Question 1

The firm's value of marginal product curve slopes downward:

Accepted Answer

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. 
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.

Question 2

Use the following to answer question:
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.

Accepted Answer

A) 4 
B) 6 
C) 5 
D) 8 
A) 4 
B) 6 
C) 5 
D) 8

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

(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.

Accepted Answer

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. 
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.

Question 7

According to the _____,in a perfectly competitive economy each factor of production is paid its equilibrium value of the marginal product.

Accepted Answer

A) theory of labor supply 
B) efficiency-wage model 
C) theory of compensating differentials 
D) marginal productivity theory of income distribution 
A) theory of labor supply 
B) efficiency-wage model 
C) theory of compensating differentials 
D) marginal productivity theory of income distribution

Question 8

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:

Accepted Answer

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. 
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.

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

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:

Accepted Answer

A) value of the marginal product. 
B) average product. 
C) marginal factor cost. 
D) marginal physical product. 
A) value of the marginal product. 
B) average product. 
C) marginal factor cost. 
D) marginal physical product.

Question 11

(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?

Accepted Answer

A) one 
B) two 
C) three 
D) four 
A) one 
B) two 
C) three 
D) four

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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.

Accepted Answer

A) total cost;total revenue 
B) total revenue;total cost 
C) marginal cost;marginal revenue 
D) marginal product;marginal cost 
A) total cost;total revenue 
B) total revenue;total cost 
C) marginal cost;marginal revenue 
D) marginal product;marginal cost

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

In a given perfectly competitive labor market,the equilibrium wage:

Accepted Answer

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. 
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.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

Human capital is the improvement in _____ produced by _____.

Accepted Answer

A) physical capital;technology 
B) labor;education and knowledge 
C) labor;physical capital 
D) labor;management 
A) physical capital;technology 
B) labor;education and knowledge 
C) labor;physical capital 
D) labor;management

Question 18

Use the following to answer question:  
-(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).

Accepted Answer

A) 1 more 
B) 2 more 
C) 1 fewer 
D) 2 fewer 
A) 1 more 
B) 2 more 
C) 1 fewer 
D) 2 fewer

Question 19

A factor demand curve will shift to the left because of a(n)_____ in the price of the _____.

Accepted Answer

A) increase;factor 
B) increase;good the factor produces 
C) decrease;factor 
D) decrease;good the factor produces 
A) increase;factor 
B) increase;good the factor produces 
C) decrease;factor 
D) decrease;good the factor produces

Question 20

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?

Accepted Answer

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. 
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.

The firm's value of marginal product curve slopes downward:

Use the following to answer question: 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.

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

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.

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

According to the _____,in a perfectly competitive economy each factor of production is paid its equilibrium value of the marginal product.

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:

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

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:

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

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.

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

In a given perfectly competitive labor market,the equilibrium wage:

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.

Human capital is the improvement in _ produced by _.

A factor demand curve will shift to the left because of a(n)_ in the price of the _.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Exam 19: Factor Markets and the Distribution of Income

The firm's value of marginal product curve slopes downward:

Use the following to answer question: 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.

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

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.

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

According to the _____,in a perfectly competitive economy each factor of production is paid its equilibrium value of the marginal product.

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:

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

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:

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

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.

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

In a given perfectly competitive labor market,the equilibrium wage:

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.

Human capital is the improvement in _____ produced by _____.

A factor demand curve will shift to the left because of a(n)_____ in the price of the _____.

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

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.

Human capital is the improvement in _ produced by _.

A factor demand curve will shift to the left because of a(n)_ in the price of the _.