Question 1

A firm is in equilibrium when the wage is:

Accepted Answer

A) less than the price of the product. 
B) greater than the average product. 
C) equal to the average product. 
D) equal to the VMPL. 
A) less than the price of the product. 
B) greater than the average product. 
C) equal to the average product. 
D) equal to the VMPL.

Question 2

An efficiency wage exists when an employer pays an employee more than the equilibrium wage to motivate the employee to work hard.False

Accepted Answer

A) True 
 B)False

Question 3

When a person receives a wage increase, changes in his or her labor supply depend on:

Accepted Answer

A) a substitution effect and an income effect. 
B) a substitution effect only. 
C) an income effect only. 
D) diminishing marginal product. 
A) a substitution effect and an income effect. 
B) a substitution effect only. 
C) an income effect only. 
D) diminishing marginal product.

Question 4

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2, the value of the marginal product for the fifth worker is:

Accepted Answer

A) $0. 
B) $20. 
C) $40. 
D) $60. 
A) $0. 
B) $20. 
C) $40. 
D) $60.

Question 5

Which of the following is a factor of production at a college?

Accepted Answer

A) the faculty 
B) lab concentrations to use in experiments 
C) electricity 
D) scantron sheets 
A) the faculty 
B) lab concentrations to use in experiments 
C) electricity 
D) scantron sheets

Question 6

A lower wage:

Accepted Answer

A) has an income effect but not a substitution effect on the quantity of labor supplied. 
B) means a higher income for any given level of labor supplied. 
C) has an income effect that is always negative with respect to the quantity of labor supplied. 
D) has an income effect that is always positive with respect to the quantity of labor supplied. 
A) has an income effect but not a substitution effect on the quantity of labor supplied. 
B) means a higher income for any given level of labor supplied. 
C) has an income effect that is always negative with respect to the quantity of labor supplied. 
D) has an income effect that is always positive with respect to the quantity of labor supplied.

Question 7

Which of the following calculations is correct?
A.VMPL = MC × P.
B.VMPL = MP × P.
C.MP = VMPL × P.
D.VMPL / MC = TR.

Accepted Answer

The answer of Which of the following calculations is correct?
A.VMPL...

Question 8

The factor of production capital includes physical capital (such as buildings and machines), human capital (improvement in labor by education and knowledge), and financial capital (such as stock market investments).True

Accepted Answer

A) True 
 B)False

Question 9

Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market.The workers and their VMPLs are Noe, $40; Barbara, $35; Calvin, $27; and Diana, $15.Which of the following statements is true?

Accepted Answer

A) In equilibrium, each worker is paid his or her VMPL. 
B) Each worker is paid a wage equal to the highest VMPL . 
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 VMPL. 
B) Each worker is paid a wage equal to the highest VMPL . 
C) Each worker is paid $15. 
D) We need to know the product price before we can figure out the wage rate.

Question 10

(Table: Total Product of Labor at Debbie's Bakery) Debbie owns a bakery and can hire workers to produce cakes selling in a competitive output market at $10 each.The table Total Product of Labor at Debbie's Bakery shows the relation between the number of workers and the number of cakes produced.What is the value of the marginal product for the fourth worker?

Accepted Answer

A) 5 cakes 
B) $50 
C) $210 
D) 21 cakes 
A) 5 cakes 
B) $50 
C) $210 
D) 21 cakes

Question 11

The category "compensation of employees":

Accepted Answer

A) includes the earnings of proprietors. 
B) doesn't include benefits such as health insurance. 
C) can be attributed in a 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) can be attributed in a large part to the return on human capital. 
D) includes payments in kind that are common in rural areas.

Question 12

In the United States in the early twenty-first century, 70% of total income, by far the largest share, took the form of:

Accepted Answer

A) compensation of employees. 
B) corporate profits. 
C) interest income. 
D) rental income. 
A) compensation of employees. 
B) corporate profits. 
C) interest income. 
D) rental income.

Question 13

Tim works 51 hours per week, and his wage is $35 per hour.If his wage increases to $70 per hour, then:

Accepted Answer

A) the substitution effect implies that he will work less. 
B) if leisure is a normal good, the income effect implies that he will work more. 
C) if leisure is a normal good, the income effect will reinforce the substitution effect and he will work more. 
D) the substitution effect implies that he will work more. 
A) the substitution effect implies that he will work less. 
B) if leisure is a normal good, the income effect implies that he will work more. 
C) if leisure is a normal good, the income effect will reinforce the substitution effect and he will work more. 
D) the substitution effect implies that he will work more.

Question 14

A wage ________ reduces the quantity of labor supplied through the __ effect.

Accepted Answer

A) decrease; income 
B) increase; substitution 
C) increase; income 
D) decrease; complement 
A) decrease; income 
B) increase; substitution 
C) increase; income 
D) decrease; complement

Question 15

Human capital:

Accepted Answer

A) consists of man-made resources such as buildings and machines. 
B) is the improvement in labor created by education and knowledge that is embodied in the workforce. 
C) has become less important due to the progress in technology. 
D) is the improvement in labor created by education, which has become less important due to the progress in technology. 
A) consists of man-made resources such as buildings and machines. 
B) is the improvement in labor created by education and knowledge that is embodied in the workforce. 
C) has become less important due to the progress in technology. 
D) is the improvement in labor created by education, which has become less important due to the progress in technology.

Question 16

Gabriella often faces a trade-off between time at the beach and time working as a model.She earns $40 per hour as a model and values going to the beach at the same price.When explaining this to her parents, she says, "The marginal utility per hour working is the same as the marginal utility of going to the beach." This is an illustration of which concept?

Accepted Answer

A) indifference curves 
B) the substitution effect 
C) the income effect 
D) optimal time allocation 
A) indifference curves 
B) the substitution effect 
C) the income effect 
D) optimal time allocation

Question 17

All perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour.If the government raises the minimum wage to $8 per hour:

Accepted Answer

A) the value of the marginal product will exceed the wage, and firms will hire more workers. 
B) the value of the marginal product will be less than the wage, and firms will lay off some workers. 
C) firms will increase their prices to keep the value of the marginal product equal to the wage. 
D) firms will have to exit the industry, since the value of the marginal product is always less than the wage. 
A) the value of the marginal product will exceed the wage, and firms will hire more workers. 
B) the value of the marginal product will be less than the wage, and firms will lay off some workers. 
C) firms will increase their prices to keep the value of the marginal product equal to the wage. 
D) firms will have to exit the industry, since the value of the marginal product is always less than the wage.

Question 18

The government increases the sales tax on all goods.The government does not change the tax on income earned from labor.What happens in the market for labor?

Accepted Answer

A) The quantity of labor demanded decreases, but the demand for labor does not shift. 
B) The demand for labor decreases. 
C) The supply of labor increases. 
D) There is no change in the labor market. 
A) The quantity of labor demanded decreases, but the demand for labor does not shift. 
B) The demand for labor decreases. 
C) The supply of labor increases. 
D) There is no change in the labor market.

Question 19

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2 and the wage rate is $90 per hour, the profit- maximizing quantity of labor is workers.

Accepted Answer

A) zero 
B) two 
C) four 
D) six 
A) zero 
B) two 
C) four 
D) six

Question 20

(Table: Employment and Output) In the table Employment and Output, if the price of a bushel of wheat is $10 and the price of labor (wage) is $120, then the profit-maximizing quantity of labor is:

Accepted Answer

A) one. 
B) three. 
C) four. 
D) six. 
A) one. 
B) three. 
C) four. 
D) six.

A firm is in equilibrium when the wage is:

An efficiency wage exists when an employer pays an employee more than the equilibrium wage to motivate the employee to work hard.False

When a person receives a wage increase, changes in his or her labor supply depend on:

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2, the value of the marginal product for the fifth worker is:

Which of the following is a factor of production at a college?

A lower wage:

Which of the following calculations is correct? A.VMPL = MC × P. B.VMPL = MP × P. C.MP = VMPL × P. D.VMPL / MC = TR.

The factor of production capital includes physical capital (such as buildings and machines), human capital (improvement in labor by education and knowledge), and financial capital (such as stock market investments).True

Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market.The workers and their VMPLs are Noe, $40; Barbara, $35; Calvin, $27; and Diana, $15.Which of the following statements is true?

The category "compensation of employees":

In the United States in the early twenty-first century, 70% of total income, by far the largest share, took the form of:

Tim works 51 hours per week, and his wage is $35 per hour.If his wage increases to $70 per hour, then:

A wage ______ reduces the quantity of labor supplied through the effect.

Human capital:

All perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour.If the government raises the minimum wage to $8 per hour:

The government increases the sales tax on all goods.The government does not change the tax on income earned from labor.What happens in the market for labor?

(Table: Employment and Output) In the table Employment and Output, if the price of a bushel of wheat is $10 and the price of labor (wage) is $120, then the profit-maximizing quantity of labor is:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

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

Filters

Exam 19: Factor Markets and the Distribution of Income

A firm is in equilibrium when the wage is:

An efficiency wage exists when an employer pays an employee more than the equilibrium wage to motivate the employee to work hard.False

When a person receives a wage increase, changes in his or her labor supply depend on:

(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords.If the price of a power cord is $2, the value of the marginal product for the fifth worker is:

Which of the following is a factor of production at a college?

A lower wage:

Which of the following calculations is correct? A.VMPL = MC × P. B.VMPL = MP × P. C.MP = VMPL × P. D.VMPL / MC = TR.

The factor of production capital includes physical capital (such as buildings and machines), human capital (improvement in labor by education and knowledge), and financial capital (such as stock market investments).True

Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market.The workers and their VMPLs are Noe, $40; Barbara, $35; Calvin, $27; and Diana, $15.Which of the following statements is true?

The category "compensation of employees":

In the United States in the early twenty-first century, 70% of total income, by far the largest share, took the form of:

Tim works 51 hours per week, and his wage is $35 per hour.If his wage increases to $70 per hour, then:

A wage ________ reduces the quantity of labor supplied through the __ effect.

Human capital:

All perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour.If the government raises the minimum wage to $8 per hour:

The government increases the sales tax on all goods.The government does not change the tax on income earned from labor.What happens in the market for labor?

(Table: Employment and Output) In the table Employment and Output, if the price of a bushel of wheat is $10 and the price of labor (wage) is $120, then the profit-maximizing quantity of labor is:

First Principles

Economic Models: Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

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

Filters

A wage ______ reduces the quantity of labor supplied through the effect.