Question 1

Use the following to answer questions:
Figure: Joanna's Time Allocation Budget Line 
-(Figure: Joanna's Time Allocation Budget Line)  The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. What is Joanna's wage rate?

Accepted Answer

A)   $10.00
B)   $12.50
C)   $40.00
D)   $15.00E) B) and C)
F) A) and C)

Question 2

The individual producer's labor demand curve is the:

Accepted Answer

A)   marginal product of labor curve.
B)   value of the average product of labor curve.
C)   average product curve.
D)   value of the marginal product of labor curve.E) B) and D)
F) B) and C)

Question 3

The largest component of the factor distribution of income in the United States is:

Accepted Answer

A)   interest and rents.
B)   taxes.
C)   corporate profits.
D)   compensation of employees.E) C) and D)
F) All of the above

Question 4

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has increased.

Accepted Answer

A) True 
 B)False

Question 5

Use the following to answer questions: 
-(Table: Value of the Marginal Product of Labor and Demand)  In the figure Value of the Marginal Product of Labor and Demand, the total product of labor 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 $120 per hour, the profit-maximizing quantity of labor is _____ workers.

Accepted Answer

A)   zero
B)   two
C)   three
D)   fourE) A) and B)
F) None of the above

Question 6

Beyond some point, a higher wage may induce an individual to work _____, and the labor supply curve may then _____.

Accepted Answer

A)   more; bend backward
B)   less; bend backward
C)   more; slope downward
D)   harder; become verticalE) A) and D)
F) C) and D)

Question 7

An increase in the demand for autoworkers may come about because of:

Accepted Answer

A)   a decrease in the price of cars.
B)   a decrease in the productivity of autoworkers.
C)   a decrease in the supply of other factors that autoworkers use in production.
D)   an increase in the price of cars.E) C) and D)
F) None of the above

Question 8

Andy's individual labor supply curve is positively sloped, so for Andy, the substitution effect dominates the income effect.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a compensating differential?

Accepted Answer

A)   Tiger Woods gets paid more than a college professor.
B)   A window washer working in a suburban residential subdivision gets paid less than one who is washing windows on the outside of a skyscraper.
C)   A nuclear scientist gets paid more than a janitor working in the same building.
D)   On average, White men get paid more than women of all ethnicities.E) C) and D)
F) B) and D)

Question 10

At Hamill Manufacturing of Pennsylvania 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 labor 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 11

Derived demand for a factor means that:

Accepted Answer

A)   people demand factors just as they do goods.
B)   the demand for factors depends on what the factor can produce.
C)   the market derives a demand for factors regardless of what they produce.
D)   suppliers determine what will be produced.E) A) and B)
F) A) and C)

Question 12

A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect, and the supply curve has a _____ slope.

Accepted Answer

A)   income; substitution; positive
B)   income; substitution; negative
C)   substitution; income; positive
D)   substitution; income; negativeE) A) and D)
F) A) and C)

Question 13

The demand for factors of production is called a derived demand because it is:

Accepted Answer

A)   derived from the demand for the outputs that are produced by the factors of production.
B)   derived from the available supply of factors, such as land, that can be overexploited.
C)   not easy to determine and must be derived by a technical (and often complicated)  process.
D)   derived on the basis of questions posed to residents during the census.E) A) and C)
F) A) and B)

Question 14

You overhear an economist refer to the price of leisure. What does this mean? How can leisure have a price?

Accepted Answer

Economists see the decision to work as a...

Question 15

Use the following to answer questions: 
-(Table: Value of the Marginal Product of Labor and Demand)  In the figure Value of the Marginal Product of Labor and Demand, the total product of labor 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, the value of the marginal product for the third worker is:

Accepted Answer

A)   $2.
B)   $10.
C)   $60.
D)   $80.E) A) and B)
F) B) and D)

Question 16

Leisure is considered a normal good, since people:

Accepted Answer

A)   consume more of it all the time.
B)   cannot consume more, it being limited.
C)   consume more of it when their income rises.
D)   find it to be a luxury to take time off from their job.E) B) and D)
F) All of the above

Question 17

A firm's demand curve for labor is:

Accepted Answer

A)   its marginal cost curve.
B)   its marginal product curve.
C)   its value of the marginal product of labor curve.
D)   horizontal if it is in perfect competition.E) A) and C)
F) None of the above

Question 18

The _____ effect of a _____ wage causes individuals to substitute _____.

Accepted Answer

A)   substitution, higher; labor for leisure
B)   income; lower; leisure for labor
C)   substitution; lower; labor for leisure
D)   complementary; constant; leisure for laborE) A) and B)
F) A) and C)

Question 19

Use the following to answer questions:
Figure: Rita's Time Allocation Budget Line 
-(Figure: Rita's Time Allocation Budget Line)  Look at the figure Rita's Time Allocation Budget Line. It is based on 80 hours available for labor and leisure. If her hourly wage doubles, the vertical intercept will be:

Accepted Answer

A)   $1,120.
B)   $1,400.
C)   $1,600.
D)   $2,000.E) A) and B)
F) A) and C)

Question 20

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 price of the good increases and everything else stays the same, then the profit-maximizing quantity of labor:

Accepted Answer

A)   will increase.
B)   will decrease.
C)   will stay the same.
D)   cannot be determined.E) A) and B)
F) A) and C)

Exam 19: Factor Markets and the Distribution of Income

The ___ effect of a _ wage causes individuals to substitute ___.

Correct Answer
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The largest component of the factor distribution of income in the United States is:

Correct Answer
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Derived demand for a factor means that:

Correct Answer
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An increase in the demand for autoworkers may come about because of:

Correct Answer
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If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has increased.

Correct Answer
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Correct Answer
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The individual producer's labor demand curve is the:

Correct Answer
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Use the following to answer questions: Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line) Look at the figure Rita's Time Allocation Budget Line. It is based on 80 hours available for labor and leisure. If her hourly wage doubles, the vertical intercept will be:

Correct Answer
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Correct Answer
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The demand for factors of production is called a derived demand because it is:

Correct Answer
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Correct Answer
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A firm's demand curve for labor is:

Correct Answer
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Andy's individual labor supply curve is positively sloped, so for Andy, the substitution effect dominates the income effect.

Correct Answer
verified

Which of the following is a compensating differential?

Correct Answer
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Use the following to answer questions: Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line) The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. What is Joanna's wage rate?

Correct Answer
verified

Correct Answer
verified

You overhear an economist refer to the price of leisure. What does this mean? How can leisure have a price?

Correct Answer
verified
Economists see the decision to work as a...
View Answer

Leisure is considered a normal good, since people:

Correct Answer
verified

A backward-bending supply curve of labor shows that at relatively low wages the ___ effect dominates the _ effect, and the supply curve has a ___ slope.

Correct Answer
verified

Beyond some point, a higher wage may induce an individual to work _, and the labor supply curve may then _.

Correct Answer
verified

Exam 19: Factor Markets and the Distribution of Income

The _____ effect of a _____ wage causes individuals to substitute _____.

Correct AnswerverifiedShow Answer

The largest component of the factor distribution of income in the United States is:

Correct AnswerverifiedShow Answer

Derived demand for a factor means that:

Correct AnswerverifiedShow Answer

An increase in the demand for autoworkers may come about because of:

Correct AnswerverifiedShow Answer

If John's wage increases from $10 to $12 per hour, his opportunity cost of leisure has increased.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The individual producer's labor demand curve is the:

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Rita's Time Allocation Budget Line -(Figure: Rita's Time Allocation Budget Line) Look at the figure Rita's Time Allocation Budget Line. It is based on 80 hours available for labor and leisure. If her hourly wage doubles, the vertical intercept will be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The demand for factors of production is called a derived demand because it is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A firm's demand curve for labor is:

Correct AnswerverifiedShow Answer

Andy's individual labor supply curve is positively sloped, so for Andy, the substitution effect dominates the income effect.

Correct AnswerverifiedShow Answer

Which of the following is a compensating differential?

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: Joanna's Time Allocation Budget Line -(Figure: Joanna's Time Allocation Budget Line) The figure Joanna's Time Allocation Budget Line depicts what happens when she can choose how to spend 40 hours. What is Joanna's wage rate?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

You overhear an economist refer to the price of leisure. What does this mean? How can leisure have a price?

Correct AnswerverifiedEconomists see the decision to work as a...View AnswerShow Answer

Leisure is considered a normal good, since people:

Correct AnswerverifiedShow Answer

A backward-bending supply curve of labor shows that at relatively low wages the _____ effect dominates the _____ effect, and the supply curve has a _____ slope.

Correct AnswerverifiedShow Answer

Beyond some point, a higher wage may induce an individual to work _____, and the labor supply curve may then _____.

Correct AnswerverifiedShow Answer

The ___ effect of a _ wage causes individuals to substitute ___.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Economists see the decision to work as a...
View Answer

Correct Answer
verified

A backward-bending supply curve of labor shows that at relatively low wages the ___ effect dominates the _ effect, and the supply curve has a ___ slope.

Correct Answer
verified

Beyond some point, a higher wage may induce an individual to work _, and the labor supply curve may then _.

Correct Answer
verified