Exam 19: Factor Markets and the Distribution of Income

If a person's marginal utility from an additional hour of leisure is less than the marginal utility gained from goods bought with the wages earned from an additional hour of labour,then this person should:

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

Use the following to answer questions : $\text {Table: Value of the Marginal}$ $\text {Product of Labour at Demand}$ Quantity of Labour Total Product 0 0 1 20 2 50 3 90 4 120 5 140 6 150 7 150 8 140 -(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 wage rate is $90 per hour,the profit-maximizing quantity of labour is _____ workers.

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

Assume that perfect competition exists in output and factor markets.The P = MC rule for profit maximization implies the same level of labour use that would be implied by using the VMPL = W rule.

When labour is hired in a competitive market,the value of the marginal product of labour is computed by:

As the _____ of labour used in production increases,ceteris paribus,eventually the _____ of labour will _____.

The fact that Carey Price,the goaltender for the Montreal Canadians,is paid more than a high school hockey coach is an example of a wage disparity most likely caused by differences in ability and talent.

Although improved technology can either increase or decrease the demand for a factor of production,the usual effect of technological progress is to reduce demand for labour,holding everything else constant.

Which statement is NOT true about the factor distribution of income?

The government increases the sales tax on all goods but does not change the tax on income earned from labour.What happens?

According to the _____,workers may earn a wage rate higher than the value of their marginal product because it provides an incentive to perform efficiently.

The trade-off between work and leisure underlying the supply of labour involves the income effect and the _____ effect.

The quantity demanded of labour will decrease if:

A wage _____ raises the quantity of labour supplied through a strong _____ effect.

Assume that Stan just received a promotion and raise.In terms of labour supply,the substitution effect of a higher wage will lead him to:

An increase in the demand for autoworkers would NOT come about because of a(n):