Question 1

The U.S. labor market shows large differences in the median earnings of workers according to gender and ethnicity.

Accepted Answer

A) True 
 B)False

Question 2

In 2012, the median earnings of union members were actually lower than the wages of workers not represented by unions.

Accepted Answer

A) True 
 B)False

Question 3

Over the past 30 years the premium for workers with advanced degrees has decreased.

Accepted Answer

A) True 
 B)False

Question 4

The factor distribution of income reflects that:

Accepted Answer

A)  land, labor, and capital are equally distributed. 
B)  most people receive their income based on their labor contribution. 
C)  most people receive their income based on their capital distribution. 
D)  land provides most income to the population. 
A)  land, labor, and capital are equally distributed. 
B)  most people receive their income based on their labor contribution. 
C)  most people receive their income based on their capital distribution. 
D)  land provides most income to the population.

Question 5

André has asked his boss for a pay raise. His boss is concerned that if he increases André's salary, André might work less. In other words, André's boss is concerned that leisure is a normal good for André and that his:

Accepted Answer

A)  income and substitution effects might move in the same direction. 
B)  income effect might be greater than his substitution effect. 
C)  substitution effect might be greater than his income effect. 
D)  income and substitution effects might cancel out to zero. 
A)  income and substitution effects might move in the same direction. 
B)  income effect might be greater than his substitution effect. 
C)  substitution effect might be greater than his income effect. 
D)  income and substitution effects might cancel out to zero.

Question 6

Assume that Stan just received a promotion and raise. In terms of labor supply, the substitution effect of a higher wage will lead him to:

Accepted Answer

A)  supply fewer hours of labor. 
B)  supply more hours of labor. 
C)  substitute leisure for work. 
D)  reduce work time to zero. 
A)  supply fewer hours of labor. 
B)  supply more hours of labor. 
C)  substitute leisure for work. 
D)  reduce work time to zero.

Question 7

G. Reecy's Hamburger Joint is a fast-food restaurant. Which of the following is a factor of production?

Accepted Answer

A)  the raw meat used for the hamburgers 
B)  the hamburger buns 
C)  the cook 
D)  the concentrate that is diluted to make the soft drinks 
A)  the raw meat used for the hamburgers 
B)  the hamburger buns 
C)  the cook 
D)  the concentrate that is diluted to make the soft drinks

Question 8

If the wage rate rises, firms will find that:

Accepted Answer

A)  their labor demand curve shifts leftward. 
B)  their labor demand curve shifts rightward. 
C)  they move upward and to the left along the labor demand curve. 
D)  they move downward and to the right along the labor demand curve. 
A)  their labor demand curve shifts leftward. 
B)  their labor demand curve shifts rightward. 
C)  they move upward and to the left along the labor demand curve. 
D)  they move downward and to the right along the labor demand curve.

Question 9

According to the marginal productivity theory of income distribution, if a unit of labor is paid more than a unit of capital, it is because at the equilibrium quantity of each factor, the value of the _____ product of labor is _____ product of capital.

Accepted Answer

A)  marginal; greater than the marginal 
B)  marginal; less than the marginal 
C)  average; greater than the average 
D)  average; less than the average 
A)  marginal; greater than the marginal 
B)  marginal; less than the marginal 
C)  average; greater than the average 
D)  average; less than the average

Question 10

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 $100 a day, but there is a new minimum wage of $120. Therefore:

Accepted Answer

A)  three workers who otherwise would have been employed by this firm are now unemployed. 
B)  four workers will now be hired by this firm. 
C)  all bricklayers are better off. 
D)  this firm will shut down. 
A)  three workers who otherwise would have been employed by this firm are now unemployed. 
B)  four workers will now be hired by this firm. 
C)  all bricklayers are better off. 
D)  this firm will shut down.

Question 11

In the U.S. labor market, African Americans have the lowest median earnings.

Accepted Answer

A) True 
 B)False

Question 12

The importance of human capital has been increased by technological progress.

Accepted Answer

A) True 
 B)False

Question 13

Derived demand for a factor means that:

Accepted Answer

A)  people demand factors just as they do goods. 
B)  the demand for factors depends on what the factor can produce. 
C)  the market derives a demand for factors regardless of what they produce. 
D)  suppliers determine what will be produced. 
A)  people demand factors just as they do goods. 
B)  the demand for factors depends on what the factor can produce. 
C)  the market derives a demand for factors regardless of what they produce. 
D)  suppliers determine what will be produced.

Question 14

If a perfectly competitive firm chooses its level of output so that price equals marginal revenue, the value of the marginal product of labor will equal the wage rate.

Accepted Answer

A) True 
 B)False

Question 15

Regardless of gender and ethnicity, more education is associated with higher median earnings.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  production 
B)  elasticity 
C)  income 
D)  complementary 
A)  production 
B)  elasticity 
C)  income 
D)  complementary

Question 17

When interferences in the labor market raise the wage above the equilibrium level, employers may discriminate because there are more job applicants than jobs.

Accepted Answer

A) True 
 B)False

Question 18

If a firm hires labor such that W > VMPL, then profit:

Accepted Answer

A)  is maximized. 
B)  can be increased by hiring less labor. 
C)  can be increased by hiring more labor. 
D)  can be increased by decreasing the price of the output. 
A)  is maximized. 
B)  can be increased by hiring less labor. 
C)  can be increased by hiring more labor. 
D)  can be increased by decreasing the price of the output.

Question 19

An objection to the marginal productivity theory of income distribution is that many people believe it is a moral justification for the unequal distribution of income.

Accepted Answer

A) True 
 B)False

Question 20

Alex's boss notices that with each course Alex takes, he becomes a more knowledgeable and efficient worker. This is an example of:

Accepted Answer

A)  human capital development. 
B)  derived demand. 
C)  value of marginal product. 
D)  income effects. 
A)  human capital development. 
B)  derived demand. 
C)  value of marginal product. 
D)  income effects.

Exam 18: Factor Markets and the Distribution of Income

The U.S. labor market shows large differences in the median earnings of workers according to gender and ethnicity.

In 2012, the median earnings of union members were actually lower than the wages of workers not represented by unions.

Over the past 30 years the premium for workers with advanced degrees has decreased.

The factor distribution of income reflects that:

André has asked his boss for a pay raise. His boss is concerned that if he increases André's salary, André might work less. In other words, André's boss is concerned that leisure is a normal good for André and that his:

Assume that Stan just received a promotion and raise. In terms of labor supply, the substitution effect of a higher wage will lead him to:

G. Reecy's Hamburger Joint is a fast-food restaurant. Which of the following is a factor of production?

If the wage rate rises, firms will find that:

According to the marginal productivity theory of income distribution, if a unit of labor is paid more than a unit of capital, it is because at the equilibrium quantity of each factor, the value of the _____ product of labor is _____ product of capital.

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 $100 a day, but there is a new minimum wage of $120. Therefore:

In the U.S. labor market, African Americans have the lowest median earnings.

The importance of human capital has been increased by technological progress.

Derived demand for a factor means that:

If a perfectly competitive firm chooses its level of output so that price equals marginal revenue, the value of the marginal product of labor will equal the wage rate.

Regardless of gender and ethnicity, more education is associated with higher median earnings.

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

When interferences in the labor market raise the wage above the equilibrium level, employers may discriminate because there are more job applicants than jobs.

If a firm hires labor such that W > VMPL, then profit:

An objection to the marginal productivity theory of income distribution is that many people believe it is a moral justification for the unequal distribution of income.

Alex's boss notices that with each course Alex takes, he becomes a more knowledgeable and efficient worker. This is an example of:

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

According to the marginal productivity theory of income distribution, if a unit of labor is paid more than a unit of capital, it is because at the equilibrium quantity of each factor, the value of the _ product of labor is _ product of capital.