Question 1

When interferences in the labor market raise the wage above the equilibrium level, employers may discriminate because there are more job applicants than jobs.

Accepted Answer

A) True 
 B)False

Question 2

Median earning in the U.S. labor market is highest for White men, followed by African Americans, followed by women regardless of ethnicity, and then Hispanics.

Accepted Answer

A) True 
 B)False

Question 3

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?

Accepted Answer

A)  three 
B)  four 
C)  five 
D)  six

Question 4

A nurse willing to work the midnight to 8 A.M. shift may make more than one who works 8 A.M. to 4 P.M. because of:

Accepted Answer

A)  discrimination. 
B)  market power. 
C)  compensating differentials. 
D)  efficiency wages.

Question 5

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has decreased or increased, depending on what he does with an hour of leisure.

Accepted Answer

A) True 
 B)False

Question 6

If the hourly wage increases from $8 to $10 an hour and in response Jim increases the number of hours that he works from 44 to 46, the income effect is dominant.

Accepted Answer

A) True 
 B)False

Question 7

In 2012, the median earnings of union members were actually lower than the wages of workers not represented by unions.

Accepted Answer

A) True 
 B)False

Question 8

Use the following to answer questions:
Figure: The Value of the Marginal Product Curve 
-(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the market wage rate increases:

Accepted Answer

A)  the VMPL curve will shift to the right. 
B)  the profit-maximizing quantity of labor will increase. 
C)  the VMPL curve will shift to the left. 
D)  the profit-maximizing quantity of labor will decrease.

Question 9

Use the following to answer questions:
Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive. The price of this firm's product is $5. The firm's total product with respect to labor is given in the table that follows. 
-(Scenario: The Decision to Hire Labor) Look at the scenario The Decision to Hire Labor. What is the value of the marginal product of the third worker to this firm?

Accepted Answer

A)  $5 
B)  $25 
C)  $18 
D)  $10

Question 10

For the Tampa Bay Rays baseball team, the value of the marginal product curve is the team's labor _____ curve. This means the marginal product curve has a _____ slope.

Accepted Answer

A)  demand; positive 
B)  supply; positive 
C)  demand; negative 
D)  supply; negative

Question 11

Wage differences between men and women and among various ethnic groups are proof that the marginal productivity theory of income distribution is invalid.

Accepted Answer

A) True 
 B)False

Question 12

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home. If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay:

Accepted Answer

A)  $22. 
B)  $26. 
C)  $18. 
D)  the minimum wage.

Question 13

Use the following to answer questions:
Scenario: The Decision to Hire Labor
Assume that both the product market and the labor market are perfectly competitive. The price of this firm's product is $5. The firm's total product with respect to labor is given in the table that follows. 
-(Scenario: The Decision to Hire Labor) Look at the scenario The Decision to Hire Labor. This firm experiences diminishing marginal product after it hires the _____ worker.

Accepted Answer

A)  first 
B)  second 
C)  third 
D)  fourth

Question 14

Use the following to answer questions:
Figure: Equilibrium in the Labor Market 
-(Figure: Equilibrium in the Labor Market) In the figure Equilibrium in the Labor Market, 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 labor and a(n) _____ in the equilibrium price of labor.

Accepted Answer

A)  increase; increase 
B)  decrease; increase 
C)  increase; decrease 
D)  decrease; decrease

Question 15

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 16

Use the following to answer questions:
Figure: Income and Leisure Opportunities 
-(Figure: Income and Leisure Opportunities) The figure Income and Leisure Opportunities refers to Keisha when she has 100 hours per week for working or leisure. There are two time allocation lines, one for a $10 hourly wage rate and one for a $20 hourly wage rate. Keisha's optimal choice is point A when the wage is $10, and her optimal choice is point C when the wage is $20. As the amount she earns increases from $10 per hour to $20 per hour, Keisha will work _____ hours because of the income effect.

Accepted Answer

A)  10 fewer 
B)  15 more 
C)  25 fewer 
D)  50 more

Question 17

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 labor, holding everything else constant.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The category compensation of employees doesn't capture the full income of labor because:

Accepted Answer

A)  it doesn't include the earnings of proprietors. 
B)  it doesn't include benefits such as health insurance. 
C)  a sizable fraction of it can be attributed to the return on human capital. 
D)  it excludes payments in kind that are common in rural areas.

Question 20

A wage _____ raises the quantity of labor supplied through the _____ effect.

Accepted Answer

A)  decrease; substitution 
B)  increase; substitution 
C)  increase; income 
D)  decrease; complement

Exam 19: Factor Markets and the Distribution of Income

When interferences in the labor market raise the wage above the equilibrium level, employers may discriminate because there are more job applicants than jobs.

Median earning in the U.S. labor market is highest for White men, followed by African Americans, followed by women regardless of ethnicity, and then Hispanics.

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?

A nurse willing to work the midnight to 8 A.M. shift may make more than one who works 8 A.M. to 4 P.M. because of:

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has decreased or increased, depending on what he does with an hour of leisure.

If the hourly wage increases from $8 to $10 an hour and in response Jim increases the number of hours that he works from 44 to 46, the income effect is dominant.

In 2012, the median earnings of union members were actually lower than the wages of workers not represented by unions.

Use the following to answer questions: Figure: The Value of the Marginal Product Curve -(Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if the market wage rate increases:

For the Tampa Bay Rays baseball team, the value of the marginal product curve is the team's labor _ curve. This means the marginal product curve has a _ slope.

Wage differences between men and women and among various ethnic groups are proof that the marginal productivity theory of income distribution is invalid.

Suppose Mike wants to pay efficiency wages to help in the construction of his beach home. If the prevailing wage rate for electricians is $22 per hour in his area, he will probably pay:

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.

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 labor, holding everything else constant.

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

The category compensation of employees doesn't capture the full income of labor because:

A wage _ raises the quantity of labor supplied through the _ effect.