Question 1

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 2

Maria operates a persimmon orchard in southeastern Oklahoma. She pays her workers $248 per week to pick and process persimmons, and she sells her persimmons for $6 per bushel. If she adds one more worker and that worker can pick and process 44 bushels per week, what will be the profit for Maria from hiring that worker?

Accepted Answer

A)  $0 
B)  $16 
C)  $264 
D)  $544 
A)  $0 
B)  $16 
C)  $264 
D)  $544

Question 3

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.

Accepted Answer

A) True 
 B)False

Question 4

Above-equilibrium wages paid by some employers as an incentive for better performance are called:

Accepted Answer

A)  efficiency wages. 
B)  market power wages. 
C)  compensating differentials. 
D)  discrimination. 
A)  efficiency wages. 
B)  market power wages. 
C)  compensating differentials. 
D)  discrimination.

Question 5

Suppose that two police officers are identical in every way. One officer is employed in Chicago, a metropolis of 5 million people, and the other officer is employed in Madison, Indiana, a town of 25,000 people. Which officer is likely to receive the higher wage? What is a likely source of this wage difference?

Accepted Answer

Although the officers are alike in every

Question 6

The category compensation of employees:

Accepted Answer

A)  includes the earnings of proprietors. 
B)  doesn't include benefits such as health insurance. 
C)  can be attributed in a large part to the return on human capital. 
D)  includes payments in kind that are common in rural areas. 
A)  includes the earnings of proprietors. 
B)  doesn't include benefits such as health insurance. 
C)  can be attributed in a large part to the return on human capital. 
D)  includes payments in kind that are common in rural areas.

Question 7

The firm's value of marginal product curve slopes downward:

Accepted Answer

A)  only if the firm is a perfect competitor in the product market. 
B)  because of diminishing returns. 
C)  only if the firm is a perfect competitor in the labor market. 
D)  only if the firm is a perfect competitor in both the labor and product markets. 
A)  only if the firm is a perfect competitor in the product market. 
B)  because of diminishing returns. 
C)  only if the firm is a perfect competitor in the labor market. 
D)  only if the firm is a perfect competitor in both the labor and product markets.

Question 8

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 falls from $110 to $100, the _____ bricklayers will _____.

Accepted Answer

A)  demand for; rise 
B)  quantity demanded of; rise 
C)  demand for; fall 
D)  quantity demanded of; fall 
A)  demand for; rise 
B)  quantity demanded of; rise 
C)  demand for; fall 
D)  quantity demanded of; fall

Question 9

To maximize profits, a firm will employ workers until for the last worker employed:

Accepted Answer

A)  marginal product of labor is equal to the nominal wage rate. 
B)  the value of the marginal product of labor is equal to the wage rate. 
C)  the value of the marginal product of labor is equal to the price per unit of output. 
D)  the value of the marginal product of labor is as high as possible. 
A)  marginal product of labor is equal to the nominal wage rate. 
B)  the value of the marginal product of labor is equal to the wage rate. 
C)  the value of the marginal product of labor is equal to the price per unit of output. 
D)  the value of the marginal product of labor is as high as possible.

Question 10

Which of the following does NOT partially explain wage differentials?

Accepted Answer

A)  different amounts of human capital 
B)  compensating differentials 
C)  differences in talent 
D)  differences in capital 
A)  different amounts of human capital 
B)  compensating differentials 
C)  differences in talent 
D)  differences in capital

Question 11

Market forces tend to work against discrimination.

Accepted Answer

A) True 
 B)False

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 the equilibrium market wage for bricklayers is $100 per day, _____ bricklayers will be hired by this masonry firm.

Accepted Answer

A)  four 
B)  five 
C)  six 
D)  There is insufficient information to make this decision. 
A)  four 
B)  five 
C)  six 
D)  There is insufficient information to make this decision.

Question 13

If an individual labor supply curve is negatively sloped, the substitution effect dominates the income effect.

Accepted Answer

A) True 
 B)False

Question 14

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).

Accepted Answer

A)  reduces; six; one 
B)  reduces; six; five 
C)  reduces; six; four 
D)  increases; one; four 
A)  reduces; six; one 
B)  reduces; six; five 
C)  reduces; six; four 
D)  increases; one; four

Question 15

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 16

In terms of labor supply, the substitution effect of a higher wage causes a(n):

Accepted Answer

A)  increase in leisure time. 
B)  increase in the quantity of labor supplied. 
C)  substitution of leisure for work. 
D)  reduction of work time to zero. 
A)  increase in leisure time. 
B)  increase in the quantity of labor supplied. 
C)  substitution of leisure for work. 
D)  reduction of work time to zero.

Question 17

Scott's wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply. His marginal utility of one hour of leisure is equal to:

Accepted Answer

A)  the marginal utility he gets from $25 worth of goods. 
B)  the marginal utility he gets from more than $25 worth of goods. 
C)  the marginal utility he gets from less than $25 worth of goods. 
D)  the substitution effect. 
A)  the marginal utility he gets from $25 worth of goods. 
B)  the marginal utility he gets from more than $25 worth of goods. 
C)  the marginal utility he gets from less than $25 worth of goods. 
D)  the substitution effect.

Question 18

Use the following to answer questions 
Figure: Equilibrium in the Labor Market  
-(Figure: Equilibrium in the Labor Market) In the figure Equilibrium in the Labor Market, a decrease in population that decreases the number of workers, when everything else stays the same, will lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.

Accepted Answer

A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease 
A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

When a firm is a perfect competitor in the product market, its demand curve for labor will _____ because the _____ product declines as additional workers are hired.

Accepted Answer

A)  slope downward; marginal 
B)  be horizontal; average 
C)  slope upward; marginal 
D)  slope downward; average 
A)  slope downward; marginal 
B)  be horizontal; average 
C)  slope upward; marginal 
D)  slope downward; average

Exam 18: Factor Markets and the Distribution of Income

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

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.

Above-equilibrium wages paid by some employers as an incentive for better performance are called:

The category compensation of employees:

The firm's value of marginal product curve slopes downward:

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 falls from $110 to $100, the _____ bricklayers will _____.

To maximize profits, a firm will employ workers until for the last worker employed:

Which of the following does NOT partially explain wage differentials?

Market forces tend to work against discrimination.

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 $100 per day, _____ bricklayers will be hired by this masonry firm.

If an individual labor supply curve is negatively sloped, the substitution effect dominates the income effect.

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

In terms of labor supply, the substitution effect of a higher wage causes a(n):

Scott's wage is $25 per hour and he works 50 hours a week, which is his optimal labor supply. His marginal utility of one hour of leisure is equal to:

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

When a firm is a perfect competitor in the product market, its demand curve for labor will _____ because the _____ product declines as additional workers are hired.

First Principles

Economic Models- Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas- Meddling With Markets

Elasticity

Taxes

The Rational Consumer

International Trade

Decision Making by Individuals and Firms

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Gdp and the Consumer Price Index

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

Filters

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 falls from $110 to $100, the _ bricklayers will _.

When a firm is a perfect competitor in the product market, its demand curve for labor will _ because the _ product declines as additional workers are hired.