Exam 18: Factor Markets and the Distribution of Income

Use the following to answer questions : -(Table: Value of the Marginal Product of Labor and Demand) In the figure Value of the Marginal Product of Labor and Demand, the total product of labor is shown for the hourly production of power cords. Assume that the market for power cords is perfectly competitive. If the price of a power cord is $2 and the market wage rate is $100 per hour, the profit-maximizing quantity of labor is _____ workers.

Use the following to answer question : -(Table: Workers and Art Output) Look at the table Workers and Art Output. Suppose you achieve your dream of opening an art studio specializing in selling mud statues. You pay $10 in fixed costs for equipment and $9 per day to each of your workers who make the mud statues. The industry is perfectly competitive, with a current market price of $1. How many statues should you produce?

An efficiency wage is higher than the equilibrium wage to motivate the employee to work hard.

The _____ effect of a _____ wage causes individuals to substitute _____.

Manufactured resources such as equipment, buildings, and tools are also known as:

According to the efficiency wage model, all of the following are correct EXCEPT that efficiency wages:

When a person receives more education, his or her _____ has increased. When a firm buys a new copy machine, it has purchased _____.

Which of the following will NOT shift the labor supply curve?

Use the following to answer questions : -(Table: Employment and Output) In the table Employment and Output, if the price of a bushel of wheat is $5 and the price of labor (wage) is $40, then the profit-maximizing quantity of labor is:

Which of the following is most likely an example of wage disparity due to differences in human capital?

Factor demand is called derived demand because it:

The opportunity cost of an hour of leisure increases if the hour of leisure time is spent in an unproductive activity and decreases if the hour of leisure time is spent in a productive activity.

A profit-maximizing firm will base its decision to hire workers on the additional costs and benefits of each worker. If the extra output that is produced by hiring one more unit of labor adds more to _____ than to _____, the firm will increase its profit by increasing the use of labor.

A firm's demand curve for labor in a perfectly competitive market is the downward-sloping portion of its _____ curve.

José, a corn farmer operating in a perfectly competitive market, pays his workers $8 an hour. At his current level of labor use, the marginal product of an additional hour of labor is three bushels of corn. The market price of corn is $2.75. To maximize his profits, Jose should:

At Hamill Manufacturing of Pennsylvania highly skilled senior machinists are paid $70,000, excluding benefits, but the average skilled machinist generates approximately $137,000 in value added. This difference means that the marginal productivity theory of income distribution doesn't hold.

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 is employing two workers. If she adds the third worker, her profits will:

A firm's demand curve for labor is:

Actual wage differentials can be partially explained by:

An increase in the market demand for electricians might occur if: