Question 1

If a firm hires labor and with its current employees W = VMPL,then profit:

Accepted Answer

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. 
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.

Question 2

Suppose there are diminishing returns to labor.If the _____ of labor hired by a firm increases,holding everything else constant,the _____ labor will _____.

Accepted Answer

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 
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

Question 3

Use the following to answer question:
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 _____.

Accepted Answer

A) less;$80 
B) greater;$100 
C) less;$60 
D) greater;$110 
A) less;$80 
B) greater;$100 
C) less;$60 
D) greater;$110

Question 4

Which group had the HIGHEST median earnings in the U.S.labor market in 2015?

Accepted Answer

A) White men 
B) women,regardless of ethnicity 
C) African-Americans 
D) Hispanics 
A) White men 
B) women,regardless of ethnicity 
C) African-Americans 
D) Hispanics

Question 5

Use the following to answer question:
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:

Accepted Answer

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. 
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.

Question 6

People who have higher levels of human capital will tend to:

Accepted Answer

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. 
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.

Question 7

An increase in wealth will cause the labor supply curve to:

Accepted Answer

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) 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.

Question 8

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.

Accepted Answer

A) True 
 B)False

Question 9

Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:

Accepted Answer

A) efficiency wages. 
B) market power. 
C) compensating differentials. 
D) discrimination. 
A) efficiency wages. 
B) market power. 
C) compensating differentials. 
D) discrimination.

Question 10

The opportunity cost of an extra hour of leisure is:

Accepted Answer

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) $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.

Question 11

Factors of production are different from inputs in that factors of production:

Accepted Answer

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. 
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.

Question 12

The firm's value of the marginal product of labor curve:

Accepted Answer

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. 
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.

Question 13

Manufactured resources such as equipment,buildings,and tools are also known as:

Accepted Answer

A) human capital. 
B) labor. 
C) physical capital. 
D) natural resources. 
A) human capital. 
B) labor. 
C) physical capital. 
D) natural resources.

Question 14

The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the _____ effect.

Accepted Answer

A) production 
B) elasticity 
C) income 
D) complementary 
A) production 
B) elasticity 
C) income 
D) complementary

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) monopolies. 
B) oligopolies. 
C) perfectly competitive. 
D) allowed to pay only the wages that government approves. 
A) monopolies. 
B) oligopolies. 
C) perfectly competitive. 
D) allowed to pay only the wages that government approves.

Question 17

The marginal product times product price equals the:

Accepted Answer

A) marginal revenue. 
B) value of the marginal product. 
C) additional revenue product. 
D) marginal cost. 
A) marginal revenue. 
B) value of the marginal product. 
C) additional revenue product. 
D) marginal cost.

Question 18

Which statement is TRUE?

Accepted Answer

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. 
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.

Question 19

Use the following to answer question:  
-(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:

Accepted Answer

A) $11. 
B) $110. 
C) $90. 
D) $750. 
A) $11. 
B) $110. 
C) $90. 
D) $750.

Question 20

In the United States in 2015,approximately _____% of total income in the economy took the form of compensation of employees.

Accepted Answer

A) 40 
B) 9 
C) 90 
D) 70 
A) 40 
B) 9 
C) 90 
D) 70

Exam 19: Factor Markets and the Distribution of Income

If a firm hires labor and with its current employees W = VMPL,then profit:

Suppose there are diminishing returns to labor.If the _____ of labor hired by a firm increases,holding everything else constant,the _____ labor will _____.

Which group had the HIGHEST median earnings in the U.S.labor market in 2015?

Use the following to answer question: 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:

People who have higher levels of human capital will tend to:

An increase in wealth will cause the labor supply curve to:

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.

Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:

The opportunity cost of an extra hour of leisure is:

Factors of production are different from inputs in that factors of production:

The firm's value of the marginal product of labor curve:

Manufactured resources such as equipment,buildings,and tools are also known as:

The trade-off between work and leisure underlying the supply of labor involves the substitution effect and the _____ effect.

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

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

The marginal product times product price equals the:

Which statement is TRUE?

Use the following to answer question: -(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:

In the United States in 2015,approximately _____% of total income in the economy took the form of compensation of employees.

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

Suppose there are diminishing returns to labor.If the ___ of labor hired by a firm increases,holding everything else constant,the _ labor will ___.