Question 1

Minimum wages are:

Accepted Answer

A)  an example of an efficiency wage.
B)  always needed to guarantee workers an acceptable standard of living.
C)  only enforceable at the federal level.
D)  None of these are true.E) A) and B)
F) C) and D)

Question 2

If law schools decide to relax their admission standards, the labor market for lawyers will be affected. We would expect the:

Accepted Answer

A)  supply of labor to shift to the right.
B)  supply of labor to shift to the left.
C)  demand for labor to shift to the right.
D)  demand for labor to shift to the left.E) C) and D)
F) B) and D)

Question 3

Demond has a PhD in history and teaches at the local college, where he earns $75,000 a year. Truth be told, Demond loves teaching so much that he would gladly do it for $45,000 a year. Which of the following statements is true?

Accepted Answer

A)  Demond's economic rent is worth $30,000.
B)  Demond's producer surplus is worth $30,000.
C)  The value of Demond's marginal product is $75,000.
D)  All of these are true.E) A) and C)
F) A) and B)

Question 4

If the demand for a good increases, it is likely that the demand for the factors of production used as its inputs will:

Accepted Answer

A)  decrease.
B)  increase.
C)  stay the same.
D)  either increase or decrease.E) All of the above
F) A) and B)

Question 5

In economics, the term "leisure" refers to:

Accepted Answer

A)  nonwork activities that individuals enjoy doing.
B)  any activities that individuals enjoy doing.
C)  all nonwork activities.
D)  the vacation time one receives when working.E) All of the above
F) None of the above

Question 6

An efficiency wage is a wage that:

Accepted Answer

A)  the government sets deliberately above the market rate to increase equity.
B)  most unionized workers negotiate to get rid of.
C)  is deliberately set above the market rate to increase worker productivity.
D)  is set right at market equilibrium, which creates an efficient labor market.E) B) and D)
F) A) and D)

Question 7

If Toben receives a pay cut and the price effect outweighs the income effect on his labor supply decisions, he will work:

Accepted Answer

A)  more hours.
B)  less hours.
C)  the same number of hours.
D)  zero hours.E) A) and C)
F) B) and C)

Question 8

If Luiz receives a pay raise and the income effect outweighs the price effect on his labor supply decisions, he will work:

Accepted Answer

A)  more hours.
B)  less hours.
C)  the same number of hours.
D)  less hours initially, but eventually will work more.E) All of the above
F) C) and D)

Question 9

We think about the cost of supplying labor as the:

Accepted Answer

A)  opportunity cost of the individual's time.
B)  input costs that go into producing a unit of labor.
C)  average wage in the labor market.
D)  the additional equipment and training that is required when an individual is hired.E) A) and B)
F) B) and D)

Question 10

What is one reason why an efficiency wage leads to greater worker productivity?

Accepted Answer

A)  Earning more than the market wage gives workers an incentive to stay with the firm.
B)  An efficiency wage deters workers from trying to start a union.
C)  Due to competition for jobs, firms pay less overall for a worker in the long run.
D)  An efficiency wage is set right at market equilibrium, which creates an efficient labor market.E) A) and D)
F) All of the above

Question 11

If medical schools decide to raise their admission standards, the labor market for doctors will be affected. We would expect the:

Accepted Answer

A)  demand for labor to decrease.
B)  supply of labor to decrease.
C)  demand for labor to increase.
D)  supply of labor to increase.E) A) and D)
F) None of the above

Question 12

In the capital market, the purchase price is what a:

Accepted Answer

A)  producer pays to use a factor of production for a certain period or task.
B)  producer pays to gain permanent ownership of a factor of production.
C)  consumer pays to use labor or land services for a certain period or task.
D)  consumer pays to gain permanent ownership of a factor of production.E) A) and B)
F) A) and C)

Question 13

The question of how much labor a firm will hire comes down to:

Accepted Answer

A)  whether added workers are going to generate more revenue or not.
B)  if the added workers are going to add profits to the firm.
C)  whether the value of the marginal product is greater than, less than, or equal to the average total cost.
D)  the amount of capital that will be required in order to ensure the worker is productive.E) B) and C)
F) A) and D)

Question 14

The marginal product of any input into the production process is the:

Accepted Answer

A)  increase in output that is generated by an additional unit of input.
B)  decrease in input that is generated by an additional unit of output.
C)  constant ratio of inputs to outputs.
D)  ratio of total output divided by total quantity.E) A) and C)
F) B) and D)

Question 15

The table shown displays the production schedule for an apple orchard in a competitive market that sells a bushel of apples for $50.

What is the value of the marginal product of labor for the seventh worker?

Accepted Answer

A)  $800
B)  $3,750
C)  $4,250
D)  $400E) A) and B)
F) A) and D)

Question 16

Firms in _______ countries tend to have more labor-intensive production processes, while firms in _______ countries tend to have more capital-intensive production processes.

Accepted Answer

A)  small; large
B)  large; small
C)  rich; poor
D)  poor; richE) B) and C)
F) A) and D)

Question 17

Safiya works at a factory for $15 an hour and typically works 40 hours a week. Safiya gets a pay raise and now earns $20 an hour. She decides to work 45 hours a week at her new wage. Safiya's response to the pay increase demonstrates that the _______ effect outweighs the _______ effect.

Accepted Answer

A)  income; prices
B)  price; income
C)  income; substitution
D)  labor; priceE) A) and C)
F) C) and D)

Question 18

The market labor supply curve is typically:

Accepted Answer

A)  upward sloping.
B)  downward sloping.
C)  perfectly elastic.
D)  perfectly inelastic.E) A) and D)
F) None of the above

Question 19

The determinants of labor demand include:

Accepted Answer

A)  culture and other opportunities.
B)  supply of other factors and output prices.
C)  other opportunities and technology.
D)  culture and population.E) None of the above
F) A) and B)

Question 20

A worker will be indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

Accepted Answer

A)  greater than the opportunity cost.
B)  exactly equal to the opportunity cost.
C)  less than the opportunity cost.
D)  constant for each additional hour worked.E) A) and B)
F) All of the above

Exam 16: The Facts of Production

In economics, the term "leisure" refers to:

Correct AnswerverifiedShow Answer

Firms in _______ countries tend to have more labor-intensive production processes, while firms in _______ countries tend to have more capital-intensive production processes.

Correct AnswerverifiedShow Answer

If the demand for a good increases, it is likely that the demand for the factors of production used as its inputs will:

Correct AnswerverifiedShow Answer

We think about the cost of supplying labor as the:

Correct AnswerverifiedShow Answer

The question of how much labor a firm will hire comes down to:

Correct AnswerverifiedShow Answer

If Toben receives a pay cut and the price effect outweighs the income effect on his labor supply decisions, he will work:

Correct AnswerverifiedShow Answer

In the capital market, the purchase price is what a:

Correct AnswerverifiedShow Answer

The marginal product of any input into the production process is the:

Correct AnswerverifiedShow Answer

If law schools decide to relax their admission standards, the labor market for lawyers will be affected. We would expect the:

Correct AnswerverifiedShow Answer

The determinants of labor demand include:

Correct AnswerverifiedShow Answer

Minimum wages are:

Correct AnswerverifiedShow Answer

Demond has a PhD in history and teaches at the local college, where he earns $75,000 a year. Truth be told, Demond loves teaching so much that he would gladly do it for $45,000 a year. Which of the following statements is true?

Correct AnswerverifiedShow Answer

If medical schools decide to raise their admission standards, the labor market for doctors will be affected. We would expect the:

Correct AnswerverifiedShow Answer

What is one reason why an efficiency wage leads to greater worker productivity?

Correct AnswerverifiedShow Answer

If Luiz receives a pay raise and the income effect outweighs the price effect on his labor supply decisions, he will work:

Correct AnswerverifiedShow Answer

Safiya works at a factory for $15 an hour and typically works 40 hours a week. Safiya gets a pay raise and now earns $20 an hour. She decides to work 45 hours a week at her new wage. Safiya's response to the pay increase demonstrates that the _______ effect outweighs the _______ effect.

Correct AnswerverifiedShow Answer

The table shown displays the production schedule for an apple orchard in a competitive market that sells a bushel of apples for $50. What is the value of the marginal product of labor for the seventh worker?

Correct AnswerverifiedShow Answer

The market labor supply curve is typically:

Correct AnswerverifiedShow Answer

A worker will be indifferent between spending the next hour on work or leisure if the benefit of another hour of work is:

Correct AnswerverifiedShow Answer

An efficiency wage is a wage that:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Firms in _ countries tend to have more labor-intensive production processes, while firms in _ countries tend to have more capital-intensive production processes.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Safiya works at a factory for $15 an hour and typically works 40 hours a week. Safiya gets a pay raise and now earns $20 an hour. She decides to work 45 hours a week at her new wage. Safiya's response to the pay increase demonstrates that the _ effect outweighs the _ effect.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified