Exam 19: Factor Markets and the Distribution of Income

As a 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.

If a firm hires labor and with its current employees W = VMPL, then profit:

A firm has hired the profit-maximizing number of workers when the wage is:

The Bountiful Bakery is considering hiring another pastry chef. The bakery knows the average product of its chefs is 15 dozen croissants per day. It also believes that the next chef hired will produce an extra 12 dozen croissants per day. A dozen croissants sell for $30. The bakery should hire another worker:

If a firm hires labor such that W < VMPL, then profit:

If an individual's labor supply curve is upward-sloping at low wage rates and downward-sloping at high wage rates, then at higher wage rates:

If the hourly wage increases from $8 to $10 an hour and in response Jim increases the number of hours that he works from 44 to 46, the substitution effect is dominant.

Use the following to answer questions: -(Table: Workers and Corn Output) Look at the 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. Suppose Laura acquires more land and as a result the output that can be produced by any given number of workers doubles. Laura should hire _____ workers to maximize profits.

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

If a person's marginal utility from an additional hour of leisure is less than the marginal utility gained from goods bought with the wages earned from an additional hour of labor, then this person should:

The marginal product times product price equals the:

A _____ wage will _____ the _____ leisure.

Using standard economic theory, Scientific Superconductors should continue hiring workers until:

A wage _____ reduces the quantity of labor supplied through the _____ effect.

A shift in demand for a given factor of production will NOT occur if:

An objection to the marginal productivity theory of income distribution is that many people believe it is a moral justification for the unequal distribution of income.

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

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

John and Deanna are married, with two children. Both adults have college degrees, but Deanna has chosen not to enter the labor force, while John has worked continuously for 10 years. Suppose Deanna gets a job with John's employer. She is offered a salary that is $15,000 below John's. Is Deanna being discriminated against because she is a woman? Support your answer.

Use the following to answer questions: Figure: Davina's Labor Supply Choice -(Figure: Davina's Labor Supply Choice) The figure Davina's Labor Supply Choice shows Davina's time allocation budget line when her hourly wage is $10 or $15 and she has 80 hours to allocate between labor and leisure; it also shows two of her indifference curves for income and leisure. As Davina's hourly wage rises from $10 to $15: