Question 1

In the U.S. labor market, White men have the highest median earnings.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer questions :  
-(Table: Total Product of Labor at Debbie's Bakery) Look at the table Total Product of Labor at Debbie's Bakery. Debbie can sell cakes at $10 each. What is the value of the marginal product for the fourth worker?

Accepted Answer

A)  five cakes 
B)  $50 
C)  $210 
D)  21 cakes 
A)  five cakes 
B)  $50 
C)  $210 
D)  21 cakes

Question 3

Judy's individual labor supply curve is positively sloped, so for Judy, the income effect dominates the substitution effect.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements is TRUE?

Accepted Answer

A)  Leisure is a normal good. 
B)  Leisure is an inferior good. 
C)  All other things unchanged, an increase in income will decrease the demand for leisure. 
D)  The demand for leisure is perfectly inelastic. 
A)  Leisure is a normal good. 
B)  Leisure is an inferior good. 
C)  All other things unchanged, an increase in income will decrease the demand for leisure. 
D)  The demand for leisure is perfectly inelastic.

Question 5

The key distinction between a factor of production and an input is that:

Accepted Answer

A)  an input is an enduring source of income, but a factor of production is used up in production. 
B)  a factor of production earns income from selling its services over and over again, but an input cannot. 
C)  an input earns income from selling its services over and over again, but a factor of production cannot. 
D)  a factor of production has limited earning potential. 
A)  an input is an enduring source of income, but a factor of production is used up in production. 
B)  a factor of production earns income from selling its services over and over again, but an input cannot. 
C)  an input earns income from selling its services over and over again, but a factor of production cannot. 
D)  a factor of production has limited earning potential.

Question 6

Suppose the factor market for computer engineers is competitive in India and the United States, but Indian engineers earn one-fifth of what American engineers earn. This means that in India engineers are price takers, but engineers in America are not.

Accepted Answer

A) True 
 B)False

Question 7

The marginal productivity theory of income distribution assumes that factor markets are:

Accepted Answer

A)  monopolies. 
B)  oligopolies. 
C)  perfectly competitive. 
D)  allowed to pay only the wages that government approves. 
A)  monopolies. 
B)  oligopolies. 
C)  perfectly competitive. 
D)  allowed to pay only the wages that government approves.

Question 8

Human capital is the improvement in _____ produced by _____.

Accepted Answer

A)  physical capital; technology 
B)  labor; education and knowledge 
C)  labor; physical capital 
D)  labor; management 
A)  physical capital; technology 
B)  labor; education and knowledge 
C)  labor; physical capital 
D)  labor; management

Question 9

Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:

Accepted Answer

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

Question 10

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, a decrease in the price of the good produced, 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.

Accepted Answer

A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease 
A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease

Question 11

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 third worker is:

Accepted Answer

A)  $15. 
B)  $150. 
C)  $170. 
D)  $510. 
A)  $15. 
B)  $150. 
C)  $170. 
D)  $510.

Question 12

A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect, and the supply curve has a _____ slope.

Accepted Answer

A)  income; substitution; positive 
B)  income; substitution; negative 
C)  substitution; income; positive 
D)  substitution; income; negative 
A)  income; substitution; positive 
B)  income; substitution; negative 
C)  substitution; income; positive 
D)  substitution; income; negative

Question 13

Unions and efficiency wages usually lead to wages that are below the equilibrium level.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is most likely an example of wage disparity due to differences in talent and ability?

Accepted Answer

A)  The median earnings of White men are more than the median earnings of African Americans. 
B)  People with graduate degrees usually have higher earnings than people who did not graduate from high school. 
C)  Nick Saban, the football coach at the University of Alabama, earns more than the local high school football coach. 
D)  Crab fishermen on the Bering Sea earn more than clerks who sell goldfish at a pet store. 
A)  The median earnings of White men are more than the median earnings of African Americans. 
B)  People with graduate degrees usually have higher earnings than people who did not graduate from high school. 
C)  Nick Saban, the football coach at the University of Alabama, earns more than the local high school football coach. 
D)  Crab fishermen on the Bering Sea earn more than clerks who sell goldfish at a pet store.

Question 15

The opportunity cost of an hour of leisure:

Accepted Answer

A)  is always assumed to be equal to the minimum wage. 
B)  is the hourly wage rate. 
C)  increases if the hour of leisure time is spent in an unproductive activity. 
D)  decreases if the hour of leisure is spent in a productive activity. 
A)  is always assumed to be equal to the minimum wage. 
B)  is the hourly wage rate. 
C)  increases if the hour of leisure time is spent in an unproductive activity. 
D)  decreases if the hour of leisure is spent in a productive activity.

Question 16

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 $20 per hour, the profit-maximizing quantity of labor is _____ workers.

Accepted Answer

A)  two 
B)  four 
C)  six 
D)  eight 
A)  two 
B)  four 
C)  six 
D)  eight

Question 17

A backward-bending labor supply curve is possible only if leisure is an inferior good.

Accepted Answer

A) True 
 B)False

Question 18

A decrease in the demand for pastry chefs may come about because of an increase in the:

Accepted Answer

A)  concern for healthy living. 
B)  market wage rate for pastry chefs. 
C)  productivity of pastry chefs. 
D)  supply of other factors that pastry chefs use. 
A)  concern for healthy living. 
B)  market wage rate for pastry chefs. 
C)  productivity of pastry chefs. 
D)  supply of other factors that pastry chefs use.

Question 19

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.

Accepted Answer

A)  total cost; total revenue 
B)  total revenue; total cost 
C)  marginal cost; marginal revenue 
D)  marginal product; marginal cost 
A)  total cost; total revenue 
B)  total revenue; total cost 
C)  marginal cost; marginal revenue 
D)  marginal product; marginal cost

Question 20

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 $125 and the price per bushel of corn is $10. To maximize profits Laura should employ _____ workers.

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  six 
A)  two 
B)  three 
C)  four 
D)  six

Exam 18: Factor Markets and the Distribution of Income

In the U.S. labor market, White men have the highest median earnings.

Use the following to answer questions : -(Table: Total Product of Labor at Debbie's Bakery) Look at the table Total Product of Labor at Debbie's Bakery. Debbie can sell cakes at $10 each. What is the value of the marginal product for the fourth worker?

Judy's individual labor supply curve is positively sloped, so for Judy, the income effect dominates the substitution effect.

Which of the following statements is TRUE?

The key distinction between a factor of production and an input is that:

Suppose the factor market for computer engineers is competitive in India and the United States, but Indian engineers earn one-fifth of what American engineers earn. This means that in India engineers are price takers, but engineers in America are not.

The marginal productivity theory of income distribution assumes that factor markets are:

Human capital is the improvement in _____ produced by _____.

Wage differences across jobs that reflect the fact that some jobs are less pleasant than others are called:

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 third worker is:

A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect, and the supply curve has a _____ slope.

Unions and efficiency wages usually lead to wages that are below the equilibrium level.

Which of the following is most likely an example of wage disparity due to differences in talent and ability?

The opportunity cost of an hour of leisure:

A backward-bending labor supply curve is possible only if leisure is an inferior good.

A decrease in the demand for pastry chefs may come about because of an increase in the:

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.

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

Human capital is the improvement in _ produced by _.

A backward-bending supply curve of labor shows that at relatively low wages the ___ effect dominates the _ effect, and the supply curve has a ___ slope.

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.