Exam 18: Factor Markets and the Distribution of Income

Benny employs people to sell candy bars at intersections. The marginal product of the last worker Benny hired is 20 candy bars per hour. Benny pays $7 per worker per hour and sells the candy bars for $1 each. If the price of candy bars rises to $2, then the:

Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print. Now suppose during the holiday season the price of poster-size copies increases to $12. What happens?

An increase in the demand for autoworkers may come about because of:

In the United States, payments to labor account for:

Unions represent approximately _____% of employees of private businesses.

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has decreased.

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.

All perfectly competitive fast-food firms are hiring the profit-maximizing quantity of labor and are paying their workers $7 per hour. If the government raises the minimum wage to $8 per hour:

The invention of labor-saving appliances has decreased the supply of labor in the United States.

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has decreased or increased, depending on what he does with an hour of leisure.

Median earning in the U.S. labor market is highest for White men, followed by African Americans, followed by women regardless of ethnicity, and then Hispanics.

Use the following to answer questions 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, if the price of the good increases and everything else stays the same, then the profit-maximizing quantity of labor:

The firm's value of the marginal product of labor curve:

Suppose the labor market for plumbers is in equilibrium. Which of the following might DECREASE the wage for plumbers?

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 the equilibrium market wage for bricklayers is $80 per day, then this masonry firm will hire _____ bricklayers.

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home. If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay:

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

Use the following to answer questions 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 determined by:

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?

While reading the local newspaper, you notice an article about a man who won a sizable prize in the state lottery. This prize amounts to monthly payments for the rest of the man's life. The man is quoted as saying, "As soon as I receive that first lottery payment, I will only work when I want to, rather than because I have to." How would an economist explain what has happened to this man's labor supply curve?