Question 1

The price 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)  the total utility of labour. 
A)  $1. 
B)  the hourly wage rate. 
C)  the same as the price of money. 
D)  the total utility of labour.

Question 2

In the Canadian labour market,male immigrants have the highest median earnings of any demographic group.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Actual wage differentials can be partially explained by which factor(s)? I.differences in talent
II.different amounts of human capital
III.compensating differentials

Accepted Answer

A)  I only 
B)  I and II only 
C)  III only 
D)  I,II,and III 
A)  I only 
B)  I and II only 
C)  III only 
D)  I,II,and III

Question 5

If a perfectly competitive firm chooses its level of output so that price equals marginal revenue,the value of the marginal product of labour will equal the wage rate.

Accepted Answer

A) True 
 B)False

Question 6

Barry's Brewpub is considering hiring more brewmasters.The market wage for a brewmaster is $120 per day.The average brewmaster produces 40 pints of beer per day,but Barry expects the next brewmaster to produce only 20 pints per day.Assuming the market for beer is perfectly competitive,Barry's Brewpub will hire another brewmaster only if:

Accepted Answer

A)  a pint of brew sells for $3. 
B)  the new brewmaster can produce 40 pints. 
C)  a pint of brew sells for $2. 
D)  a pint of brew sells for $6 or more. 
A)  a pint of brew sells for $3. 
B)  the new brewmaster can produce 40 pints. 
C)  a pint of brew sells for $2. 
D)  a pint of brew sells for $6 or more.

Question 7

Use the following to answer questions :
Figure: Equilibrium in the Labour Market  
-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 difference is due to the fact that the:

Accepted Answer

A)  marginal productivity theory of income distribution does not apply in this case. 
B)  equilibrium wage rate includes other costs,such as employee benefits,that have to be subtracted from the $70 000 salary. 
C)  equilibrium wage rate includes other costs,such as employee benefits,that have to be added to the $70 000 salary. 
D)  value of the marginal product of the last machinist hired is equal to the average of all machinists employed. 
A)  marginal productivity theory of income distribution does not apply in this case. 
B)  equilibrium wage rate includes other costs,such as employee benefits,that have to be subtracted from the $70 000 salary. 
C)  equilibrium wage rate includes other costs,such as employee benefits,that have to be added to the $70 000 salary. 
D)  value of the marginal product of the last machinist hired is equal to the average of all machinists employed.

Question 8

Use the following to answer questions :
Figure: The Demand for Bricklayers  
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is determined by:

Accepted Answer

A)  the firm hiring the bricklayers. 
B)  demand and supply in the market for bricklayers. 
C)  the government. 
D)  where VMPLBricklayers = MPBricklayers × P of output. 
A)  the firm hiring the bricklayers. 
B)  demand and supply in the market for bricklayers. 
C)  the government. 
D)  where VMPLBricklayers = MPBricklayers × P of output.

Question 9

The Canadian labour market shows large differences in the median earnings of workers across ethnicities and gender.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that Professor Jones receives a promotion and an increase in her annual salary.Her labour supply curve will be _____ if the substitution effect is _____ than the income effect.

Accepted Answer

A)  upward sloping;greater 
B)  upward sloping;smaller 
C)  downward sloping;greater 
D)  vertical;greater 
A)  upward sloping;greater 
B)  upward sloping;smaller 
C)  downward sloping;greater 
D)  vertical;greater

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Although horses were once a very important factor of production,the development of automobiles and other machinery reduced the demand for their use.This example illustrates:

Accepted Answer

A)  technological progress shifting the demand for horses to the left. 
B)  higher marginal costs for horses shifting demand for horses to the right. 
C)  technological progress shifting the demand for horses to the right. 
D)  higher marginal costs for horses having no impact on the demand for horses. 
A)  technological progress shifting the demand for horses to the left. 
B)  higher marginal costs for horses shifting demand for horses to the right. 
C)  technological progress shifting the demand for horses to the right. 
D)  higher marginal costs for horses having no impact on the demand for horses.

Question 13

One reason for wage inequality is:

Accepted Answer

A)  demographics. 
B)  geography. 
C)  nepotism. 
D)  talent. 
A)  demographics. 
B)  geography. 
C)  nepotism. 
D)  talent.

Question 14

Use the following to answer questions :
Figure: The Demand for Bricklayers  
-(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.Which statement is TRUE?

Accepted Answer

A)  Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than or equal to the market wage rate of bricklayers. 
B)  The profit-maximizing condition for firms hiring bricklayers is where VMPLBricklayers is less than the market wage rate. 
C)  The profit-maximizing condition for firms hiring bricklayers is where MPBricklayers equals the market wage rate. 
D)  Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers. 
A)  Bricklayers should be hired whenever the value of the marginal product of bricklayers is greater than or equal to the market wage rate of bricklayers. 
B)  The profit-maximizing condition for firms hiring bricklayers is where VMPLBricklayers is less than the market wage rate. 
C)  The profit-maximizing condition for firms hiring bricklayers is where MPBricklayers equals the market wage rate. 
D)  Bricklayers should be hired whenever the market wage rate of bricklayers is greater than the value of the marginal product of bricklayers.

Question 15

Manufactured resources such as equipment,buildings,and tools are also known as:

Accepted Answer

A)  human capital. 
B)  labour. 
C)  physical capital. 
D)  natural resources. 
A)  human capital. 
B)  labour. 
C)  physical capital. 
D)  natural resources.

Question 16

On average,women earn about _____ as much as men.

Accepted Answer

A)  67% 
B)  75% 
C)  92% 
D)  55% 
A)  67% 
B)  75% 
C)  92% 
D)  55%

Question 17

Suppose that a firm sells a good for a perfectly competitive price of $5.The equilibrium wage rate is $10.The first worker it hires produces five units.Two workers produce a total of nine units.Given this information,the firm will:

Accepted Answer

A)  hire the first worker only. 
B)  hire both the first and second workers. 
C)  not hire either worker. 
D)  hire only the second worker. 
A)  hire the first worker only. 
B)  hire both the first and second workers. 
C)  not hire either worker. 
D)  hire only the second worker.

Question 18

The more work people do,all other things unchanged,the:

Accepted Answer

A)  more their free time. 
B)  greater their nonmarket use of time. 
C)  less income they have. 
D)  less leisure they have. 
A)  more their free time. 
B)  greater their nonmarket use of time. 
C)  less income they have. 
D)  less leisure they have.

Question 19

A firm's demand curve for labour will shift because of:

Accepted Answer

A)  a decrease in the wage rate. 
B)  an increase in the wage rate. 
C)  changes in preferences and the cultural norms that define how much we work. 
D)  a change in the product's price. 
A)  a decrease in the wage rate. 
B)  an increase in the wage rate. 
C)  changes in preferences and the cultural norms that define how much we work. 
D)  a change in the product's price.

Question 20

The firm's value of marginal product curve slopes downward:

Accepted Answer

A)  only if the firm is a perfect competitor in the product market. 
B)  because of diminishing returns. 
C)  only if the firm is a perfect competitor in the labour market. 
D)  only if the firm is a perfect competitor in both the labour and product markets. 
A)  only if the firm is a perfect competitor in the product market. 
B)  because of diminishing returns. 
C)  only if the firm is a perfect competitor in the labour market. 
D)  only if the firm is a perfect competitor in both the labour and product markets.

Exam 19: Factor Markets and the Distribution of Income

The price of an extra hour of leisure is:

In the Canadian labour market,male immigrants have the highest median earnings of any demographic group.

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

Actual wage differentials can be partially explained by which factor(s)? I.differences in talent II.different amounts of human capital III.compensating differentials

If a perfectly competitive firm chooses its level of output so that price equals marginal revenue,the value of the marginal product of labour will equal the wage rate.

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.The equilibrium market wage for bricklayers is determined by:

The Canadian labour market shows large differences in the median earnings of workers across ethnicities and gender.

Suppose that Professor Jones receives a promotion and an increase in her annual salary.Her labour supply curve will be _____ if the substitution effect is _____ than the income effect.

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

Although horses were once a very important factor of production,the development of automobiles and other machinery reduced the demand for their use.This example illustrates:

One reason for wage inequality is:

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers)Use Figure: The Demand for Bricklayers.Which statement is TRUE?

Manufactured resources such as equipment,buildings,and tools are also known as:

On average,women earn about _____ as much as men.

Suppose that a firm sells a good for a perfectly competitive price of $5.The equilibrium wage rate is $10.The first worker it hires produces five units.Two workers produce a total of nine units.Given this information,the firm will:

The more work people do,all other things unchanged,the:

A firm's demand curve for labour will shift because of:

The firm's value of marginal product curve slopes downward:

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

Suppose that Professor Jones receives a promotion and an increase in her annual salary.Her labour supply curve will be _ if the substitution effect is _ than the income effect.