Question 1

Since the 1960s the number of women in the labor force has decreased.

Accepted Answer

A) True 
 B)False

Question 2

The price of an extra hour of leisure is:

Accepted Answer

A)  $1. 
B)  the hourly wage rate. 
C)  the same as the price of money. 
D)  the total utility of labor. 
A)  $1. 
B)  the hourly wage rate. 
C)  the same as the price of money. 
D)  the total utility of labor.

Question 3

If the labor supply curve bends backward, then the backward-bending portion reveals that _____ is a(n) _____ good and the _____ effect is greater than the _____ effect.

Accepted Answer

A)  labor; normal; income; substitution 
B)  labor; inferior; substitution; income 
C)  leisure; normal; income; substitution 
D)  leisure; inferior; substitution; income 
A)  labor; normal; income; substitution 
B)  labor; inferior; substitution; income 
C)  leisure; normal; income; substitution 
D)  leisure; inferior; substitution; income

Question 4

The key distinction between a factor of production and an input is that:

Accepted Answer

A)  an input is an enduring source of income, but a factor of production is used up in production. 
B)  a factor of production earns income from selling its services over and over again, but an input cannot. 
C)  an input earns income from selling its services over and over again, but a factor of production cannot. 
D)  a factor of production has limited earning potential. 
A)  an input is an enduring source of income, but a factor of production is used up in production. 
B)  a factor of production earns income from selling its services over and over again, but an input cannot. 
C)  an input earns income from selling its services over and over again, but a factor of production cannot. 
D)  a factor of production has limited earning potential.

Question 5

Use the following to answer questions:
Figure: Joanna's Time Allocation Budget Line  
-(Figure: Joanna's Time Allocation Budget Line) Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. If Joanna's wage rate increases and she ends up working MORE hours:

Accepted Answer

A)  leisure became relatively more expensive. 
B)  leisure became relatively less expensive. 
C)  leisure did not change in price. 
D)  she does not know how to allocate her time effectively. 
A)  leisure became relatively more expensive. 
B)  leisure became relatively less expensive. 
C)  leisure did not change in price. 
D)  she does not know how to allocate her time effectively.

Question 6

Human capital:

Accepted Answer

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

Question 7

A new teacher often makes less than a teacher with 20 years' experience because of:

Accepted Answer

A)  discrimination. 
B)  differences in human capital. 
C)  efficiency wages. 
D)  differences in physical capital. 
A)  discrimination. 
B)  differences in human capital. 
C)  efficiency wages. 
D)  differences in physical capital.

Question 8

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 9

In the past 30 years, the ability of unions to increase wages and improve working conditions for their members has:

Accepted Answer

A)  increased. 
B)  decreased. 
C)  remained constant. 
D)  proved the marginal productivity theory of income distribution to be false. 
A)  increased. 
B)  decreased. 
C)  remained constant. 
D)  proved the marginal productivity theory of income distribution to be false.

Question 10

Consider the labor market for accountants. As more people earn accounting degrees, we should expect to see:

Accepted Answer

A)  a shift to the right of the labor supply curve. 
B)  a shift to the right of the labor demand curve. 
C)  an increase in labor along a stable labor supply curve. 
D)  an increase in labor along a stable labor demand curve. 
A)  a shift to the right of the labor supply curve. 
B)  a shift to the right of the labor demand curve. 
C)  an increase in labor along a stable labor supply curve. 
D)  an increase in labor along a stable labor demand curve.

Question 11

There will be an increase in factor demand because of a(n) _____ in the price of the _____.

Accepted Answer

A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces 
A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces

Question 12

Use the following to answer questions:
Figure: The Demand for Bricklayers  
-(Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers. If there is an increase in technology that increases the productivity of bricklayers, then the value of the marginal product of the sixth bricklayer will be _____ than _____.

Accepted Answer

A)  less; $80 
B)  greater; $100 
C)  less; $60 
D)  greater; $110 
A)  less; $80 
B)  greater; $100 
C)  less; $60 
D)  greater; $110

Question 13

An increase in wealth will cause the labor supply curve to:

Accepted Answer

A)  shift leftward if leisure is a normal good. 
B)  slope downward if the substitution effect dominates the income effect. 
C)  slope upward if leisure is an inferior good. 
D)  bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good. 
A)  shift leftward if leisure is a normal good. 
B)  slope downward if the substitution effect dominates the income effect. 
C)  slope upward if leisure is an inferior good. 
D)  bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good.

Question 14

Suppose there are diminishing returns to labor. If the _____ of labor hired by a firm increases, holding everything else constant, the _____ labor will _____.

Accepted Answer

A)  price; demand for; increase 
B)  quantity; marginal product of; fall 
C)  quantity; marginal product of; rise 
D)  quantity; value of the marginal product of; rise 
A)  price; demand for; increase 
B)  quantity; marginal product of; fall 
C)  quantity; marginal product of; rise 
D)  quantity; value of the marginal product of; rise

Question 15

A factor demand curve will shift to the left because of a(n) _____ in the price of the _____.

Accepted Answer

A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces 
A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces

Question 16

Suppose Billy Bud's Bucking Broncos employs 20 workers at a daily wage of $60 each. The average product of labor is 30 bucking broncos per day; the marginal product of the last worker is 12 bucking broncos per day; and total fixed cost is $3,600 for equipment. What is the marginal cost of the last bucking bronco produced?

Accepted Answer

A)  $0.20 
B)  $5.00 
C)  $240.00 
D)  $720.00 
A)  $0.20 
B)  $5.00 
C)  $240.00 
D)  $720.00

Question 17

Assume that Stan just received a promotion and raise. In terms of labor supply, the substitution effect of a higher wage will lead him to:

Accepted Answer

A)  supply fewer hours of labor. 
B)  supply more hours of labor. 
C)  substitute leisure for work. 
D)  reduce work time to zero. 
A)  supply fewer hours of labor. 
B)  supply more hours of labor. 
C)  substitute leisure for work. 
D)  reduce work time to zero.

Question 18

Miss Marple spends her entire leisure time gardening. She values the marginal utility of the last hour spent gardening at $17. She could earn $20 if she worked an additional hour. Assuming that Miss Marple wants to maximize her utility, which of the following is CORRECT?

Accepted Answer

A)  She should spend more time gardening and less time working to balance the stress of work with the relaxation provided by a hobby. 
B)  She should spend more time gardening and less time working, since leisure activities are usually characterized by increasing marginal utility. 
C)  She should reallocate her time away from gardening and toward more work. 
D)  This question cannot be answered without knowing how many hours she spends working and how many hours she spends gardening. 
A)  She should spend more time gardening and less time working to balance the stress of work with the relaxation provided by a hobby. 
B)  She should spend more time gardening and less time working, since leisure activities are usually characterized by increasing marginal utility. 
C)  She should reallocate her time away from gardening and toward more work. 
D)  This question cannot be answered without knowing how many hours she spends working and how many hours she spends gardening.

Question 19

According to the marginal productivity theory of income distribution, every factor of production is paid a wage equal to the equilibrium value of its average product.

Accepted Answer

A) True 
 B)False

Question 20

Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.

Accepted Answer

A) True 
 B)False

Since the 1960s the number of women in the labor force has decreased.

The price of an extra hour of leisure is:

If the labor supply curve bends backward, then the backward-bending portion reveals that ___ is a(n) _ good and the _ effect is greater than the ___ effect.

The key distinction between a factor of production and an input is that:

Use the following to answer questions: Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line) Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. If Joanna's wage rate increases and she ends up working MORE hours:

Human capital:

A new teacher often makes less than a teacher with 20 years' experience because of:

The value of the marginal product is calculated as:

In the past 30 years, the ability of unions to increase wages and improve working conditions for their members has:

Consider the labor market for accountants. As more people earn accounting degrees, we should expect to see:

There will be an increase in factor demand because of a(n) _ in the price of the _.

An increase in wealth will cause the labor supply curve to:

Suppose there are diminishing returns to labor. If the ___ of labor hired by a firm increases, holding everything else constant, the _ labor will ___.

A factor demand curve will shift to the left because of a(n) _ in the price of the _.

Assume that Stan just received a promotion and raise. In terms of labor supply, the substitution effect of a higher wage will lead him to:

Miss Marple spends her entire leisure time gardening. She values the marginal utility of the last hour spent gardening at $17. She could earn $20 if she worked an additional hour. Assuming that Miss Marple wants to maximize her utility, which of the following is CORRECT?

According to the marginal productivity theory of income distribution, every factor of production is paid a wage equal to the equilibrium value of its average product.

Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Uncertainty, Risk, and Private Information

Filters

Exam 19: Factor Markets and the Distribution of Income

Since the 1960s the number of women in the labor force has decreased.

The price of an extra hour of leisure is:

If the labor supply curve bends backward, then the backward-bending portion reveals that _____ is a(n) _____ good and the _____ effect is greater than the _____ effect.

The key distinction between a factor of production and an input is that:

Human capital:

A new teacher often makes less than a teacher with 20 years' experience because of:

The value of the marginal product is calculated as:

In the past 30 years, the ability of unions to increase wages and improve working conditions for their members has:

Consider the labor market for accountants. As more people earn accounting degrees, we should expect to see:

There will be an increase in factor demand because of a(n) _____ in the price of the _____.

An increase in wealth will cause the labor supply curve to:

Suppose there are diminishing returns to labor. If the _____ of labor hired by a firm increases, holding everything else constant, the _____ labor will _____.

A factor demand curve will shift to the left because of a(n) _____ in the price of the _____.

Assume that Stan just received a promotion and raise. In terms of labor supply, the substitution effect of a higher wage will lead him to:

Miss Marple spends her entire leisure time gardening. She values the marginal utility of the last hour spent gardening at $17. She could earn $20 if she worked an additional hour. Assuming that Miss Marple wants to maximize her utility, which of the following is CORRECT?

According to the marginal productivity theory of income distribution, every factor of production is paid a wage equal to the equilibrium value of its average product.

Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

Decision Making by Individuals 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 Common Resources

The Economics of the Welfare

Uncertainty, Risk, and Private Information

Filters

If the labor supply curve bends backward, then the backward-bending portion reveals that ___ is a(n) _ good and the _ effect is greater than the ___ effect.

There will be an increase in factor demand because of a(n) _ in the price of the _.

Suppose there are diminishing returns to labor. If the ___ of labor hired by a firm increases, holding everything else constant, the _ labor will ___.

A factor demand curve will shift to the left because of a(n) _ in the price of the _.