Question 1

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 $100.For a profit-maximizing firm at the equilibrium level of output,the VMPLBricklayers:

Accepted Answer

A)  is $200. 
B)  is equal to the market wage rate. 
C)  is irrelevant since the firm is a price taker. 
D)  cannot be determined from the information provided.

Question 2

Use the following to answer questions : $$\begin{array}{l}
\text { Table: Workers and Corn Output }\
\begin{array} { l c } 
\hline \begin{array} { l } 
\text { Numbers } \
\text { of Workers }
\end{array} & \begin{array} { c } 
\text { Output } \
\text { of Corn } \
\text { (units of corn) }
\end{array} \
\hline 0 & 0 \
1 & 30 \
2 & 58 \
3 & 79 \
4 & 94 \
5 & 104 \
6 & 108 \
7 & 110 \
\hline
\end{array}
\end{array}$$
-(Table: Workers and Corn Output)Use Table: Workers and Corn Output.Laura is a price-taking farmer who produces corn.Assume that the wage rate for workers is $125 and the price per kilogram of corn is $10.To maximize profits,Laura should employ _____ workers.

Accepted Answer

A)  2 
B)  3 
C)  4 
D)  6

Question 3

A leftward shift in the labour supply curve might result from:

Accepted Answer

A)  people valuing leisure more highly. 
B)  people having less wealth. 
C)  increasing work opportunities for women and minorities. 
D)  an increase in the population.

Question 4

If the extra output that is produced by hiring one more unit of labour adds more to _____ than to _____,the firm will increase its profit by increasing the use of labour.

Accepted Answer

A)  total cost;total revenue 
B)  total revenue;total cost 
C)  marginal cost;marginal revenue 
D)  marginal product;marginal cost

Question 5

Using standard economic theory,a firm should continue hiring workers until:

Accepted Answer

A)  the marginal product of labour times price equals demand. 
B)  the quantity of labour supplied equals the quantity of labour demanded. 
C)  the marginal product of labour times price equals the workers' wage. 
D)  the marginal product of labour times the workers' wage equals price.

Question 6

A small university employs two economists.Rob has been employed by the university for 15 years,and Nasrin has been employed for 1 year.Rob's salary is significantly higher than Nasrin's,although both have their doctoral degrees in economics.Each professor averages one publication per year,and both are excellent teachers.Given this information,the wage difference is BEST explained by:

Accepted Answer

A)  compensating differentials. 
B)  differences in human capital. 
C)  discrimination. 
D)  differences in talent.

Question 7

A factor demand curve will shift to the left 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

Question 8

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

Accepted Answer

A)  production 
B)  elasticity 
C)  income 
D)  complementary

Question 9

John is an entrepreneur who owns an auto body repair shop.John's business is booming,and his salary is rising.John's labour supply curve will be _____ if the substitution effect is _____ the income effect.

Accepted Answer

A)  upward sloping;smaller than 
B)  downward sloping;smaller than 
C)  horizontal;equal to 
D)  vertical;greater than

Question 10

An efficiency wage is:

Accepted Answer

A)  above the equilibrium wage and is paid to provide workers with an incentive to increase productivity. 
B)  efficient because it is exactly equal to the wage rate implied by the marginal productivity theory. 
C)  determined by collective bargaining between unions and management. 
D)  equal to the value of the marginal product of labour adjusted so as to make the structure of compensation more equitable.

Question 11

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

Accepted Answer

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

Question 12

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.What is the value of the marginal product for the fourth worker?

Accepted Answer

A)  5 cakes 
B)  $50 
C)  $210 
D)  21 cakes

Question 13

If the demand for orange juice increases,the derived demand for orange grove workers will decrease.

Accepted Answer

A) True 
 B)False

Question 14

When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole,this is:

Accepted Answer

A)  the marginal productivity theory of income distribution. 
B)  diminishing marginal product. 
C)  the factor distribution of income. 
D)  the efficiency wage model.

Question 15

A lumberjack cutting large trees in rural British Colombia being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

Accepted Answer

A) True 
 B)False

Question 16

For the Blue Jays baseball team,the value of the marginal product curve is the team's labour _____ curve.This means that the marginal product curve has a _____ slope.

Accepted Answer

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

Question 17

Differences in talent and ability of workers resulting in differences in their wages are consistent with the marginal productivity theory of income distribution.

Accepted Answer

A) True 
 B)False

Question 18

A change in the wage rate will shift the supply curve in the market for labour.

Accepted Answer

A) True 
 B)False

Question 19

The marginal productivity theory of income distribution says that:

Accepted Answer

A)  each factor is paid the equilibrium value of the output generated by the last unit of that factor employed in the factor market as a whole. 
B)  each factor is paid an amount greater than the value of the output generated by the last unit of that factor employed in the factor market as a whole. 
C)  each factor is paid an amount less than the value of the output generated by the last unit of that factor employed in the factor market as a whole. 
D)  the payment to each factor does not correspond to the marginal product of the factor.

Question 20

Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:

Accepted Answer

A)  the substitution effect implies that she will work less. 
B)  if leisure is a normal good,the income effect implies that she will work less. 
C)  if leisure is a normal good,the income effect will reinforce the substitution effect and she will work less. 
D)  Lisa's marginal product of labour has decreased.

Exam 19: Factor Markets and the Distribution of Income

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 $100.For a profit-maximizing firm at the equilibrium level of output,the VMPL_Bricklayers:

A leftward shift in the labour supply curve might result from:

If the extra output that is produced by hiring one more unit of labour adds more to _ than to _,the firm will increase its profit by increasing the use of labour.

Using standard economic theory,a firm should continue hiring workers until:

A factor demand curve will shift to the left because of a(n) _ in the price of the _.

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

John is an entrepreneur who owns an auto body repair shop.John's business is booming,and his salary is rising.John's labour supply curve will be _ if the substitution effect is _ the income effect.

An efficiency wage is:

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

If the demand for orange juice increases,the derived demand for orange grove workers will decrease.

When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole,this is:

A lumberjack cutting large trees in rural British Colombia being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

For the Blue Jays baseball team,the value of the marginal product curve is the team's labour _ curve.This means that the marginal product curve has a _ slope.

Differences in talent and ability of workers resulting in differences in their wages are consistent with the marginal productivity theory of income distribution.

A change in the wage rate will shift the supply curve in the market for labour.

The marginal productivity theory of income distribution says that:

Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:

Exam 19: Factor Markets and the Distribution of Income

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 $100.For a profit-maximizing firm at the equilibrium level of output,the VMPLBricklayers:

A leftward shift in the labour supply curve might result from:

If the extra output that is produced by hiring one more unit of labour adds more to _____ than to _____,the firm will increase its profit by increasing the use of labour.

Using standard economic theory,a firm should continue hiring workers until:

A factor demand curve will shift to the left because of a(n) _____ in the price of the _____.

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

John is an entrepreneur who owns an auto body repair shop.John's business is booming,and his salary is rising.John's labour supply curve will be _____ if the substitution effect is _____ the income effect.

An efficiency wage is:

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

If the demand for orange juice increases,the derived demand for orange grove workers will decrease.

When each factor is paid an amount equal to the value of the marginal product of the last unit of that factor employed in the factor market as a whole,this is:

A lumberjack cutting large trees in rural British Colombia being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

For the Blue Jays baseball team,the value of the marginal product curve is the team's labour _____ curve.This means that the marginal product curve has a _____ slope.

Differences in talent and ability of workers resulting in differences in their wages are consistent with the marginal productivity theory of income distribution.

A change in the wage rate will shift the supply curve in the market for labour.

The marginal productivity theory of income distribution says that:

Lisa works 46 hours a week at $10 an hour.If her wage increases to $16.50:

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 $100.For a profit-maximizing firm at the equilibrium level of output,the VMPL_Bricklayers:

If the extra output that is produced by hiring one more unit of labour adds more to _ than to _,the firm will increase its profit by increasing the use of labour.

A factor demand curve will shift to the left because of a(n) _ in the price of the _.

John is an entrepreneur who owns an auto body repair shop.John's business is booming,and his salary is rising.John's labour supply curve will be _ if the substitution effect is _ the income effect.

For the Blue Jays baseball team,the value of the marginal product curve is the team's labour _ curve.This means that the marginal product curve has a _ slope.