when people take summer vacations rather than winter vacations,even though their pay is the same year-round.
Free
True False
Free
True False
Q 282Q 282
As stock prices rise and workers' wealth increases,workers will increase the quantity supplied of labor because they will want to buy more stock.
Free
True False
Free
True False
Free
True False
Q 285Q 285
Since the Great Recession,which began in 2008,the U.S.labor supply curve has shifted to the left because many workers were disillusioned by bad job prospects and left the labor force.
Free
True False
Q 286Q 286
The invention of labor-saving appliances has decreased the supply of labor in the United States.
Free
True False
Q 287Q 287
If the age at which a person can receive Social Security benefits increases from 67 to 70,the supply of labor will increase.
Free
True False
Q 288Q 288
When a person becomes better educated and is able to produce a better product,the person's education is an improvement in:
A)human capital.
B)physical capital.
C)land.
D)labor.
Free
Multiple Choice
Q 289Q 289
When a person receives more education,his or her _____ has increased.When a firm buys a new copy machine,it has purchased _____.
A)human capital;physical capital
B)labor;capital labor
C)labor;capital
D)human capital;land
Free
Multiple Choice
Q 290Q 290
Alex's boss notices that,with each adult education course Alex takes,he becomes a more knowledgeable and efficient worker.This example illustrates:
A)human capital development.
B)derived demand.
C)value of marginal product.
D)income effects.
Free
Multiple Choice
Q 291Q 291
Factors of production are different from inputs in that factors of production:
A)can be used over and over again,but inputs cannot.
B)can be used only once,whereas an input can be used over and over again.
C)refer only to labor,while inputs refer to machinery.
D)encompass only land and other natural factors,while inputs are ingredients.
Free
Multiple Choice
Q 292Q 292
Derived demand for a factor of production means that:
A)people demand factors just as they do goods.
B)the demand for factors depends on what the factor can produce.
C)the market derives a demand for factors regardless of what they produce.
D)suppliers determine what will be produced.
Free
Multiple Choice
Q 293Q 293
The factor distribution of income in the United States reflects that:
A)land,labor,and capital are equally distributed.
B)most people receive their income based on their labor contribution.
C)most people receive their income based on their capital distribution.
D)land provides most income to the population.
Free
Multiple Choice
Q 294Q 294
In the United States,payments to labor account for roughly:
A)70% of total income,a share that has not fluctuated much in the past 30 years.
B)50% of total income,but the returns to land have been increasing.
C)30% of total income,and this number is falling.
D)90% of total income and can be broken down into human capital and physical capital.
Free
Multiple Choice
Q 295Q 295
Firms will continue to hire workers as long as:
A)they make a profit.
B)the value of the marginal product is greater than the marginal cost of hiring labor.
C)the wage is below the product price.
D)there are no diminishing returns.
Free
Multiple Choice
Q 296Q 296
Suppose that a firm sells a good for a perfectly competitive price of $5.The equilibrium wage rate is $10.The first worker it hires produces five units.Two workers produce a total of nine units.If it hires two workers,the value of marginal product for the second worker is:
A)$5.
B)$45.
C)$20.
D)$10.
Free
Multiple Choice
Q 297Q 297
Suppose that a firm sells a good for a perfectly competitive price of $5.The equilibrium wage rate is $10.The first worker it hires produces five units.Two workers produce a total of nine units.Given this information,the firm will:
A)hire the first worker only.
B)hire both the first and second workers.
C)not hire either worker.
D)hire only the second worker.
Free
Multiple Choice
Q 298Q 298
The firm's value of the marginal product of labor curve:
A)is the firm's demand curve for labor.
B)is the industry's demand curve for labor.
C)is the same as the marginal cost curve for labor.
D)slopes upward.
Free
Multiple Choice
Q 299Q 299
The firm's value of marginal product curve slopes downward:
A)only if the firm is a perfect competitor in the product market.
B)because of diminishing returns.
C)only if the firm is a perfect competitor in the labor market.
D)only if the firm is a perfect competitor in both the labor and product markets.
Free
Multiple Choice
Q 300Q 300
Although horses were once a very important factor of production,the development of automobiles and other machinery reduced the demand for their use.This example illustrates:
A)technological progress shifting the demand for horses to the left.
B)higher marginal costs for horses shifting demand for horses to the right.
C)technological progress shifting the demand for horses to the right.
D)higher marginal costs for horses having no impact on the demand for horses.
Free
Multiple Choice
Q 301Q 301
In a given perfectly competitive labor market,the equilibrium wage:
A)is the same for all workers in that labor market.
B)is always greater than the value of marginal product.
C)results in diminishing marginal product.
D)causes some people to be unemployed.
Free
Multiple Choice
Q 302Q 302
When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole,this is:
A)the marginal productivity theory of income distribution.
B)diminishing marginal product.
C)the factor distribution of income.
D)the efficiency wage model.
Free
Multiple Choice
Q 303Q 303
In the factor market for land,equilibrium rental prices will be _____ the value of marginal product of land.
A)less than
B)equal to
C)greater than
D)unrelated to
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Multiple Choice
Q 304Q 304
(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.If this profit-maximizing firm hires two workers,what is a possible equilibrium wage rate in the labor market? Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows.
A)$30
B)$5
C)$13
D)$6
Free
Multiple Choice
Q 305Q 305
(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.How many workers will this perfectly competitive,profit-maximizing firm choose to hire if the equilibrium wage is $30? Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows.
A)1
B)2
C)3
D)4
Free
Multiple Choice
Q 306Q 306
(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.Holding everything else constant,if the demand for this firm's product decreases: Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows.
A)its value of marginal product curve shifts to the right,and it will hire more workers.
B)its value of marginal product curve shifts to the left,and it will hire more workers.
C)its value of marginal product curve shifts to the left,and it will hire fewer workers.
D)the firm will not change its hiring,since it is a perfectly competitive firm.
Free
Multiple Choice
Q 307Q 307
(Scenario: The Decision to Hire Labor)Use Scenario: The Decision to Hire Labor.This firm experiences diminishing marginal product after it hires the _____ worker. Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labor is given in the table that follows.
A)first
B)second
C)third
D)fourth
Free
Multiple Choice
Q 308Q 308
Large disparities in wages are often used as:
A)evidence of the importance of profit maximization.
B)a means to question the validity of the marginal productivity theory of income distribution.
C)evidence of diminishing returns.
D)evidence to illustrate the absence of market failures in factor markets.
Free
Multiple Choice
Q 309Q 309
People who have higher levels of human capital will tend to:
A)work only in nonunion jobs.
B)receive higher salaries than do those who have lower levels of human capital.
C)earn salaries based on marginal costs of their labor.
D)earn salaries higher than their value of marginal product.
Free
Multiple Choice
Q 310Q 310
If a union is able to bargain for a wage that is higher than the equilibrium:
A)all workers will earn a wage equal to their value of marginal product.
B)some excess supply of labor or unemployment will generally result.
C)compensating differentials will be erased.
D)diminishing returns will not exist.
Free
Multiple Choice
Q 311Q 311
Time allocation refers to:
A)how many hours an employer should hire a worker for.
B)how many hours people choose to spend on different activities.
C)how many hours unions will choose for their members to work.
D)how different types of talents determine the wages people will earn.
Free
Multiple Choice
Q 312Q 312
Leisure is considered a normal good since people:
A)consume more of it all the time.
B)cannot consume more,it being limited.
C)consume more of it when their income rises.
D)find it to be a luxury to take time off from their job.
Free
Multiple Choice
Q 313Q 313
If a person's marginal utility from an additional hour of leisure is less than the marginal utility gained from goods bought with the wages earned from an additional hour of labor,then this person should:
A)continue to work the hours he or she is working.
B)work less since he or she is working more than the optimal number of hours.
C)work more since he or she is working less than the optimal number of hours.
D)quit work since he or she is not earning enough to satisfy his or her time allocation.
Free
Multiple Choice
Q 314Q 314
A person's optimal labor supply choice:
A)is similar to a person's optimal consumption rule,but with consumption and leisure as the "goods" in question.
B)is not useful in determining how many hours a person should work.
C)reveals little about a person's labor-leisure choices.
D)results in people working too much for too little pay.
Free
Multiple Choice
Q 315Q 315
Within the labor-leisure framework,when an individual's income effect is stronger than the substitution effect from a wage increase,it means they have a(n):
A)inverted U-shaped labor supply curve.
B)labor supply curve that is upward sloping but from the origin.
C)downward-sloping labor supply curve in the wage range in question.
D)upward-sloping labor supply curve in the wage range in question.
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Multiple Choice
Q 316Q 316
When a person receives a wage increase,changes in his or her labor supply depend on:
A)a substitution effect and an income effect.
B)a substitution effect only.
C)an income effect only.
D)diminishing marginal product.
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Multiple Choice