Exam 19: Factor Markets and the Distribution of Income

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.If the price for "bricks laid in the wall" by a bricklayer is $0.10 a brick, the total production of bricks by the first three bricklayers is bricks.

Time allocation refers to:

An increase in the demand for construction workers may come about because of a(n):

An increase in the market demand for electricians might occur if:

(Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn.The table Workers and Corn Output shows her production function.Suppose Laura acquires more land and as a result the output that can be produced by any given number of workers doubles.If the wage is $130 and the price per bushel of corn is $10, Laura should hire workers to maximize Profits.

According to the efficiency wage model, all of the following are correct except that:

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

Now that Naila has completed her bachelor's degree, she has decided to pursue her master's degree.Naila's choice of additional education is called an investment in:

If the marginal product is ___ ___, the value of marginal product must be _.

The corn-based ethanol boom has dramatically increased the price of farm acreage.Using the concept of derived demand, explain how this happened.What role does the elasticity of supply play in the market for land?

Employers may be able to discriminate on the basis of race or gender because:

(Table: Employment and Output) In the table Employment and Output, if the price of a bushel of wheat is $5 and the price of labor (wage) is $40, then the profit-maximizing quantity of labor is:

Suppose the factor market for computer engineers is competitive in India and the United States, but Indian engineers earn one-fifth of what American engineers earn.This means that in India engineers are price-takers, but engineers in America are not.True

The marginal product times product price equals the:

A profit-maximizing producer employs each factor of production up to the point at which the value of the marginal product of the last unit of the factor employed is equal to the price per unit of output.True

Your boss is trying to decide whether to buy out a rival company and asks for your advice.The boss says that the rival will be bought if there is evidence that the rival is operating inefficiently.(Your company will then improve its efficiency and increase profits.) The rival will not be bought if there is evidence that the rival is already operating efficiently.Your boss gives you the following data on the rival's operations: The average product of labor equals 4, the marginal product of labor equals 10, the wage equals $20, and the price of output equals $5.Based on this information, you should tell your boss to buy the rival.False

An example of the substitution effect dominating the income effect occurs when people take summer vacations rather than winter vacations, even though their pay is the same year-round.True

If a perfectly competitive firm chooses the level of output so that price equals marginal revenue, then it is also true that at that output level the value of the marginal product of labor will equal the wage rate.True

Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print.If the market wage rises to $70, what happens to Phil's labor demand?

A backward-bending supply curve of labor shows that at relatively high wages the: