Exam 19: Factor Markets and the Distribution of Income

Actual wage differentials can be partially explained by which factor(s)? I.differences in talent II.different amounts of human capital III.compensating differentials

In terms of labor supply,the substitution effect of a higher wage causes a(n):

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.

If a firm hires labor such that W > VMPL,then profit:

Use the following to answer question: -(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 firm's demand curve for labor is:

Which statement is TRUE?

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.

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 leftward shift in the labor supply curve might result from:

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.

Human capital:

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.

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:

Use the following to answer question: -(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 firm's demand curve for labor in a perfectly competitive market is the downward-sloping portion of its _____ curve.

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?

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:

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.

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.