Question 1

A firm's demand curve for an input in a perfectly competitive market is the downward-sloping portion of its:

Accepted Answer

A) marginal revenue curve. 
B) average total cost curve. 
C) VMPL curve. 
D) total revenue curve. 
A) marginal revenue curve. 
B) average total cost curve. 
C) VMPL curve. 
D) total revenue curve.

Question 2

The trade-off between work and leisure underlying the supply of labor involves the income effect and the:

Accepted Answer

A) substitution effect. 
B) elasticity effect. 
C) production effect. 
D) wage effect. 
A) substitution effect. 
B) elasticity effect. 
C) production effect. 
D) wage effect.

Question 3

Unions represent approximately % of employees of private businesses.

Accepted Answer

A) less than 1 
B) 9 
C) 19 
D) 29 
A) less than 1 
B) 9 
C) 19 
D) 29

Question 4

The value of the marginal product is calculated as:

Accepted Answer

A) MP / MR. 
B) MP / P. 
C) MP × P. 
D) MR / MP. 
A) MP / MR. 
B) MP / P. 
C) MP × P. 
D) MR / MP.

Question 5

Figure: The Demand for Bricklayers     (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.Which of the following statements is true?

Accepted Answer

A) Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than the market wage rate of bricklayers. 
B) The profit-maximizing condition for firms hiring bricklayers is where VMPLbricklayers is less than the market wage rate. 
C) The profit-maximizing condition for firms hiring bricklayers is where MPbricklayers equals the market wage rate. 
D) Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers. 
A) Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than the market wage rate of bricklayers. 
B) The profit-maximizing condition for firms hiring bricklayers is where VMPLbricklayers is less than the market wage rate. 
C) The profit-maximizing condition for firms hiring bricklayers is where MPbricklayers equals the market wage rate. 
D) Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers.

Question 6

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 marginal product of the second bricklayer is bricks.

Accepted Answer

A) 1,500 
B) 1,400 
C) 1,300 
D) 1,200 
A) 1,500 
B) 1,400 
C) 1,300 
D) 1,200

Question 7

The largest component of the factor distribution of income in the United States is:

Accepted Answer

A) interest and rents. 
B) taxes. 
C) corporate profits. 
D) compensation of employees. 
A) interest and rents. 
B) taxes. 
C) corporate profits. 
D) compensation of employees.

Question 8

When the demand for automobiles is high, the demand for workers who build automobiles is high.This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called:

Accepted Answer

A) the marginal productivity theory of income distribution. 
B) a compensating differential. 
C) the factor distribution of income. 
D) a derived demand. 
A) the marginal productivity theory of income distribution. 
B) a compensating differential. 
C) the factor distribution of income. 
D) a derived demand.

Question 9

Factors of production are different from inputs in that factors of production:

Accepted Answer

A) can be used over and over again, but inputs cannot. 
B) can be used only once, whereas an input can be used over and over again. 
C) refer only to labor, while inputs refer to machinery. 
D) encompass only land and other natural factors, while inputs are ingredients. 
A) can be used over and over again, but inputs cannot. 
B) can be used only once, whereas an input can be used over and over again. 
C) refer only to labor, while inputs refer to machinery. 
D) encompass only land and other natural factors, while inputs are ingredients.

Question 10

(Table: Production Function for Shaheer's Framing Shop) Shaheer runs a framing shop that creates custom picture frames for his customers.The table shows the daily production function for his framing shop.He can hire a worker at a daily competitive wage of $60, and he sells a custom frame at a competitive price of $10.a) Calculate the marginal product of labor for each worker in the first empty column.b) Calculate the value of the marginal product of labor for each worker in the second empty column.

Accepted Answer

a) The marginal product of lab

Question 11

A determinant of the demand for a factor of production is the:

Accepted Answer

A) price of the factor. 
B) productivity of the factor. 
C) quantity of the factor supplied. 
D) compensating differential. 
A) price of the factor. 
B) productivity of the factor. 
C) quantity of the factor supplied. 
D) compensating differential.

Question 12

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, the VMPL curve will shift to the right if:

Accepted Answer

A) the wage rate increases. 
B) a technological advance makes labor more productive. 
C) the price of the good decreases. 
D) the wage rate decreases. 
A) the wage rate increases. 
B) a technological advance makes labor more productive. 
C) the price of the good decreases. 
D) the wage rate decreases.

Question 13

Figure: The Demand for Bricklayers     (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day, but there is a new minimum wage of $120 a day for bricklayers.From this information, we can see that:

Accepted Answer

A) three workers who otherwise would have been employed by this firm are now unemployed. 
B) four workers will now be hired by this firm. 
C) all bricklayers are better off. 
D) this firm will shut down. 
A) three workers who otherwise would have been employed by this firm are now unemployed. 
B) four workers will now be hired by this firm. 
C) all bricklayers are better off. 
D) this firm will shut down.

Question 14

John is an entrepreneur who runs his own auto body repair shop.John's business is booming, and his salary is rising.John's labor supply curve will be:

Accepted Answer

A) upward sloping if the substitution effect is smaller than the income effect. 
B) downward sloping if the substitution effect is smaller than the income effect. 
C) horizontal if the substitution effect is equal to the income effect. 
D) vertical if the substitution effect is equal to the income effect. 
A) upward sloping if the substitution effect is smaller than the income effect. 
B) downward sloping if the substitution effect is smaller than the income effect. 
C) horizontal if the substitution effect is equal to the income effect. 
D) vertical if the substitution effect is equal to the income effect.

Question 15

An increase in the demand for autoworkers may come about because of all of the following except a(n):

Accepted Answer

A) increase in the price of cars. 
B) decrease in the market wage rate. 
C) increase in the productivity of autoworkers. 
D) increase in the supply of other factors that autoworkers use in production. 
A) increase in the price of cars. 
B) decrease in the market wage rate. 
C) increase in the productivity of autoworkers. 
D) increase in the supply of other factors that autoworkers use in production.

Question 16

People who have higher levels of human capital will tend to:

Accepted Answer

A) work only in nonunion jobs. 
B) receive higher salaries than those who have lower levels of human capital. 
C) earn salaries based on marginal costs of their labor. 
D) earn salaries higher than their values of marginal product. 
A) work only in nonunion jobs. 
B) receive higher salaries than those who have lower levels of human capital. 
C) earn salaries based on marginal costs of their labor. 
D) earn salaries higher than their values of marginal product.

Question 17

Suppose the government increases the child tax credit, which increases the after-tax income of families with children.How will this decision affect the amount of labor supplied by parents of children (assuming that leisure is a normal good)?

Accepted Answer

A) Since the income and substitution effects move in the same direction, the amount of labor supplied will increase. 
B) Since the income effect will dominate the substitution effect, the amount of labor supplied will decrease. 
C) We don't know what will happen to the quantity of labor supplied, since we don't know whether the income effect or substitution effect will dominate. 
D) The labor supply curve will shift right, so the quantity of labor will also increase. 
A) Since the income and substitution effects move in the same direction, the amount of labor supplied will increase. 
B) Since the income effect will dominate the substitution effect, the amount of labor supplied will decrease. 
C) We don't know what will happen to the quantity of labor supplied, since we don't know whether the income effect or substitution effect will dominate. 
D) The labor supply curve will shift right, so the quantity of labor will also increase.

Question 18

(Table: Workers and Art Output) Look at the table Workers and Art Output.Suppose you achieve your dream of opening your own art studio, specializing in selling mud statues.You pay $10 in fixed costs for equipment, and you pay $9 per day to each of your workers who make the mud statues.You know the mud statues industry is perfectly competitive, with a current market price of
$1)The table shows your production function.How many statues should you produce?

Accepted Answer

A) 25 
B) 35 
C) 43 
D) 48 
A) 25 
B) 35 
C) 43 
D) 48

Question 19

(Table: Workers and Corn Output) Laura is a price-taking farmer who produces corn.Assume the wage rate for workers is $130 and the price per bushel of corn is $10.The table Workers and Corn Output shows Laura's production function.Suppose Laura is employing two workers.If she adds the third worker, her profits will:

Accepted Answer

A) increase by $79. 
B) decrease by $51. 
C) decrease by $109. 
D) increase by $80. 
A) increase by $79. 
B) decrease by $51. 
C) decrease by $109. 
D) increase by $80.

Question 20

Manufactured resources such as equipment, buildings, and tools are also known as:

Accepted Answer

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

A firm's demand curve for an input in a perfectly competitive market is the downward-sloping portion of its:

The trade-off between work and leisure underlying the supply of labor involves the income effect and the:

Unions represent approximately % of employees of private businesses.

The value of the marginal product is calculated as:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.Which of the following statements is true?

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 marginal product of the second bricklayer is bricks.

The largest component of the factor distribution of income in the United States is:

When the demand for automobiles is high, the demand for workers who build automobiles is high.This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called:

Factors of production are different from inputs in that factors of production:

A determinant of the demand for a factor of production 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, the VMPL curve will shift to the right if:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day, but there is a new minimum wage of $120 a day for bricklayers.From this information, we can see that:

John is an entrepreneur who runs his own auto body repair shop.John's business is booming, and his salary is rising.John's labor supply curve will be:

An increase in the demand for autoworkers may come about because of all of the following except a(n):

People who have higher levels of human capital will tend to:

Suppose the government increases the child tax credit, which increases the after-tax income of families with children.How will this decision affect the amount of labor supplied by parents of children (assuming that leisure is a normal good)?

Manufactured resources such as equipment, buildings, and tools are also known as:

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's demand curve for an input in a perfectly competitive market is the downward-sloping portion of its:

The trade-off between work and leisure underlying the supply of labor involves the income effect and the:

Unions represent approximately % of employees of private businesses.

The value of the marginal product is calculated as:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.Which of the following statements is true?

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 marginal product of the second bricklayer is bricks.

The largest component of the factor distribution of income in the United States is:

When the demand for automobiles is high, the demand for workers who build automobiles is high.This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called:

Factors of production are different from inputs in that factors of production:

A determinant of the demand for a factor of production 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, the VMPL curve will shift to the right if:

Figure: The Demand for Bricklayers (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers.The equilibrium market wage for bricklayers is $100 a day, but there is a new minimum wage of $120 a day for bricklayers.From this information, we can see that:

John is an entrepreneur who runs his own auto body repair shop.John's business is booming, and his salary is rising.John's labor supply curve will be:

An increase in the demand for autoworkers may come about because of all of the following except a(n):

People who have higher levels of human capital will tend to:

Suppose the government increases the child tax credit, which increases the after-tax income of families with children.How will this decision affect the amount of labor supplied by parents of children (assuming that leisure is a normal good)?

Manufactured resources such as equipment, buildings, and tools are also known as:

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