Exam 18: Factor Markets and the Distribution of Income

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 rate for bricklayers rises from $80 to $100, the _____ bricklayers will _____.

An example of the substitution effect dominating the income effect occurs when people take summer vacations rather than winter vacations, even though their pay is the same year-round.

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. The price of a power cord is $2, the market wage rate is $40 per hour, and eight workers are hired. Profit can be maximized by hiring _____ worker(s).

If the age at which a person can receive Social Security benefits increases from 67 to 70, the supply of labor will increase.

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, an increase in the productivity of labor, 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.

The demand for factors of production is called a derived demand because it is:

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 is due to the fact that:

Although horses were once a very important factor of production, the development of automobiles and other machinery reduced the demand for their use. This is an example of:

Tim works 51 hours per week, and his wage is $35 per hour. If his wage increases to $70 per hour:

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

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

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

Wage differences between men and women and among various ethnic groups are proof that the marginal productivity theory of income distribution is invalid.

A new teacher often makes less than a teacher with 20 years' experience because of:

The competitive labor market for economists is in equilibrium. Suppose that more college students decide to major in economics. How will this affect the labor market?

The demand for a factor of production is a(n) _____ demand.

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. The price of a power cord is $2, the market wage rate is $40 per hour, and four workers are hired. Profit can be maximized by hiring _____ worker(s).

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

The labor demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labor curves.

Barry's Brewpub is considering hiring more brewmasters. A pint of brew sells for $3. The market wage of a brewmaster is $150 per day. Assuming that the market for beer is perfectly competitive, Barry's Brewpub will hire another brewmaster only if Barry believes the new brewmaster will: