Exam 19: Factor Markets and the Distribution of Income

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, assuming that leisure is a normal good?

Factor demand is called derived demand because it:

Use the following to answer questions: -(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. Assume that the market for power cords is perfectly competitive. If the price of a power cord is $2, the value of the marginal product for the fifth worker is:

In the U.S. labor market, women of all ethnicities have the highest median earnings.

Which of the following groups has the LOWEST median earnings in the U.S. labor market?

A small college employs two economists. Rob has been employed by the college for 15 years, and Nasrin has been employed for 1 year. Rob's salary is significantly higher than Nasrin's, although both have their doctoral degrees in economics. Each professor averages one publication per year, and both are excellent teachers. Given this information, the wage difference is best explained by:

Wage differences across jobs reflecting the fact that some jobs are less pleasant than others are called efficiency wages.

Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:

In the markets for goods and services, households demand labor and firms supply labor.

Use the following to answer questions: -(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:

The supply curves for goods and services are almost universally upward-sloping. How is it that labor supply can be downward-sloping in certain cases?

In terms of contribution to total income in the United States, the single most important factor of production is:

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

According to the marginal productivity theory of income distribution, in a competitive economy each factor of production is paid its equilibrium value of the marginal product.

Which of the following statements is TRUE?

In terms of contribution to total U.S. income, the factor of production that receives the SMALLEST share is:

Use the following to answer questions: Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line) The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. What is the opportunity cost of an hour of leisure?

A leftward shift in the labor supply curve might result from:

Use the following to answer questions: -(Table: Total Product of Labor at Debbie's Bakery) Look at the table Total Product of Labor at Debbie's Bakery. Debbie can sell cakes at $10 each. Debbie must pay each worker $30 per day. Now suppose the government imposes a minimum wage law that all bakeries must pay no less than $50 per day. Debbie _____ employment from _____ workers to _____ worker(s).

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