Question 1

A change in the wage rate will shift the supply curve in the market for labor.

Accepted Answer

A) True 
 B)False

Question 2

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 is partially because diminishing returns to labor cause the value of the marginal product of the last machinist hired to be less than the average of all of the machinists currently employed.

Accepted Answer

A) True 
 B)False

Question 3

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 $10, then the value of the marginal product of the fifth worker is:

Accepted Answer

A)  $11. 
B)  $110. 
C)  $90. 
D)  $750. 
A)  $11. 
B)  $110. 
C)  $90. 
D)  $750.

Question 4

The individual producer's labor demand curve is the:

Accepted Answer

A)  marginal product of labor curve. 
B)  value of the average product of labor curve. 
C)  average product curve. 
D)  value of the marginal product of labor curve. 
A)  marginal product of labor curve. 
B)  value of the average product of labor curve. 
C)  average product curve. 
D)  value of the marginal product of labor curve.

Question 5

One objection to the marginal productivity theory of income distribution is the existence of large disparities in income between factors of production that should receive the same payment.

Accepted Answer

A) True 
 B)False

Question 6

Oscar's Flower Shop maximizes profits by hiring four workers in a perfectly competitive labor market. The workers and their value of the marginal product of labor are Noe, $40; Barbara, $35; Calvin, $27; and Diana, $15. According to the marginal productivity theory of income distribution, which of the following statements is TRUE?

Accepted Answer

A)  In equilibrium, each worker is paid his or her value of the marginal product of labor. 
B)  Each worker is paid a wage equal to the highest value of the marginal product of labor . 
C)  Each worker is paid $15. 
D)  We need to know the product price before we can figure out the wage rate. 
A)  In equilibrium, each worker is paid his or her value of the marginal product of labor. 
B)  Each worker is paid a wage equal to the highest value of the marginal product of labor . 
C)  Each worker is paid $15. 
D)  We need to know the product price before we can figure out the wage rate.

Question 7

Lisa works 46 hours a week at $10 an hour. If her wage increases to $16.50:

Accepted Answer

A)  the substitution effect implies that she will work less. 
B)  if leisure is a normal good, the income effect implies that she will work less. 
C)  if leisure is a normal good, the income effect will reinforce the substitution effect and she will work less. 
D)  Lisa's marginal product of labor has decreased. 
A)  the substitution effect implies that she will work less. 
B)  if leisure is a normal good, the income effect implies that she will work less. 
C)  if leisure is a normal good, the income effect will reinforce the substitution effect and she will work less. 
D)  Lisa's marginal product of labor has decreased.

Question 8

A profit-maximizing producer employs each factor of production up to the point at which the value of the marginal product of the last unit of the factor employed is equal to the price per unit of output.

Accepted Answer

A) True 
 B)False

Question 9

One objection to the marginal productivity theory of income distribution is the absence of large disparities in income between men and women and various ethnic groups.

Accepted Answer

A) True 
 B)False

Question 10

A lumberjack cutting giant redwoods in California being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is TRUE?

Accepted Answer

A)  If W  VMPL, the firm should hire more labor. 
C)  If W = VMPL, the firm should hire more labor. 
D)  If W > 0, the firm should shut down. 
A)  If W  VMPL, the firm should hire more labor. 
C)  If W = VMPL, the firm should hire more labor. 
D)  If W > 0, the firm should shut down.

Question 13

Lakisha's labor supply curve is downward-sloping for wage rates greater than $40 per hour and upward-sloping for wage rates less than $40 per hour. If leisure is a normal good for Lakisha and if the wage is _____, the substitution effect of a wage increase is _____ than the income effect.

Accepted Answer

A)  greater than $40; greater 
B)  equal to $18; less 
C)  greater than $40; less 
D)  greater than $20; less 
A)  greater than $40; greater 
B)  equal to $18; less 
C)  greater than $40; less 
D)  greater than $20; less

Question 14

Approximately 71% of income generated in the United States goes to corporate profit.

Accepted Answer

A) True 
 B)False

Question 15

A leftward shift in the labor supply curve might result from:

Accepted Answer

A)  people valuing leisure more highly. 
B)  people having less wealth. 
C)  increasing work opportunities for women and minorities. 
D)  an increase in the population. 
A)  people valuing leisure more highly. 
B)  people having less wealth. 
C)  increasing work opportunities for women and minorities. 
D)  an increase in the population.

Question 16

The equilibrium value of the marginal product of a factor is the additional value produced by the most productive unit of that factor employed in the factor market as a whole.

Accepted Answer

A) True 
 B)False

Question 17

When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole, this is:

Accepted Answer

A)  the marginal productivity theory of income distribution. 
B)  diminishing marginal product. 
C)  the factor distribution of income. 
D)  the efficiency wage model. 
A)  the marginal productivity theory of income distribution. 
B)  diminishing marginal product. 
C)  the factor distribution of income. 
D)  the efficiency wage model.

Question 18

A nurse willing to work the midnight to 8 A.M. shift may make more than one who works 8 A.M. to 4 P.M. because of:

Accepted Answer

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

Question 19

In terms of contribution to total U.S. income, the factor of production that receives the SMALLEST share is:

Accepted Answer

A)  capital. 
B)  labor. 
C)  natural resources. 
D)  entrepreneurship. 
A)  capital. 
B)  labor. 
C)  natural resources. 
D)  entrepreneurship.

Question 20

There will be an increase in factor demand because of a(n) _____ in the price of the _____.

Accepted Answer

A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces 
A)  increase; factor 
B)  increase; good the factor produces 
C)  decrease; factor 
D)  decrease; good the factor produces

Exam 18: Factor Markets and the Distribution of Income

A change in the wage rate will shift the supply curve in the market for labor.

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 $10, then the value of the marginal product of the fifth worker is:

The individual producer's labor demand curve is the:

One objection to the marginal productivity theory of income distribution is the existence of large disparities in income between factors of production that should receive the same payment.

Lisa works 46 hours a week at $10 an hour. If her wage increases to $16.50:

A profit-maximizing producer employs each factor of production up to the point at which the value of the marginal product of the last unit of the factor employed is equal to the price per unit of output.

One objection to the marginal productivity theory of income distribution is the absence of large disparities in income between men and women and various ethnic groups.

A lumberjack cutting giant redwoods in California being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

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

Which of the following statements is TRUE?

Lakisha's labor supply curve is downward-sloping for wage rates greater than $40 per hour and upward-sloping for wage rates less than $40 per hour. If leisure is a normal good for Lakisha and if the wage is _____, the substitution effect of a wage increase is _____ than the income effect.

Approximately 71% of income generated in the United States goes to corporate profit.

A leftward shift in the labor supply curve might result from:

The equilibrium value of the marginal product of a factor is the additional value produced by the most productive unit of that factor employed in the factor market as a whole.

When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole, this is:

A nurse willing to work the midnight to 8 A.M. shift may make more than one who works 8 A.M. to 4 P.M. because of:

In terms of contribution to total U.S. income, the factor of production that receives the SMALLEST share is:

There will be an increase in factor demand because of a(n) _____ in the price of the _____.

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

Lakisha's labor supply curve is downward-sloping for wage rates greater than $40 per hour and upward-sloping for wage rates less than $40 per hour. If leisure is a normal good for Lakisha and if the wage is _, the substitution effect of a wage increase is _ than the income effect.

There will be an increase in factor demand because of a(n) _ in the price of the _.