Quiz 19: Factor Markets and the Distribution of Income

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

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.

Which factor is NOT associated with production at a college? A)the faculty B)classroom buildings C)electricity D)the computer labs

Which factor is associated with production at a college? A)the faculty B)lab concentrations to use in experiments C)electricity D)Scantron sheets

Which factor is an input in the production of croissants? A)ovens B)pastry chefs C)flour D)dough mixers

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.

Human capital is the improvement in _____ produced by _____. A)physical capital;technology B)labor;education and knowledge C)labor;physical capital D)labor;management

Manufactured resources such as equipment,buildings,and tools are also known as: A)human capital. B)labor. C)physical capital. D)natural resources.

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.

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.

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.

The demand for a factor of production is a(n)_____ demand. A)derived B)implicit C)direct D)distributional

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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

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.

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.

(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

(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

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.

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.

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

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.

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

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

The value of the marginal product is calculated as: A)MP / MR. B)MP / P. C)MP × P. D)MR / MP.

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.

The marginal product times product price equals the: A)marginal revenue. B)value of the marginal product. C)additional revenue product. D)marginal cost.

Which formula is CORRECT? A)VMPL = MC × P. B)VMPL = MPL × P. C)MPL = VMPL × P. D)VMPL / MC = TR.

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.

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.

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

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.

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

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.

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

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

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.

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.

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.

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.

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.

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.

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

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

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.

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.

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

If the marginal product is _____,the value of marginal product must be _____. A)rising;falling B)falling;falling C)falling;rising D)rising;zero

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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.

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.

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.

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.

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

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

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.

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

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

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.

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.

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.

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.

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.

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.

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

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.

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.

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.

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

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

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

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

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

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.

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

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

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.

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.

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

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

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

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

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.

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

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.

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

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

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.

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.

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.

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.

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.

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.

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.

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.

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

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

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

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

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

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

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

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

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

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.

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 VMPL_bricklayers = MP_bricklayers × P of output.

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 VMPL_bricklayers: 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.

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.

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 VMPL_bricklayers is less than the market wage rate. C)The profit-maximizing condition for firms hiring bricklayers is where MP_bricklayers 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.

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

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

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

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

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

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.

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

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.

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

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

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.

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.

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.

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.

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.

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.

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

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.

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.

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

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.

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.

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.

In 2015,unions represent approximately _____% of employees of private businesses. A)1 B)7 C)19 D)29

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.

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.

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.

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

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.

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.

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.

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

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.

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.

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.

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.

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.

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

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.

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.

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

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

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.

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.

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.

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.

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

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.

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

A wage _____ raises the quantity of labor supplied through a strong _____ effect. A)decrease;substitution B)increase;substitution C)increase;income D)decrease;complement

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

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.

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.

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

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

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

A wage _____ reduces the quantity of labor supplied through the _____ effect. A)decrease;income B)increase;substitution C)increase;income D)decrease;complement

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

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

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.

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.

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

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.

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.

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.

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

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.

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

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.

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).

The importance of human capital has been increased by technological progress.

Approximately 71% of income generated in the United States goes to corporate profit.

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.

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.

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.

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.

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.

If the demand for orange juice increases,the derived demand for orange grove workers will decrease.

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.

The clearest sign of discrimination against an individual is that that individual is paid less than the value of his or her marginal productivity.

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.

The marginal productivity theory of income distribution is based on the assumption that factor markets are perfectly competitive.

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.

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.

The marginal productivity theory of income distribution assumes that factor markets are oligopolies.

The marginal productivity theory of income distribution assumes that factor markets are perfectly competitive.

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.

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.

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.

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.

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.

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.

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.

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.

Over the past 30 years,the premium for workers with advanced degrees has decreased.

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.

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.

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.

Wage differences between men and women and among various ethnic groups are proof that the marginal productivity theory of income distribution is invalid.

The U.S.labor market shows large differences in the median earnings of workers across ethnicities and gender.

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.

In the U.S.labor market,Hispanic men have the highest median earnings of any demographic group.

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

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

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.

In the United States,the median earnings of Hispanics are greater than the median earnings of African Americans.

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

Wage differences across jobs reflecting the fact that some jobs are less pleasant or safe than others are called efficiency wages.

Wage differences across jobs reflecting the fact that some jobs are less pleasant or safe than others are called compensating differentials.

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.

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.

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.

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.

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.

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.

Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.

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.

Workers with more human capital usually generate a higher value of the marginal product.

Regardless of gender and ethnicity,more education is associated with higher median earnings.

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

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.

In 2015,the median weekly earnings of union members was roughly 25% higher than the median weekly earnings of workers not represented by unions.

In 2015,the median weekly earnings of union members was actually lower than the median weekly earnings of workers not represented by unions.

In 2015,fewer than 10% of the employees of private businesses were represented by unions.

An efficiency wage is higher than the equilibrium wage to motivate the employee to work hard.

Above-equilibrium wages paid by some employers as an incentive for better performance are called compensating differentials.

Above-equilibrium wages paid by some employers as an incentive for better performance are called efficiency wages.

Efficiency wages reduce unemployment.

Compensating differentials are used to motivate employees and to reduce worker turnover.

Unions and efficiency wages usually lead to wages that are below the equilibrium level.

Market forces tend to work against discrimination.

When interferences in the labor market raise the wage above the equilibrium level,employers may discriminate because there are more job applicants than jobs.

Firms that engage in discrimination are usually more profitable than firms that don't discriminate.

The opportunity cost of an hour of leisure is always assumed to be equal to the minimum wage.

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.

The opportunity cost of an hour of leisure is the hourly wage rate.

Decisions about labor supply result from decisions about time allocation,which deals with determining how many hours to spend on different activities.

In the labor market,households demand labor and firms supply goods and services.

In the labor market,households supply labor and firms demand labor.

In markets for goods and services,households demand goods and services and firms supply goods and services.

In the markets for goods and services,households demand labor and firms supply labor.

If John's wage increases from $10 to $12 per hour,his opportunity cost of leisure has decreased.

If John's wage increases from $10 to $12 per hour,his opportunity cost of leisure has increased.

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.

When wages increase,if the substitution effect dominates,the quantity of labor supplied will increase.

When wages increase,if the income effect dominates,the quantity of labor supplied will increase.

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.

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.

Judy's individual labor supply curve is positively sloped,so for Judy,the income effect dominates the substitution effect.

Andy's individual labor supply curve is positively sloped,so for Andy,the substitution effect dominates the income effect.

If an individual labor supply curve is negatively sloped,the substitution effect dominates the income effect.

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.

A backward-bending labor supply curve is possible only if leisure is an inferior good.

As stock prices rise and workers' wealth increases,workers will increase the quantity supplied of labor because they will want to buy more stock.

A change in the wage rate will shift the supply curve in the market for labor.

Since the 1960s,the number of women in the labor force has decreased.

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.

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

If the age at which a person can receive Social Security benefits increases from 67 to 70,the supply of labor will increase.

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.

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

(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

(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

(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.

(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

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.

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.

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.

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.

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.

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.

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.

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.