Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The marginal product times product price equals the:

Accepted Answer

A)  marginal revenue. 
B)  value of the marginal product. 
C)  additional revenue product. 
D)  marginal cost. 
A)  marginal revenue. 
B)  value of the marginal product. 
C)  additional revenue product. 
D)  marginal cost.

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Use the following to answer questions : $\text {Table: Value of the Marginal}$
 $\text {Product of Labour at Demand}$

$\begin{array} { cc}
\hline \text {Quantity of Labour}&
\text {Total Product}\ 
\hline 0 & 0 \ 1 & 20 \ 2 & 50 \ 3 & 90 \ 4 & 120 \ 5 & 140 \ 6 & 150 \ 7 & 150 \ 8 & 140 \
\hline\end{array}$
-(Table: Value of the Marginal Product of Labour and Demand)Use Table: Value of the Marginal Product of Labour and Demand.In the table,the total product of labour 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 $100 per hour,the profit-maximizing quantity of labour is _____ workers.

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  6 
A)  0 
B)  2 
C)  4 
D)  6

Question 5

Use the following to answer questions : $\text {Table: Value of the Marginal}$
 $\text {Product of Labour at Demand}$

$\begin{array} { cc}
\hline \text {Quantity of Labour}&
\text {Total Product}\ 
\hline 0 & 0 \ 1 & 20 \ 2 & 50 \ 3 & 90 \ 4 & 120 \ 5 & 140 \ 6 & 150 \ 7 & 150 \ 8 & 140 \
\hline\end{array}$
-(Table: Value of the Marginal Product of Labour and Demand)Use Table: Value of the Marginal Product of Labour and Demand.In the table,the total product of labour 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 $60 per hour,the profit-maximizing quantity of labour is _____ workers.

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  6 
A)  0 
B)  2 
C)  4 
D)  6

Question 6

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

Accepted Answer

A) True 
 B)False

Question 7

Which statement is TRUE?

Accepted Answer

A)  Leisure is usually a normal good. 
B)  Leisure is usually 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 usually a normal good. 
B)  Leisure is usually 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 8

Your boss is trying to decide whether to buy out a rival company and asks for your advice.The boss says that she will buy the rival if there is evidence that the rival is operating inefficiently.(Your company will then improve its efficiency and increase profits. )She will not buy the rival if there is evidence that the rival is already operating efficiently.Your boss gives you the following data on the rival's operations: The average product of labour is 4,the marginal product of the last worker hired is 10,the wage is $20,and the price of output is $5.Based on this information,you should tell your boss to buy the rival.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

In Canada,payments to labour account for roughly:

Accepted Answer

A)  60% of total income,a share that has not fluctuated much in the past 30 years. 
B)  50% of total income,but the returns to land have been increasing. 
C)  30% of total income,and this number is falling. 
D)  90% of total income and can be broken down into human capital and physical capital. 
A)  60% of total income,a share that has not fluctuated much in the past 30 years. 
B)  50% of total income,but the returns to land have been increasing. 
C)  30% of total income,and this number is falling. 
D)  90% of total income and can be broken down into human capital and physical capital.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which statement is TRUE?

Accepted Answer

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

Question 13

Use the following to answer question 28: $$\begin{array}{l}
\text { Table: Workers and Art Output }\
\begin{array} { l c } 
\hline \begin{array} { l } 
\text { Number of } \
\text { Workers (artists) }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { (mud statues) }
\end{array} \
\hline 1 & 10 \
2 & 25 \
3 & 35 \
4 & 43 \
5 & 48 \
\hline
\end{array}
\end{array}$$
-(Table: Workers and Art Output)Use Table: Workers and Art Output.Suppose that you achieve your dream of opening an art studio specializing in selling mud statues.You pay $10 in fixed costs for equipment and $9 per day to each of your workers who make the mud statues.The industry is perfectly competitive,with a current market price of $1.How many statues should you produce?

Accepted Answer

A)  25 
B)  35 
C)  43 
D)  3 
A)  25 
B)  35 
C)  43 
D)  3

Question 14

Use the following to answer questions :
Figure: Equilibrium in the Labour Market  
-(Figure: Equilibrium in the Labour Market)Use Figure: Equilibrium in the Labour Market.In the figure,a decrease in population that decreases the number of workers,when everything else stays the same,will lead to a(n)_____ in the equilibrium quantity of labour and a(n)_____ in the equilibrium price of labour.

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 15

The value of the marginal product is calculated as:

Accepted Answer

A)  MP / MR. 
B)  MP / P. 
C)  MP × P. 
D)  MR / MP. 
A)  MP / MR. 
B)  MP / P. 
C)  MP × P. 
D)  MR / MP.

Question 16

The labour demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labour curves.

Accepted Answer

A)  marginal 
B)  value of the marginal 
C)  marginal physical 
D)  average physical 
A)  marginal 
B)  value of the marginal 
C)  marginal physical 
D)  average physical

Question 17

Which expression BEST describes the value of the marginal product?

Accepted Answer

A)  the change in total output generated by a unit change in the quantity of a factor 
B)  the change in total revenue generated by a unit change in the quantity of a factor 
C)  the change in marginal cost generated by a unit change in the quantity of a factor 
D)  the ratio of total revenue to the quantity of a factor employed 
A)  the change in total output generated by a unit change in the quantity of a factor 
B)  the change in total revenue generated by a unit change in the quantity of a factor 
C)  the change in marginal cost generated by a unit change in the quantity of a factor 
D)  the ratio of total revenue to the quantity of a factor employed

Question 18

Use the following to answer questions :
Figure: Equilibrium in the Labour Market  
-According to the marginal productivity theory of income distribution,if a unit of labour is paid more than a unit of capital,it is because,at the equilibrium quantity of each factor,the value of the _____ product of labour 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 19

An input differs from a factor of production in that the former gets used up in production,while the latter is an enduring source of income for its owner.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

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

The marginal product times product price equals the:

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

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

Which statement is TRUE?

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

In Canada,payments to labour account for roughly:

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

Which statement is TRUE?

The value of the marginal product is calculated as:

The labour demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labour curves.

Which expression BEST describes the value of the marginal product?

An input differs from a factor of production in that the former gets used up in production,while the latter is an enduring source of income for its owner.

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

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 19: Factor Markets and the Distribution of Income

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

The marginal product times product price equals the:

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

Wage differentials that arise because of innate differences in ability or talent are consistent with the marginal productivity theory of income distribution.

Which statement is TRUE?

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

In Canada,payments to labour account for roughly:

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

Which statement is TRUE?

The value of the marginal product is calculated as:

The labour demand curve in a perfectly competitive factor market is the horizontal sum of all firms' _____ product of labour curves.

Which expression BEST describes the value of the marginal product?

An input differs from a factor of production in that the former gets used up in production,while the latter is an enduring source of income for its owner.

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

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

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