Exam 12: The Markets for Labour and Other Factors of Production

a.What are the two effects of an increase in the wage rate on an individual's labour supply decision? Briefly explain each effect. b.Explain how a labour supply curve could be backward-bending.

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Question 1

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a.There are two effects of a wage rate increase: a substitution effect and an income effect.The substitution effect raises the price of leisure,which causes a worker to consume less leisure and supply more labour.Since leisure is a normal good,the income effect leads the worker to choose more leisure and supply less labour.
b.When the wage rate is low,an increase in the wage rate leads to an increase in the quantity of labour supplied because the substitution effect is greater than the income effect.Therefore,the labour supply curve slopes upward.When the wage rate is high,the income effect may be greater than the substitution effect.If this is so,the quantity of labour supplied will decrease as the wage increases and the labour supply curve would be backward-bending.

Table 12-4 Table 12-4 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MP_L and MRP_Lrefer to the marginal product of labour and the marginal revenue product of labour,respectively. -Refer to Table 12-4.What are the quantity of labour and marginal revenue product of labour that will maximise the profit Apple would earn from selling iPods?

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Question 2

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Compensating differentials are associated most closely with which of the following?

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Question 3

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Table 12-2 -Refer to Table 12-2.The marginal profit from hiring the second unit of labour is

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Question 4

How will an increase in population affect the labour market?

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Question 5

Despite evidence that companies will find it more profitable to use a commission system of compensation rather than a salary system,many companies continue to pay their workers salaries.Which of the following is one reason why firms choose a salary system?

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Question 6

Figure 12-4 -Refer to Figure 12-4.Which of the following is true at W₀?

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Question 7

Which of the following is a reason why some firms do not use commission pay?

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Question 8

The application of economic analysis to human resources issues is called

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Question 9

The marginal revenue product of labour is defined as

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Question 10

Customer discrimination occurs when

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Question 11

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

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Question 12

What is personnel economics?

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Question 13

What is the difference between a firm's marginal revenue and its marginal revenue product?

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Question 14

The most important factor contributing to wage differences in the labour market is differences in the level of education and training among workers.

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Question 15

Which of the following describes a difference between the marginal product of labour and the marginal revenue product of labour?

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Question 16

The marginal productivity theory of income distribution was developed by

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Question 17

Table 12-1 -Refer to Table 12-1.The marginal product of the fourth unit of labour is

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Question 18

At low wages,the labour supply curve for most people slopes upward because

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Question 19

The wage rate is the opportunity cost of

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Question 20

Showing 1 - 20 of 253

a.What are the two effects of an increase in the wage rate on an individual's labour supply decision? Briefly explain each effect. b.Explain how a labour supply curve could be backward-bending.

Compensating differentials are associated most closely with which of the following?

Table 12-2 -Refer to Table 12-2.The marginal profit from hiring the second unit of labour is

How will an increase in population affect the labour market?

Despite evidence that companies will find it more profitable to use a commission system of compensation rather than a salary system,many companies continue to pay their workers salaries.Which of the following is one reason why firms choose a salary system?

Figure 12-4 -Refer to Figure 12-4.Which of the following is true at W₀?

Which of the following is a reason why some firms do not use commission pay?

The application of economic analysis to human resources issues is called

The marginal revenue product of labour is defined as

Customer discrimination occurs when

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

What is personnel economics?

What is the difference between a firm's marginal revenue and its marginal revenue product?

The most important factor contributing to wage differences in the labour market is differences in the level of education and training among workers.

Which of the following describes a difference between the marginal product of labour and the marginal revenue product of labour?

The marginal productivity theory of income distribution was developed by

Table 12-1 -Refer to Table 12-1.The marginal product of the fourth unit of labour is

At low wages,the labour supply curve for most people slopes upward because

The wage rate is the opportunity cost of

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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Exam 12: The Markets for Labour and Other Factors of Production

a.What are the two effects of an increase in the wage rate on an individual's labour supply decision? Briefly explain each effect. b.Explain how a labour supply curve could be backward-bending.

Compensating differentials are associated most closely with which of the following?

Table 12-2 -Refer to Table 12-2.The marginal profit from hiring the second unit of labour is

How will an increase in population affect the labour market?

Despite evidence that companies will find it more profitable to use a commission system of compensation rather than a salary system,many companies continue to pay their workers salaries.Which of the following is one reason why firms choose a salary system?

Figure 12-4 -Refer to Figure 12-4.Which of the following is true at W0?

Which of the following is a reason why some firms do not use commission pay?

The application of economic analysis to human resources issues is called

The marginal revenue product of labour is defined as

Customer discrimination occurs when

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

What is personnel economics?

What is the difference between a firm's marginal revenue and its marginal revenue product?

The most important factor contributing to wage differences in the labour market is differences in the level of education and training among workers.

Which of the following describes a difference between the marginal product of labour and the marginal revenue product of labour?

The marginal productivity theory of income distribution was developed by

Table 12-1 -Refer to Table 12-1.The marginal product of the fourth unit of labour is

At low wages,the labour supply curve for most people slopes upward because

The wage rate is the opportunity cost of

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Figure 12-4 -Refer to Figure 12-4.Which of the following is true at W₀?