Question 1

One reason that wage discrimination based on gender or ethnicity can continue is:

Accepted Answer

A)  market interference or market failure associated with above-equilibrium wages. 
B)  market competition making it profitable to engage in discrimination. 
C)  it is justified by the marginal productivity theory of income distribution. 
D)  the South African experience with apartheid showed that discrimination led to more rapid economic growth. 
A)  market interference or market failure associated with above-equilibrium wages. 
B)  market competition making it profitable to engage in discrimination. 
C)  it is justified by the marginal productivity theory of income distribution. 
D)  the South African experience with apartheid showed that discrimination led to more rapid economic growth.

Question 2

Which of the following is a compensating differential?

Accepted Answer

A)  Tiger Woods gets paid more than a college professor. 
B)  A window washer working in a suburban residential subdivision gets paid less than one who is washing windows on the outside of a skyscraper. 
C)  A nuclear scientist gets paid more than a janitor working in the same building. 
D)  On average, White men get paid more than women of all ethnicities. 
A)  Tiger Woods gets paid more than a college professor. 
B)  A window washer working in a suburban residential subdivision gets paid less than one who is washing windows on the outside of a skyscraper. 
C)  A nuclear scientist gets paid more than a janitor working in the same building. 
D)  On average, White men get paid more than women of all ethnicities.

Question 3

John and Deanna are married, with two children. Both adults have college degrees, but Deanna has chosen not to enter the labor force, while John has worked continuously for 10 years. Suppose Deanna gets a job with John's employer. She is offered a salary that is $15,000 below John's. Is Deanna being discriminated against because she is a woman? Support your answer.

Accepted Answer

Probably not. Although both John and Dea

Question 4

If a firm hires labor and with its current employees 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 increasing the wage rate. 
A)  is maximized. 
B)  can be increased by hiring less labor. 
C)  can be increased by hiring more labor. 
D)  can be increased by increasing the wage rate.

Question 5

Wage differences across jobs reflecting the fact that some jobs are less pleasant than others are called compensating differentials.

Accepted Answer

A) True 
 B)False

Question 6

The category compensation of employees doesn't capture the full income of labor because:

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

A factor demand curve will shift to the left 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

Question 9

A higher wage _____ the price of _____ and _____ workers' incomes. The result pulls the quantity of labor supplied in _____ direction(s).

Accepted Answer

A)  increases; leisure; increases; opposite 
B)  increases; leisure; increases; the same 
C)  reduces; work effort; reduces; opposite 
D)  reduces; labor; increases; the same 
A)  increases; leisure; increases; opposite 
B)  increases; leisure; increases; the same 
C)  reduces; work effort; reduces; opposite 
D)  reduces; labor; increases; the same

Question 10

You overhear an economist refer to the price of leisure. What does this mean? How can leisure have a price?

Accepted Answer

Economists see the decision to work as a

Question 11

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 there is an increase in technology that increases the productivity of bricklayers, then the value of the marginal product of the sixth bricklayer will be _____ than _____.

Accepted Answer

A)  less; $80 
B)  greater; $100 
C)  less; $60 
D)  greater; $110 
A)  less; $80 
B)  greater; $100 
C)  less; $60 
D)  greater; $110

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. Which of the following statements is TRUE?

Accepted Answer

A)  Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than or equal to the market wage rate of bricklayers. 
B)  The profit-maximizing condition for firms hiring bricklayers is where VMPLbricklayers is less than the market wage rate. 
C)  The profit-maximizing condition for firms hiring bricklayers is where MPbricklayers equals the market wage rate. 
D)  Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers. 
A)  Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than or equal to the market wage rate of bricklayers. 
B)  The profit-maximizing condition for firms hiring bricklayers is where VMPLbricklayers is less than the market wage rate. 
C)  The profit-maximizing condition for firms hiring bricklayers is where MPbricklayers equals the market wage rate. 
D)  Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers.

Question 13

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 a shortage in the market for mortar lowers bricklayers' productivity, then the value of the marginal product of the eighth bricklayer will be:

Accepted Answer

A)  less than $80. 
B)  greater than $100. 
C)  equal to $100. 
D)  greater than $80. 
A)  less than $80. 
B)  greater than $100. 
C)  equal to $100. 
D)  greater than $80.

Question 14

Holly and Emily both have a bachelor's degree in nursing from the same college. Both have been nurses for eight years. Holly works from 11 P.M. until 7 A.M., and Emily works from 7 A.M. until 3 P.M. Holly's salary is $1,000 per month higher than Emily's salary. This is an example of an efficiency wage disparity.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is TRUE?

Accepted Answer

A)  The value of the marginal product of labor equals the marginal product of labor times price. 
B)  The value of the marginal product of labor equals a one-unit change in a factor divided by the change in total revenue. 
C)  Marginal cost equals change in total revenue divided by the one-unit change in a factor. 
D)  The value of the marginal product of labor equals the change in the quantity of a factor times the price of the factor. 
A)  The value of the marginal product of labor equals the marginal product of labor times price. 
B)  The value of the marginal product of labor equals a one-unit change in a factor divided by the change in total revenue. 
C)  Marginal cost equals change in total revenue divided by the one-unit change in a factor. 
D)  The value of the marginal product of labor equals the change in the quantity of a factor times the price of the factor.

Question 16

For the Tampa Bay Rays baseball team, the value of the marginal product curve is the team's labor _____ curve. This means the marginal product curve has a _____ slope.

Accepted Answer

A)  demand; positive 
B)  supply; positive 
C)  demand; negative 
D)  supply; negative 
A)  demand; positive 
B)  supply; positive 
C)  demand; negative 
D)  supply; negative

Question 17

When wages increase, if the substitution effect dominates, the quantity of labor supplied will increase.

Accepted Answer

A) True 
 B)False

Question 18

The value of the marginal product is the:

Accepted Answer

A)  change in total output resulting from a unit change in the quantity of a factor. 
B)  change in total revenue resulting from a unit change in the quantity of a factor. 
C)  change in total cost resulting from a unit change in the quantity of a factor. 
D)  ratio of total revenue to the quantity of a factor employed. 
A)  change in total output resulting from a unit change in the quantity of a factor. 
B)  change in total revenue resulting from a unit change in the quantity of a factor. 
C)  change in total cost resulting from a unit change in the quantity of a factor. 
D)  ratio of total revenue to the quantity of a factor employed.

Question 19

John is an entrepreneur who owns an auto body repair shop. John's business is booming, and his salary is rising. John's labor supply curve will be _____ if the substitution effect is _____ the income effect.

Accepted Answer

A)  upward-sloping; smaller than 
B)  downward-sloping; smaller than 
C)  horizontal; equal to 
D)  vertical; greater than 
A)  upward-sloping; smaller than 
B)  downward-sloping; smaller than 
C)  horizontal; equal to 
D)  vertical; greater than

Question 20

Mary is considering hiring another worker in an assembly line for MP3 speakers. Mary knows the average product of labor is 15 speakers per day. She also believes that the next worker hired will produce an extra 12 speakers per day. A speaker sells for $10. Assuming that the market for speakers is perfectly competitive, Mary should hire another worker:

Accepted Answer

A)  only if the new worker's marginal product is 12 or more. 
B)  only if the new worker's daily wage is $150 or less. 
C)  only if the new worker's daily wage is $120 or less. 
D)  since the marginal product is below the average product. 
A)  only if the new worker's marginal product is 12 or more. 
B)  only if the new worker's daily wage is $150 or less. 
C)  only if the new worker's daily wage is $120 or less. 
D)  since the marginal product is below the average product.

Exam 18: Factor Markets and the Distribution of Income

One reason that wage discrimination based on gender or ethnicity can continue is:

Which of the following is a compensating differential?

If a firm hires labor and with its current employees W = VMPL, then profit:

Wage differences across jobs reflecting the fact that some jobs are less pleasant than others are called compensating differentials.

The category compensation of employees doesn't capture the full income of labor because:

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

A factor demand curve will shift to the left because of a(n) _____ in the price of the _____.

A higher wage _____ the price of _____ and _____ workers' incomes. The result pulls the quantity of labor supplied in _____ direction(s).

You overhear an economist refer to the price of leisure. What does this mean? How can leisure have a price?

Use the following to answer questions Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers. Which of the following statements is TRUE?

Which of the following statements is TRUE?

For the Tampa Bay Rays baseball team, the value of the marginal product curve is the team's labor _____ curve. This means the marginal product curve has a _____ slope.

When wages increase, if the substitution effect dominates, the quantity of labor supplied will increase.

The value of the marginal product is the:

John is an entrepreneur who owns an auto body repair shop. John's business is booming, and his salary is rising. John's labor supply curve will be _____ if the substitution effect is _____ the income effect.

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

A factor demand curve will shift to the left because of a(n) _ in the price of the _.

A higher wage ___ the price of _ and _ workers' incomes. The result pulls the quantity of labor supplied in ___ direction(s).

For the Tampa Bay Rays baseball team, the value of the marginal product curve is the team's labor _ curve. This means the marginal product curve has a _ slope.

John is an entrepreneur who owns an auto body repair shop. John's business is booming, and his salary is rising. John's labor supply curve will be _ if the substitution effect is _ the income effect.