Question 1

The opportunity cost of an extra hour of leisure is:

Accepted Answer

A)  $1. 
B)  the hourly wage rate. 
C)  the same as the price of money. 
D)  always less than the value of the marginal product of labour. 
A)  $1. 
B)  the hourly wage rate. 
C)  the same as the price of money. 
D)  always less than the value of the marginal product of labour.

Question 2

When wages increase,if the income effect dominates,the quantity of labour supplied will increase.

Accepted Answer

A) True 
 B)False

Question 3

In terms of labour supply,the income effect of a higher wage causes a(n):

Accepted Answer

A)  decrease in leisure time. 
B)  increase in the quantity of labour supplied. 
C)  decrease in the quantity of labour supplied. 
D)  reduction of leisure time to zero. 
A)  decrease in leisure time. 
B)  increase in the quantity of labour supplied. 
C)  decrease in the quantity of labour supplied. 
D)  reduction of leisure time to zero.

Question 4

Suppose that the labour market for plumbers is in equilibrium.Which occurrence might DECREASE the wage for plumbers?

Accepted Answer

A)  An economic boom increases the demand for new homes. 
B)  The plumbers union establishes a rigorous certification test that is difficult for aspiring plumbers to pass. 
C)  Unemployed manufacturing workers attend technical schools to learn the plumbing trade. 
D)  A minimum wage is imposed in the market for plumbers. 
A)  An economic boom increases the demand for new homes. 
B)  The plumbers union establishes a rigorous certification test that is difficult for aspiring plumbers to pass. 
C)  Unemployed manufacturing workers attend technical schools to learn the plumbing trade. 
D)  A minimum wage is imposed in the market for plumbers.

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 $4 and the market wage rate is $80 per hour,the profit-maximizing quantity of labour is _____ worker(s).

Accepted Answer

A)  1 
B)  3 
C)  5 
D)  7 
A)  1 
B)  3 
C)  5 
D)  7

Question 6

If the wage rate rises,firms will find that:

Accepted Answer

A)  their labour demand curve shifts leftward. 
B)  their labour demand curve shifts rightward. 
C)  they move upward and to the left along the labour demand curve. 
D)  they move downward and to the right along the labour demand curve. 
A)  their labour demand curve shifts leftward. 
B)  their labour demand curve shifts rightward. 
C)  they move upward and to the left along the labour demand curve. 
D)  they move downward and to the right along the labour demand curve.

Question 7

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 the price of the good produced,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 8

A shift in demand for a given factor of production will NOT occur if:

Accepted Answer

A)  the price of that factor falls. 
B)  the productivity of that factor increases. 
C)  the productivity of that factor decreases. 
D)  there is a decrease in the price of a substitute factor. 
A)  the price of that factor falls. 
B)  the productivity of that factor increases. 
C)  the productivity of that factor decreases. 
D)  there is a decrease in the price of a substitute factor.

Question 9

The opportunity cost of an hour of leisure increases if the hour of leisure time is spent in an unproductive activity and decreases if the hour of leisure time is spent in a productive activity.

Accepted Answer

A) True 
 B)False

Question 10

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)  because,as the South African experience with apartheid showed,discrimination leads 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)  because,as the South African experience with apartheid showed,discrimination leads to more rapid economic growth.

Question 11

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

Accepted Answer

A)  capital. 
B)  labour. 
C)  land. 
D)  entrepreneurship. 
A)  capital. 
B)  labour. 
C)  land. 
D)  entrepreneurship.

Question 12

Decisions about labour supply result from decisions about time allocation,which deals with determining how many hours to spend on different activities.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Total Product of Labour at Debbie's Bakery }\
\begin{array} { l c } 
\begin{array} { l } 
\text { Quantity of Labour } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total Product of Labour } \
\text { (cakes per worker) }
\end{array} \
\hline 0 & 0 \
1 & 3 \
2 & 10 \
3 & 16 \
4 & 21 \
5 & 25 \
6 & 28
\end{array}
\end{array}$$
-(Table: Total Product of Labour at Debbie's Bakery)Use Table: Total Product of Labour at Debbie's Bakery.Debbie can sell cakes at $10 each.Debbie must pay each worker $30 per day.Now suppose that the government imposes a minimum wage law that all bakeries must pay no less than $50 per day.Debbie _____ employment from _____ workers to _____ worker(s).

Accepted Answer

A)  reduces;6;1 
B)  reduces;6;5 
C)  reduces;6;4 
D)  increases;1;4 
A)  reduces;6;1 
B)  reduces;6;5 
C)  reduces;6;4 
D)  increases;1;4

Question 14

An increase in wealth will cause the labour supply curve to:

Accepted Answer

A)  shift leftward if leisure is a normal good. 
B)  slope downward if the substitution effect dominates the income effect. 
C)  slope upward only if leisure is an inferior good. 
D)  bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good. 
A)  shift leftward if leisure is a normal good. 
B)  slope downward if the substitution effect dominates the income effect. 
C)  slope upward only if leisure is an inferior good. 
D)  bend backward if the income effect outweighs the substitution effect of a change in wealth and if leisure is a normal good.

Question 15

A firm has hired the profit-maximizing number of workers when the wage is:

Accepted Answer

A)  less than the price of the product. 
B)  greater than the average product of the last worker hired. 
C)  equal to the average product of the last worker hired. 
D)  equal to the value of the marginal product of labour of the last worker hired. 
A)  less than the price of the product. 
B)  greater than the average product of the last worker hired. 
C)  equal to the average product of the last worker hired. 
D)  equal to the value of the marginal product of labour of the last worker hired.

Question 16

At Hamill Manufacturing of Alberta,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 labour cause the value of the marginal product of the last machinist hired to be greater than the average of all of the machinists employed.

Accepted Answer

A) True 
 B)False

Question 17

Use the following to answer questions :
Figure: The Demand for Bricklayers  
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the price for bricks laid in the wall is $0.10 a brick,the marginal product of the second bricklayer is _____ bricks.

Accepted Answer

A)  1 500 
B)  1 400 
C)  1 300 
D)  1 200 
A)  1 500 
B)  1 400 
C)  1 300 
D)  1 200

Question 18

Barry's Brewpub is considering hiring more brewmasters.A pint of brew sells for $3.The market wage of a brewmaster is $150 per day.Assuming that the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if Barry believes that the new brewmaster will:

Accepted Answer

A)  produce the same number of pints per day as the last brewmaster hired. 
B)  produce 50 or more pints per day. 
C)  raise average production to 50 or more pints per day. 
D)  increase the marginal product by $150 per day. 
A)  produce the same number of pints per day as the last brewmaster hired. 
B)  produce 50 or more pints per day. 
C)  raise average production to 50 or more pints per day. 
D)  increase the marginal product by $150 per day.

Question 19

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 labour that builds automobiles is why demand in a factor market is called:

Accepted Answer

A)  the marginal productivity theory of income distribution. 
B)  a compensating differential. 
C)  the factor distribution of income. 
D)  a derived demand. 
A)  the marginal productivity theory of income distribution. 
B)  a compensating differential. 
C)  the factor distribution of income. 
D)  a derived demand.

Question 20

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

The opportunity cost of an extra hour of leisure is:

When wages increase,if the income effect dominates,the quantity of labour supplied will increase.

In terms of labour supply,the income effect of a higher wage causes a(n):

Suppose that the labour market for plumbers is in equilibrium.Which occurrence might DECREASE the wage for plumbers?

If the wage rate rises,firms will find that:

A shift in demand for a given factor of production will NOT occur if:

The opportunity cost of an hour of leisure increases if the hour of leisure time is spent in an unproductive activity and decreases if the hour of leisure time is spent in a productive activity.

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

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

Decisions about labour supply result from decisions about time allocation,which deals with determining how many hours to spend on different activities.

An increase in wealth will cause the labour supply curve to:

A firm has hired the profit-maximizing number of workers when the wage is:

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the price for bricks laid in the wall is $0.10 a brick,the marginal product of the second bricklayer is _____ bricks.

Barry's Brewpub is considering hiring more brewmasters.A pint of brew sells for $3.The market wage of a brewmaster is $150 per day.Assuming that the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if Barry believes that the new brewmaster will:

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 labour that builds automobiles is why demand in a factor market is called:

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.

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 opportunity cost of an extra hour of leisure is:

When wages increase,if the income effect dominates,the quantity of labour supplied will increase.

In terms of labour supply,the income effect of a higher wage causes a(n):

Suppose that the labour market for plumbers is in equilibrium.Which occurrence might DECREASE the wage for plumbers?

If the wage rate rises,firms will find that:

A shift in demand for a given factor of production will NOT occur if:

The opportunity cost of an hour of leisure increases if the hour of leisure time is spent in an unproductive activity and decreases if the hour of leisure time is spent in a productive activity.

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

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

Decisions about labour supply result from decisions about time allocation,which deals with determining how many hours to spend on different activities.

An increase in wealth will cause the labour supply curve to:

A firm has hired the profit-maximizing number of workers when the wage is:

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.If the price for bricks laid in the wall is $0.10 a brick,the marginal product of the second bricklayer is _____ bricks.

Barry's Brewpub is considering hiring more brewmasters.A pint of brew sells for $3.The market wage of a brewmaster is $150 per day.Assuming that the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if Barry believes that the new brewmaster will:

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 labour that builds automobiles is why demand in a factor market is called:

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.

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