Question 1

Which example illustrates wage disparity due to compensating differentials?

Accepted Answer

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. 
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.

Question 2

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:

Accepted Answer

A) compensating differentials. 
B) differences in human capital. 
C) discrimination. 
D) differences in talent. 
A) compensating differentials. 
B) differences in human capital. 
C) discrimination. 
D) differences in talent.

Question 3

Which factor is NOT associated with production at a college?

Accepted Answer

A) the faculty 
B) classroom buildings 
C) electricity 
D) the computer labs 
A) the faculty 
B) classroom buildings 
C) electricity 
D) the computer labs

Question 4

If a union is able to bargain for a wage that is higher than the equilibrium:

Accepted Answer

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. 
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.

Question 5

A higher wage _____ the price of _____ and _____ workers' incomes.The result pulls the quantity of labor supplied in _____ direction(s).

Accepted Answer

A) increases;leisure;increases;opposite 
B) increases;leisure;increases;the same 
C) reduces;work effort;reduces;opposite 
D) reduces;labor;increases;the same 
A) increases;leisure;increases;opposite 
B) increases;leisure;increases;the same 
C) reduces;work effort;reduces;opposite 
D) reduces;labor;increases;the same

Question 6

Which formula is CORRECT?

Accepted Answer

A) VMPL = MC × P. 
B) VMPL = MPL × P. 
C) MPL = VMPL × P. 
D) VMPL / MC = TR. 
A) VMPL = MC × P. 
B) VMPL = MPL × P. 
C) MPL = VMPL × P. 
D) VMPL / MC = TR.

Question 7

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:

Accepted Answer

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

Question 8

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

Accepted Answer

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

Question 9

The labor demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labor curves.

Accepted Answer

A) marginal 
B) value of the marginal 
C) marginal physical 
D) average physical 
A) marginal 
B) value of the marginal 
C) marginal physical 
D) average physical

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which statement describes a compensating differential?

Accepted Answer

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) 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.

Question 12

In the factor market for land,equilibrium rental prices will be _____ the value of marginal product of land.

Accepted Answer

A) less than 
B) equal to 
C) greater than 
D) unrelated to 
A) less than 
B) equal to 
C) greater than 
D) unrelated to

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

The marginal productivity theory of income distribution says that:

Accepted Answer

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. 
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.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

When labor is hired in a competitive market,the value of the marginal product of labor is computed by:

Accepted Answer

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. 
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.

Question 17

A person's optimal labor supply choice:

Accepted Answer

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. 
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.

Question 18

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.

Accepted Answer

A) greater than $40;greater 
B) equal to $18;less 
C) greater than $40;less 
D) greater than $20;less 
A) greater than $40;greater 
B) equal to $18;less 
C) greater than $40;less 
D) greater than $20;less

Question 19

Which factor will NOT shift the labor supply curve?

Accepted Answer

A) a change in preferences and social norms 
B) changes in wealth 
C) changes in opportunities 
D) a change in the wage rate 
A) a change in preferences and social norms 
B) changes in wealth 
C) changes in opportunities 
D) a change in the wage rate

Question 20

The category "compensation of employees":

Accepted Answer

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. 
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.

Exam 19: Factor Markets and the Distribution of Income

Which example illustrates wage disparity due to compensating differentials?

Which factor is NOT associated with production at a college?

If a union is able to bargain for a wage that is higher than the equilibrium:

A higher wage _____ the price of _____ and _____ workers' incomes.The result pulls the quantity of labor supplied in _____ direction(s).

Which formula is CORRECT?

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:

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

The labor demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labor curves.

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

Which statement describes a compensating differential?

In the factor market for land,equilibrium rental prices will be _____ the value of marginal product of land.

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

The marginal productivity theory of income distribution says that:

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

When labor is hired in a competitive market,the value of the marginal product of labor is computed by:

A person's optimal labor supply choice:

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.

Which factor will NOT shift the labor supply curve?

The category "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

A higher wage ___ the price of _ and _ workers' incomes.The result pulls the quantity of labor supplied in ___ direction(s).

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.