Exam 18: Factor Markets and the Distribution of Income

The clearest sign of discrimination against an individual is that that individual is paid less than the value of his or her marginal productivity.

The price of an extra hour of leisure is:

The opportunity cost of an hour of leisure is always assumed to be equal to the minimum wage.

In the markets for goods and services, households demand labor and firms supply labor.

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. If Debbie must pay each worker $40 per day, how many workers will she hire to maximize profit?

Which of the following is an example of wage disparity due to compensating differentials?

When the demand for automobiles is high, the demand for workers who build automobiles is high. This relation between the market for automobiles and the market for the labor that builds automobiles is why demand in a factor market is called:

The largest component of the factor distribution of income in the United States is:

Workers with more human capital usually generate a higher value of the marginal product.

The marginal productivity theory of income distribution says that:

The marginal productivity theory of income distribution assumes that factor markets are perfectly competitive.

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has increased.

In 2012, the median earnings of union members were 25% to 30% higher than the wages of workers not represented by unions.

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

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

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, the value of the marginal product for the third worker is:

Compensating differentials are used to motivate employees and to reduce worker turnover.

Which of the following statements about unions is TRUE?

The Bountiful Bakery is considering hiring another pastry chef. The bakery knows the average product of its chefs is 15 dozen croissants per day. It also believes that the next chef hired will produce an extra 12 dozen croissants per day. A dozen croissants sell for $30. The bakery should hire another worker:

Which of the following groups has the HIGHEST median earnings in the U.S. labor market?