Question 1

Human capital is the improvement in ________ created by _.

Accepted Answer

A) physical capital; technology 
B) labor; education and knowledge 
C) labor; physical capital 
D) labor; management 
A) physical capital; technology 
B) labor; education and knowledge 
C) labor; physical capital 
D) labor; management

Question 2

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home.If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay which of the following amounts as an efficiency wage?

Accepted Answer

A) $22 
B) $26 
C) $18 
D) the minimum wage 
A) $22 
B) $26 
C) $18 
D) the minimum wage

Question 3

The amount by which an additional unit of a factor increases a firm's ___ during a period is the _.

Accepted Answer

A) total revenue; value of the marginal product 
B) total revenue; marginal factor cost 
C) total cost; value of marginal product 
D) total cost; marginal product 
A) total revenue; value of the marginal product 
B) total revenue; marginal factor cost 
C) total cost; value of marginal product 
D) total cost; marginal product

Question 4

Figure: The Value of the Marginal Product Curve
(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the price of the good increases and everything else stays the same, then the profit- maximizing quantity of labor:

Accepted Answer

A) will increase. 
B) will decrease. 
C) will stay the same. 
D) cannot be determined. 
A) will increase. 
B) will decrease. 
C) will stay the same. 
D) cannot be determined.

Question 5

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, then:

Accepted Answer

A) if the wage is greater than $40, the substitution effect of a wage increase is greater than the income effect. 
B) if the wage is $18, the substitution effect of a wage increase is less than the income effect. 
C) if the wage is greater than $40, the substitution effect of a wage increase is less than the income effect. 
D) if the wage is greater than $20, the substitution effect of a wage increase is less than the income effect. 
A) if the wage is greater than $40, the substitution effect of a wage increase is greater than the income effect. 
B) if the wage is $18, the substitution effect of a wage increase is less than the income effect. 
C) if the wage is greater than $40, the substitution effect of a wage increase is less than the income effect. 
D) if the wage is greater than $20, the substitution effect of a wage increase is less than the income effect.

Question 6

Which of the following is not true about the factor distribution of income?

Accepted Answer

A) It is the division of total income among labor, land, and capital. 
B) Labor receives the bulk of the income in the modern U.S.economy. 
C) The returns to human capital are easily measured. 
D) A part of the proprietor's income should be considered wages that the business owners pay themselves. 
A) It is the division of total income among labor, land, and capital. 
B) Labor receives the bulk of the income in the modern U.S.economy. 
C) The returns to human capital are easily measured. 
D) A part of the proprietor's income should be considered wages that the business owners pay themselves.

Question 7

A decrease in the demand for pastry chefs may come about because of an:

Accepted Answer

A) increased concern for fitness. 
B) increase in the market wage rate for pastry chefs. 
C) increase in the productivity of pastry chefs. 
D) increase in the supply of other factors that pastry chefs use. 
A) increased concern for fitness. 
B) increase in the market wage rate for pastry chefs. 
C) increase in the productivity of pastry chefs. 
D) increase in the supply of other factors that pastry chefs use.

Question 8

The _ _____ effect of a ________ wage causes individuals to substitute _.

Accepted Answer

A) substitution; higher; labor for leisure 
B) income; higher; labor for leisure 
C) substitution; lower; labor for leisure 
D) complementary; constant; leisure for labor 
A) substitution; higher; labor for leisure 
B) income; higher; labor for leisure 
C) substitution; lower; labor for leisure 
D) complementary; constant; leisure for labor

Question 9

Which of the following is not a factor of 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 10

Figure: The Demand for Bricklayers     (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.If the equilibrium market wage rate for bricklayers rises from $80 to $100, the bricklayers will
________.

Accepted Answer

A) demand for; rise 
B) quantity demanded of; rise 
C) demand for; fall 
D) quantity demanded of; fall 
A) demand for; rise 
B) quantity demanded of; rise 
C) demand for; fall 
D) quantity demanded of; fall

Question 11

(Table: Framing Shop Employment and Production) Shaheer runs a framing shop that makes custom picture frames for his customers.The table Framing Shop Employment and Production shows the daily production function for his framing shop.He can hire a worker at a daily competitive wage of $70, and he sells a custom frame at a competitive price of $10.a) How many workers should Shaheer hire to maximize his profit?
b) Suppose that Shaheer is able to employ more sophisticated tools, which allow his workers to be twice as productive.How many workers will he employ?

Accepted Answer

a) To Answer:this, first compute MPL, th

Question 12

(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.Debbie must pay each worker a competitive market wage of $30 per day.Now suppose the government imposes a minimum wage law that all bakeries must pay no less than $50 per day.How will this affect her profit-maximizing hiring decision?

Accepted Answer

A) She reduces employment from six workers to one worker. 
B) She reduces employment from six workers to five workers. 
C) She reduces employment from six workers to four workers. 
D) She increases employment from one worker to four workers. 
A) She reduces employment from six workers to one worker. 
B) She reduces employment from six workers to five workers. 
C) She reduces employment from six workers to four workers. 
D) She increases employment from one worker to four workers.

Question 13

Which of the following does not partially explain wage differentials?

Accepted Answer

A) different amounts of human capital 
B) compensating differentials 
C) differences in talent 
D) differences in capital 
A) different amounts of human capital 
B) compensating differentials 
C) differences in talent 
D) differences in capital

Question 14

Benny employs people to sell candy bars at intersections.The marginal product of the last worker Benny hired is 20 candy bars per hour.Benny pays $7 per worker per hour and sells the candy bars for $1 each.If the price of candy bars rises to $2, then the:

Accepted Answer

A) demand for labor increases. 
B) demand for labor decreases. 
C) quantity demanded of labor increases but the demand for labor curve does not shift. 
D) quantity demanded of labor decreases but the demand for labor curve does not shift. 
A) demand for labor increases. 
B) demand for labor decreases. 
C) quantity demanded of labor increases but the demand for labor curve does not shift. 
D) quantity demanded of labor decreases but the demand for labor curve does not shift.

Question 15

As a general 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.

Accepted Answer

A) first; greater than 
B) last; equal to 
C) first; equal to 
D) last; less than 
A) first; greater than 
B) last; equal to 
C) first; equal to 
D) last; less than

Question 16

(Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn.Assume the wage rate for workers is $250 and the price per bushel of corn is $20.The table Workers and Corn Output shows Laura's production function.Laura should hire workers to maximize
Profits.

Accepted Answer

A) one 
B) two 
C) four 
D) seven 
A) one 
B) two 
C) four 
D) seven

Question 17

Which of the following statements is true?

Accepted Answer

A) VMPL = MP × P. 
B) VMPL = a one-unit change in a factor divided by the change in total revenue. 
C) MC = change in total revenue divided by the one-unit change in a factor. 
D) VMPL = change in the quantity of a factor times the price of the factor. 
A) VMPL = MP × P. 
B) VMPL = a one-unit change in a factor divided by the change in total revenue. 
C) MC = change in total revenue divided by the one-unit change in a factor. 
D) VMPL = change in the quantity of a factor times the price of the factor.

Question 18

The quantity demanded of labor will decrease if:

Accepted Answer

A) the productivity of labor decreases. 
B) the productivity of labor increases. 
C) the price of labor rises. 
D) there is an increase in the supply of a factor labor uses. 
A) the productivity of labor decreases. 
B) the productivity of labor increases. 
C) the price of labor rises. 
D) there is an increase in the supply of a factor labor uses.

Question 19

Which of the following is an input in the production of croissants?

Accepted Answer

A) ovens 
B) pastry chefs 
C) flour 
D) dough mixers 
A) ovens 
B) pastry chefs 
C) flour 
D) dough mixers

Question 20

As stock prices rise and workers' wealth increases, workers will increase the quantity supplied of labor because they will want to buy more stock.True

Accepted Answer

A) True 
 B)False

Human capital is the improvement in ________ created by _.

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home.If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay which of the following amounts as an efficiency wage?

The amount by which an additional unit of a factor increases a firm's ___ during a period is the _.

Figure: The Value of the Marginal Product Curve (Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the price of the good increases and everything else stays the same, then the profit- maximizing quantity of labor:

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, then:

Which of the following is not true about the factor distribution of income?

A decrease in the demand for pastry chefs may come about because of an:

The _ _ effect of a ____ wage causes individuals to substitute _.

Which of the following is not a factor of production at a college?

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.If the equilibrium market wage rate for bricklayers rises from $80 to $100, the bricklayers will ________.

Which of the following does not partially explain wage differentials?

Benny employs people to sell candy bars at intersections.The marginal product of the last worker Benny hired is 20 candy bars per hour.Benny pays $7 per worker per hour and sells the candy bars for $1 each.If the price of candy bars rises to $2, then the:

As a general 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.

(Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn.Assume the wage rate for workers is $250 and the price per bushel of corn is $20.The table Workers and Corn Output shows Laura's production function.Laura should hire workers to maximize Profits.

Which of the following statements is true?

The quantity demanded of labor will decrease if:

Which of the following is an input in the production of croissants?

As stock prices rise and workers' wealth increases, workers will increase the quantity supplied of labor because they will want to buy more stock.True

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

Human capital is the improvement in ________ created by _.

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home.If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay which of the following amounts as an efficiency wage?

The amount by which an additional unit of a factor increases a firm's ___ during a period is the _.

Figure: The Value of the Marginal Product Curve (Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the price of the good increases and everything else stays the same, then the profit- maximizing quantity of labor:

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, then:

Which of the following is not true about the factor distribution of income?

A decrease in the demand for pastry chefs may come about because of an:

The _ _____ effect of a ________ wage causes individuals to substitute _.

Which of the following is not a factor of production at a college?

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.If the equilibrium market wage rate for bricklayers rises from $80 to $100, the bricklayers will ________.

Which of the following does not partially explain wage differentials?

Benny employs people to sell candy bars at intersections.The marginal product of the last worker Benny hired is 20 candy bars per hour.Benny pays $7 per worker per hour and sells the candy bars for $1 each.If the price of candy bars rises to $2, then the:

As a general 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.

(Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn.Assume the wage rate for workers is $250 and the price per bushel of corn is $20.The table Workers and Corn Output shows Laura's production function.Laura should hire workers to maximize Profits.

Which of the following statements is true?

The quantity demanded of labor will decrease if:

Which of the following is an input in the production of croissants?

As stock prices rise and workers' wealth increases, workers will increase the quantity supplied of labor because they will want to buy more stock.True

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

The _ _ effect of a ____ wage causes individuals to substitute _.