Quiz 17: The Labor Market and the Distribution of Income

The idea that the demand for autoworkers stems from the demand for automobiles is known as: A)the value of the marginal product of autoworkers. B)derived demand. C)indirect demand. D)output demand.

Economists say that labor demand is a derived demand because: A)it does not come from competitive markets. B)it depends on the demand for products that workers produce. C)it is derived from nature. D)it is derived from production.

The demand for labor: A)is a derived demand. B)depends on the demand for the output the labor can be used to produce. C)is affected by the value placed by the market on the output produced by labor. D)all of the above

The presence of a fixed input means that the marginal product of labor eventually declines.This concept is known as: A)decreasing marginal cost. B)diminishing returns. C)derived demand. D)downward-sloping output curve.

The additional output produced by hiring an additional unit of labor is known as: A)the productivity of labor. B)the marginal product of labor. C)diminishing returns. D)the derived demand for labor.

The marginal benefit of labor equals the marginal-revenue product of labor which is: A)the change in output from one additional unit of labor. B)the extra revenue generated by one additional unit of labor. C)equal to price of output only. D)equal to marginal cost only.

Table 17.1 -Refer to Table 17.1.Diminishing returns occur after the ________ worker. A)first B)second C)third D)fourth

Table 17.1 -Refer to Table 17.1.The marginal product of the fourth worker is: A)30. B)20. C)10. D)5.

Table 17.1 -Refer to Table 17.1.If the product sells at a market price of $3,the marginal revenue product of the fourth worker is: A)$40. B)$60. C)$15. D)$10.

If a firm uses the marginal principle,then the firm picks the quantity of workers: A)at which the marginal benefit equals the marginal cost. B)at a point where the firms earns an additional profit by employing one additional unit of labor. C)equal the total product of labor times the price of labor. D)is the same as the marginal product of labor.

If the marginal product of the third worker employed by a computer manufacturer is 50 computers,and the price of a computer is $500,the third worker's marginal revenue product is: A)$50. B)$500. C)$25,000. D)It cannot be determined;more information is needed.

The Aire Fresco Ceiling Fan Factory hires workers to make ceiling fans.The factory sells the fans for $50.The marginal revenue product of this factory's sixth worker is $300.The marginal product of the sixth worker is: A)12 ceiling fans. B)6 ceiling fans. C)150 ceiling fans. D)It cannot be determined;more information is needed.

A firm's short-run demand curve for labor is: A)upward sloping. B)the marginal revenue product curve. C)the downward-sloping portion of the marginal cost curve. D)the marginal cost divided by price.

Table 17.2 -Refer to Table 17.2.The marginal revenue product of the fourth worker is: A)$5. B)$20. C)$100. D)$475.

Table 17.2 -Refer to Table 17.2.The marginal revenue product of the ________ worker is $150. A)second B)third C)fourth D)fifth

Table 17.2 -Refer to Table 17.2.If the wage per day is $100,this T-shirt manufacturer will be maximizing profits if he hires ________ employees. A)two B)three C)four D)five

Table 17.2 -Refer to Table 17.2.The maximum wage per day that this profit-maximizing T-shirt manufacturer would be willing to pay to hire three workers per day is: A)$15. B)$75. C)$125. D)$200.

-Refer to Figure 17.1.This firm is currently hiring 16 workers.This firm should: A)do nothing because it is maximizing profits. B)reduce employment to 15 workers to increase profits. C)reduce employment to 14 workers to increase profits. D)increase employment to 17 workers to increase profits.

What does a firm use to decide how much labor to hire at a particular wage? A)marginal cost B)price of output C)marginal revenue product of labor D)marginal product of labor

Which of the following will make the labor demand curve shift to the right? A)a decrease in price B)an increase in labor force C)an increase in productivity D)all of the above

Firms in a competitive labor market will employ labor up to the point where: A)the wage rate equals the productivity of capital. B)its marginal cost equals its marginal product. C)the wage equals its marginal revenue product. D)the wage equals its marginal product.

Floor Lamp Inc.is a perfectly competitive firm that currently employs 100 workers.The marginal revenue product of the 90th worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profits,this firm should: A)increase employment until the MRP of labor equals $8.00. B)continue hiring 100 workers because the firm earns a surplus of $1.00 on each worker hired. C)decrease employment until the MRP of labor equals $8.00. D)increase the price of lamps so that the marginal revenue product increases to $8.00 per hour.

If the wage rate is less than the marginal revenue product of labor,the firm should ________ to maximize profits. A)hire less labor and produce less output B)hire less labor and produce more output C)hire more labor and produce less output D)hire more labor and produce more output

A wheat farmer sells wheat in a perfectly competitive market and hires labor in a perfectly competitive market.The market price of wheat is $2 a bushel,the wage rate is $10,the farmer employs five workers and the marginal product of the fifth worker is 10.What would you advise this farmer to do? A)Do nothing because the wage rate and the marginal product of the last worker hired are equal. B)Reduce employment because the wage paid is less than the marginal revenue product. C)Increase employment because the wage paid is less than the marginal revenue product. D)Reduce the product price so that the wage and marginal revenue product will be equal.

A soybean farmer sells soybeans in a perfectly competitive market and hires labor in a perfectly competitive market.The market price of soybeans is $1 a bushel,the wage rate is $12,the farmer employs six workers and the marginal product of the sixth worker is 10.What would you advise this farmer to do? A)Do nothing because the wage rate and the marginal product of the last worker hired are equal. B)Reduce employment because the wage paid is greater than the marginal revenue product. C)Increase employment because the wage paid is less than the marginal revenue product. D)Increase the product price so that the wage and marginal revenue product will be equal.

In a competitive labor market: A)the firm can hire all the labor it wants at the going market wage rate. B)the market wage rate is the marginal revenue product of labor. C)firms will hire as long as the marginal revenue product of labor is less than or equal to the market wage. D)all of the above

A profit maximizing firm should hire more labor as long as: A)the marginal product of the worker is positive. B)the marginal revenue product of the worker is positive. C)the marginal revenue product of the worker is greater than or equal to the wage rate. D)the marginal revenue product of the worker is greater than or equal to the price of the output.

If a firm is maximizing profit,which of the following is true? A)The marginal revenue product is equal to the wage rate. B)The marginal product of labor is equal to the average product of labor. C)The marginal product of labor is maximized. D)all of the above

Table 17.3 -Refer to Table 17.3.If the market price of the product is $4 and the firm can hire as many workers as it wants at a wage of $40,the firm should hire ________ workers. A)2 B)3 C)4 D)5

Table 17.3 -Refer to Table 17.3.Suppose that the market price of the product is $2.If the wage is $40,the firm should hire ________ workers. A)2 B)3 C)4 D)5

Table 17.3 -Refer to Table 17.3.If the market price of the product is $5 and the wage rate is $40,the firm should hire ________ workers. A)2 B)3 C)4 D)5

Table 17.4 -Refer to Table 17.4.Suppose the wage rate equals $8 per worker.How many workers will the firm hire? A)2 B)3 C)4 D)There is not enough information to tell.

Table 17.4 -Refer to Table 17.4.If the wage rate is $12 and the output sells for $3 per unit,how many workers will the firm hire? A)1 B)2 C)3 D)4

Table 17.4 -Refer to Table 17.4.Suppose the firm is hiring only one worker when the wage rate is $12 and the output price is $2.Which of the following is true? A)The firm is maximizing profit. B)The firm is incurring a loss and should hire less labor. C)The firm could increase its profit by hiring more labor. D)The wage rate will fall.

Table 17.4 -Refer to Table 17.4.If the wage rate is $8 per worker and the output sells for $1,the firm will hire: A)0 workers. B)1 workers. C)2 workers. D)3 workers.

The marginal revenue product curve is: A)upward sloping when capital and labor are substitutes. B)the firm's short-run demand curve for labor. C)likely to shift if the wage increases. D)all of the above

The perfectly competitive firm's short-run demand for labor is downward sloping because: A)the output price falls as the firm produces more output. B)of diminishing marginal productivity. C)the labor supply curve is upward sloping. D)as more labor is hired,the firm has less money available per worker.

A firm's short-run demand curve for labor would shift to the left if: A)there is a decrease in the price of the output. B)there is an increase in the marginal product of labor. C)there is a decrease in the wage rate. D)all of the above

If Sparkling Cleaning Service uses only one variable input,labor.The firm's short-run demand curve for labor is the: A)total product curve. B)marginal product curve. C)marginal revenue product curve. D)wage rate.

Which of the following situations is most likely to generate the largest output effect from a decrease in the price of one of a firm's inputs? A)The demand for a firm's product is inelastic. B)The demand for a firm's product is elastic. C)The inputs used in production are highly substitutable. D)The inputs used in production are highly complementary.

If the price of labor falls: A)we can conclude that the demand for capital will always decrease because only the input-substitution effect is relevant. B)we can conclude that the demand for capital will always increase because only the output effect is relevant. C)the change in the demand for capital cannot be predicted because the input-substitution effect and output effect work in opposite directions. D)the demand for capital will be unaffected,because only a change in the price of capital would change the demand for capital.

The demand curve for labor will slope downward because of: A)the input-substitution effect. B)the output effect. C)diminishing returns to scale. D)both A and B

The owner of Instant Printing,a firm that prints business cards,tells you that as a result of an increase in the wage rate of printer operators he has reduced the amount of output he produces and the amount of capital he uses.How would you respond to this? A)You should tell him that this doesn't make any economic sense because according to the input-substitution effect he should have substituted toward capital and away from labor. B)This seems logical,because the output effect of an input price increase would cause a firm to demand less of all inputs,not just the input whose price increased. C)You should tell him that instead of reducing output and the demand for all inputs,he should increase output and the demand for inputs so that he can meet the higher labor costs by generating more revenue. D)You tell him that the input-substitution effect and the scale effect both suggest that he decrease the amount of capital he uses when his workers' wage rate increases.

The output effect is defined as: A)the demand for the input whose price has increased will decrease,but the demand for the other factors will increase. B)the change in the quantity of labor demanded resulting from a change in the quantity of output produced. C)the change in the quantity of labor demanded resulting from an increase in the price of other inputs. D)the demand for the factor whose price has increased will increase,but the demand for the other factors will decrease.

The input-substitution effect decreases the labor input per unit of output while the output effect: A)decreases the price of the output. B)decreases the total output. C)increases the price of the output. D)increases the total output.

an appliances manufacturer adopts a new technology that,ceteris paribus,increases the productivity of capital.At the same time,its employees unionize and demand higher wages.Assume that for this manufacturer capital and labor are substitutable.Which of the following is most likely to occur? A)Capital will be substituted for labor. B)Labor will be substituted for capital. C)Output increases as do the prices of capital and labor. D)Output decreases as does the price of cars.

The tendency of firms to substitute away from a factor whose relative price has risen and toward a factor whose relative price has fallen is called the: A)input-substitution effect. B)derived demand effect. C)diminishing returns effect. D)output effect.

Compared to its long-run demand for labor,a firm's short-run demand for labor: A)is steeper. B)will be relatively more inelastic. C)will be relatively more elastic. D)none of the above

Recall the application about major league baseball,how are average salaries of MLB players determined? A)based on the MRP of a player that equals his contribution to the firm's total revenue from ticket sales and television contracts B)Firms use a specific formula that is determined by multiplying the total revenue from the player and the total cost. C)based on the diminishing return from each player D)based on the years that players have been with one team

The demand for labor is dependent on the demand for the outputs the labor is used to produce.

Since there are diminishing returns in the long run,the market demand curve is negatively sloped.

A profit-maximizing firm will hire labor as long as the marginal revenue product of labor is less than the wage.

The demand for labor is more inelastic in the short run.This makes the short-run demand curve steeper compared to the long-run curve.

Explain why the demand for labor is a derived demand.

What happens when a firm encounters diminishing returns? What causes diminishing returns?

Graphically illustrate and explain the effect of an increase in product price on the demand curve for labor.

Graphically illustrate and explain the effect of an increase in the marginal product of labor on the demand curve for labor.

Fred's Pizza Palace sells pizzas in a competitive market.The price of pizzas is $1.25 each.Hourly output varies with the amount of labor hired as follows: Fill in the column for marginal product of labor and marginal revenue product.

Frank's Burgers employs workers in a competitive market.It currently has 15 employees.The marginal revenue product of the 15th worker hired is $8.50 per hour.The market equilibrium wage is $10 per hour.Is this firm maximizing profit? Explain.

Table 17.5 -A firm producing ink pens reports the production information in Table 17.5.The pens sell in a competitive market at a price of $0.50 each.The firm hires workers in a competitive labor market at a wage of $9 per hour.How many workers should the firm hire? Explain your answer.

Graphically illustrate and explain the effect of an increase in the wage rate on the demand curve for labor.

Define the marginal revenue product of labor.Explain two factors that could cause the marginal revenue product curve of labor to shift to the right.

Table 17.6 -A soft pretzel shop can sell as many pretzels as it wishes at a price of $2.The production information is shown in Table 17.6.Complete the marginal product and marginal revenue product columns of Table 17.6.

Table 17.6 -A soft pretzel shop can sell as many pretzels as it wishes at a price of $2.The production information is shown in Table 17.6.If the shop must pay $60 per worker per day,how many workers should be hired to maximize profit?

Use a diagram of a competitive labor market and a representative firm to explain how much labor a profit-maximizing firm will hire.

Explain the output effect of an increase in the wage rate.

Explain why long-run labor demand curves slope downward using the concepts of the input-substitution effect and the output effect.

Comment on the following statement: "The output effect and the input-substitution effect work in opposite directions,so it is possible that a decrease in the wage rate can lead to a decrease in the amount of labor hired."

Explain the input-substitution effect and provide an example.

Dogger's Snowboard Shop hires workers for the holidays.Dogger's sells snowboards for $150.The marginal revenue product of the last worker hired is $450.What is the marginal product of the last worker?

Dogger's Snowboard Shop hires workers for the holidays.Dogger's sells snowboards for $150.The marginal product of the last worker hired is three.What is the marginal revenue product of the last worker?

Dogger's Snowboard Shop hires workers for the holidays.Marginal product of the last worker hired is three.Marginal revenue product of the last worker is $450.Assuming one price,what is the price of Dogger's snowboards?

Assume Edward considers eating out to be a normal good.The income effect of a wage increase for Edward implies that Edward's demand for eating out will be ________ and Edward's labor supply will be ________. A)lower;higher B)higher;lower C)higher;higher D)lower;lower

If the substitution effect of a wage change outweighs the income effect of a wage change,the labor-supply curve is: A)upward sloping. B)horizontal. C)vertical. D)backward bending.

Assuming that leisure is a normal good,if an individual's labor supply curve is backward bending,then the: A)income effect outweighs the substitution effect. B)substitution effect outweighs the income effect. C)income effect and the substitution effects are equal. D)income effect is zero.

If Sara receives a pay increase from $15 to $16 an hour and she chooses to: A)work more,then the income effect is equal to the substitution effect. B)take more vacation,then the income effect is weaker than the substitution effect. C)take more vacation,then the income and substitution effects are working in the same direction with regard to leisure because it is a normal good. D)work more,then the substitution effect for leisure demand is stronger than the income effect.

The labor market supply curve illustrates that as: A)more workers are hired,a lower wage rate needs to be paid. B)the wage rate increases,more workers seek to be employed. C)the wage rate falls,more workers will seek to be employed. D)the price of the product produced by the worker rises,more workers will be employed.

The market supply curve for labor is usually: A)negatively sloped. B)horizontal. C)positively sloped. D)vertical.

Which of the following could lead to an increase in labor supply? A)more people retire at a younger age B)an increase in labor force participation C)tighter restrictions on immigration policy D)an increase in the wage rate

Which of the following could lead to an increase in labor supply? A)an increase in immigration B)a decrease in the marginal product of workers C)an increase in the wage rate D)none of the above

Ignoring the income effect,an increase in the wage rate will cause an increase in labor supply.

Higher wages could lead workers to choose to work less hours.

An increase in the wage rate means that the opportunity cost of leisure has fallen.

There is a negative relationship between the price of labor and the quantity of labor supplied,ceteris paribus.

We cannot easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure.

As the dollar prizes for professional golf tournaments have increased,professional golfers have entered fewer tournaments per year.Is this type of behavior consistent with utility maximization? Explain.

Explain the income effect and the substitution effect due to an increase in the wage rate.

Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market.What does this imply about the relative sizes of the substitution effect and the income effect? Explain.

Comment on the following statement: "An increase in the wage always leads to an increase in the quantity of labor supplied."

Suppose that you currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour.Using the concept of income and substitution effects,explain how you might react.

How does occupational licensing affect the labor market for a particular occupation?

If the hourly wage rate is above the equilibrium wage,then: A)there is a surplus of labor. B)the quantity of labor demanded is equal to the quantity of labor supplied. C)the demand for labor will fall and the supply of labor will rise. D)the quantity of labor demanded will be greater than the quantity of labor supplied.

If the wage rate is below the equilibrium,then: A)the supply of labor will decrease to adjust to the lower wage. B)the wage will be bid up by employers. C)many workers will be unemployed. D)both A and C

-Refer to Figure 17.2.If the hourly wage is $15,then: A)supply for labor will increase. B)quantity supplied of labor is 25,000 hours. C)demand for labor will increase. D)quantity demanded for labor is 25,000 hours.

-Refer to Figure 17.2.If the hourly wage increases from $9 to $12,then: A)quantity demanded for labor will rise. B)demand for labor will decrease. C)quantity supplied of labor will increase. D)supply of labor will fall.

-Refer to Figure 17.2.If the demand for labor increases,then equilibrium wage will ________ and equilibrium quantity of hours will ________. A)rise;fall B)fall;fall C)rise;rise D)fall;rise

-Refer to Figure 17.2.If the supply of labor decreases,then equilibrium wage will ________ and equilibrium quantity of hours will ________. A)rise;fall B)fall;fall C)rise;rise D)fall;rise

-Refer to Figure 17.2.If the supply of labor increases,then equilibrium wage will ________ and equilibrium quantity of hours will ________. A)rise;fall B)fall;fall C)rise;rise D)fall;rise

-Refer to Figure 17.2.If the demand for labor decreases,then equilibrium wage will ________ and equilibrium quantity of hours will ________. A)rise;fall B)fall;fall C)rise;rise D)fall;rise

-Refer to Figure 17.2.If the equilibrium wage $12 and a new minimum wage is set at $15,then: A)demand will rise. B)quantity demanded will decrease. C)quantity demanded will increase. D)demand will fall.

-Refer to Figure 17.2.If the equilibrium wage $12 and a new minimum wage is set at $15,then ________ hours of labor will be employed. A)36,000 B)25,000 C)30,000 D)none of these

How can an increase in the minimum-wage affect the restaurant industry? A)It can create a shortage of restaurant workers. B)It can lead to an increase in prices for restaurant meals. C)It can create a surplus of restaurant workers. D)both B and C

Suppose there is a great article online on a major news page about the great career path of being a community college instructor and this encourages a lot of people to seek that path.This causes the supply of community college instructors to increase,shifting the supply curve to: A)the left,the equilibrium wage to decrease and the equilibrium quantity to increase. B)the left,the equilibrium wage to increase and the equilibrium quantity to decrease. C)the right,the equilibrium wage to decrease and the equilibrium quantity to decrease. D)the right,the equilibrium wage to decrease and the equilibrium quantity to increase.

Minimum-wage laws: A)increase the efficiency of labor markets. B)are always effective at alleviating poverty. C)force an imbalance between the supply of and demand for labor. D)result in an increase in employment.

Assume that a minimum wage is created and imposed above the equilibrium wage in an otherwise perfectly competitive labor market.Which of the following will NOT occur as a result of this new law? A)The quantity of labor seeking jobs will rise. B)The unemployment rate will rise. C)The level of employment will increase. D)None of the above will occur.

Which of the following statements about minimum-wage laws is FALSE? A)Minimum-wage laws tend to lower teenage employment. B)Minimum-wage laws have eliminated poverty in the United States. C)Increases in the minimum wage can lead to increased unemployment. D)All of the above are false.

Which of the following is a reason why wage rates may differ among workers? A)differences in skills required B)differences in working conditions C)racial and gender discrimination D)all of the above

A small supply of workers in a particular occupation could be due to: A)artificial barriers to entry. B)few people with the required skills. C)high training costs. D)all of the above.

All else equal,when the supply of workers is plentiful,we can expect market wages to be: A)relatively high. B)demand-determined. C)relatively low. D)above the equilibrium wage.

If supply is low relative to demand,then we can expect the equilibrium wage to be: A)demand-determined. B)relatively high. C)relatively low. D)neither high nor low,but very volatile.

Workers who install and maintain electrical power lines are known to have high wages.We can (in part)explain this because: A)the job is likely to be very dull. B)the job is likely to be very dangerous. C)many individuals are qualified to do this job. D)the job requires a low level of skill.

Beth is a college student looking for summer employment.She has two options.Firm X is employing lifeguards to patrol the beaches at an exclusive resort in Cancun,Mexico,while Firm Y offers her a job working in an office filing paper work and assist with the ordering of office supplies.Given this information: A)Firm X may pay a wage that is higher than that of Firm Y because the work at Firm X is not very interesting. B)Firm X may pay a wage that is lower than that of Firm Y because the job at Firm X has more desirable working conditions. C)Firm Y will pay a wage that is higher than that of Firm X because more individuals will apply for jobs at Firm Y. D)none of the above

Wages are higher in occupations that are considered dangerous.Which of the following job features would lead to a higher pay? A)night shift B)mental stress C)noisy environment D)all of these

Labor market discrimination is evident when: A)wage rates differ for similar types of jobs. B)wages of individual workers differ based on some characteristic that is not related to productivity. C)consumers prefer to purchase particular products. D)none of the above

A study done about gender gaps identified some factors that could contribute to gender gaps.Which of the following is NOT a factor? A)difference in worker skills and productivity B)difference in occupational preference C)duration of unemployment D)occupational discrimination

One of the problems with calculating the true amount of discrimination that takes place in the labor market is: A)the difficulty in measuring average wage differentials. B)inadequate reporting of discrimination. C)the difficulty of measuring productivity differences across workers. D)that inflation leads to higher wages over time.

Which of the following statements represents the signaling effect of a college education? A)A person who is naturally more productive is likely to invest in education. B)Education can turn an unproductive person into an productive person. C)The information gained in a college classroom increases the productivity of graduates. D)all of the above

According to the signaling effect,college education: A)enhances productivity. B)signals productivity. C)is an investment. D)increases the intelligence of the student.

According to the learning effect,college education: A)leads to lower lifetime earnings. B)alters an individual's work ethic. C)enhances a worker's productivity. D)signals natural ability.

Occupational licensing: A)lowers the supply of labor in a particular occupation. B)lowers the wages earned by the workers in a particular occupation. C)ensures that consumers always get the best possible service. D)raises the employment level of workers in a particular occupation.

Recall the application about the beauty premium with respect to wages.Which of the following is a factor in the beauty premium? A)Some workers and customers like dealing with attractive people. B)Beautiful people get more opportunities to learn through experience. C)Attractive people demand higher wages because of their greater potential. D)A and B are correct.

Teenagers may benefit from minimum-wage laws.

If the market wage rate is below equilibrium,there will be a surplus of workers.

There are only winners from the minimum wage.

Employment and the minimum wage are positively correlated.

Wage rates may differ across workers because of differences in occupational preferences.

Discrimination cannot be easily measured by simply comparing average wage rates across workers.

List four reasons why the supply of labor in a particular occupation may be small.

Alan and Bob have the same marginal productivity of labor.Yet,Alan's wage rate is much higher than Bob's.How can this be?

What is the learning effect of a college education?

What is the signaling effect of a college education?

A fast-food restaurant currently hires the amount of labor that maximizes profit at a market-determined wage of $3.00 per hour.If government legislation now states that all firms must pay their workers a minimum of $5.00 per hour,how will this legislation affect the firm's hiring decision?

What are the effects of a minimum wage that is placed above the market equilibrium wage?

Disposable income is defined as: A)all earnings received from labor and real estate markets. B)all income from stocks,bonds,and real estate. C)market income plus government transfers minus taxes paid. D)all income minus contributions to 401K accounts and IRAs.

Which of the following is considered a government transfer? A)earning from treasury bonds B)food taxes C)housing assistance D)all of the above

Which of the following is a way to measure income? A)available income B)market income C)taxable income D)all of the above

A reason for the increase in demand for workers with high levels of labor skills is: A)greater taxes paid on income earned. B)increased technological advances. C)reduced international trade from protectionism. D)B and C are correct.

Since the 1980s,the proportion of income received by the poorest 20 percent of U.S.income earners has: A)almost doubled. B)has increased steadily. C)has decreased steadily. D)held relatively steady.

The most important reason for money income growing more unequal in recent decades is an increase in: A)government transfers. B)the demand for skilled labor. C)the number of high school graduates. D)none of these.

Increased international trade has brought about: A)less U.S.imports. B)an increase in demand for low-skilled workers. C)less U.S.exports. D)an increase in demand for high-skilled workers.

Advancements in technology in the U.S.have resulted in: A)less U.S.imports. B)an increase in demand for high-skilled workers. C)less U.S.exports. D)an increase in demand for low-skilled workers.

The market income includes earnings from the following: A)wages and salaries. B)bonds and stocks. C)real estate. D)all of the above.

During World War II the percent share of income earned by the top 10 percent of wage earners in the U.S.: A)increased. B)held steady. C)decreased. D)tripled.

Recall the application about positive and negative effects from immigration of low-skilled workers.Which of the following is NOT a result of immigrant labor in the U.S.? A)lower prices of products B)lower costs of production C)increased wages for low-skill workers D)increased benefits to consumers

Recall the application about positive and negative effects from immigration of low-skilled workers.Which groups below benefit from immigration of low-skill workers? A)firms and high school dropouts B)consumers and low-skill workers C)firms and low-skill workers D)firms and consumers

In the U.S. ,income has become less equally distributed in the past two decades due technology.

Discrimination in the U.S.workplace is not a determinant of income inequality.

Discrimination can affect the income that workers earn due to their race or gender.

Labor skills are determined by innate ability,education and work experience.

Working longer hours at a more demanding job will not lead to higher income.

Increased international trade results in less imports to the U.S.

Labor economists consider an increase in demand for skill the most important reason for growing inequality.

Increased international trade results in greater incomes for low-skilled workers.

Chief executives in the U.S.are not paid as high as their foreign counterparts.

The incomes earned by the top one percent in the U.S.has decreased in recent years.

List and discuss the three key factors that explain the differences in market income.

Explain why the demand for high-skilled workers has increased in the U.S.during the past three decades.

The official poverty line in the U.S.is currently set at ________ times the cost of a minimum food budget. A)two B)three C)four D)five

The U.S.government defines a poor household as one: A)with total income three times more than the amount required to satisfy the minimum needs of a household. B)below the poverty line of $12,000 in household income. C)with total income less than the amount required to satisfy the minimum needs of a household. D)with disposable income less than $25,000.

Poverty rates for Hispanics are more than the poverty rates for ________. A)Asians. B)Whites. C)female-headed households. D)A and B are correct.

The poverty rate for elderly has fallen since 1959 largely due to: A)more elderly workers. B)Social Security benefits. C)elderly people working longer. D)better educational institutions.

Which one of the following groups had the lowest incidence of poverty in 2010? A)married couples B)Asian households C)65 years of age and older D)female-headed households

Government spending programs that provide assistance to those whose income falls below a certain level are called: A)unilateral programs. B)discretionary spending programs. C)means-tested programs. D)noncash programs.

Government tax and government spending programs ________ the 2004 poverty rate. A)decreased B)increased C)did not effect D)eliminated

Which of the following does NOT affect incentives to work? A)base cash payment B)college premium C)benefit reduction rate for income earned D)All of the above affect incentives to work.

What expenditure makes up approximately half of total expenditures on means-tested programs? A)education B)housing aid C)medical care D)all of the above

Cash payments make up approximately ________ percent of total expenditures on means-tested programs. A)10 B)20 C)40 D)50

For welfare recipients,the larger the benefit reduction rate for market income is,the A)higher the incentive to work additional hours. B)lower the incentive to work additional hours. C)stronger the labor union will be. D)less spent on welfare programs.

Recall the application on state lotteries and distribution of Income,how do government policies affect the distribution of income? A)Higher-income household contributes a larger percent of its income and more than the lower-income households. B)Lower-income household contributes a larger percent of its income. C)A low-income household spends about the same per yer on lotteries as a medium and high income households. D)B and C are correct.

Only about 6 million people in the U.S.were living below the poverty line in 2004.

In the years since welfare reform took place,the number of people receiving aid has gone down.

The official poverty line in the U.S.is determined by a minimum food budget times five.

The implementation of TANF helped reduce the number of people on welfare.

Most of the people living in poverty in the U.S.are elderly.

High school graduates have a higher poverty rate than college graduates.

Married couples have a higher poverty rate than female-headed households.

Explain what means-tested programs are and how they affect the poverty rate in the U.S.

Explain how cash incentives to the poor affect incentives to work.