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Exam 17: The Markets for Labor and Other Factors of Production

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Question 1

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Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

A) True
B) False

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Question 2

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Figure 17-2 -Refer to Figure 17-2.Which of the following is true at W2?

A) The income effect is larger than the substitution effect.
B) The substitution effect is larger than the income effect.
C) The income effect and the substitution effect are equal.
D) The supply curve is positively sloped.

E) B) and C)
F) C) and D)

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Question 3

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Increases in population shift the market supply curve for labor to the right.

Companies often find it to be more profitable to use a commission or piece-rate system of compensation rather than a salary system,yet many firms continue to pay their workers salaries.List three reasons why a firm would choose a salary system of compensation.

Marsha Murphy complained,"Many jobs that are filled mostly by men offer higher wages than most jobs that are typically filled by women.In many cases,the jobs men have require the same education and skills as the jobs women have.This is clearly unfair.Women should be paid the same wages as men are paid for jobs that are equivalent in terms of their qualifications." Which of the following statements describes Marsha's position?

Table 17-2 Table 17-2 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MPL and MRPL refer to the marginal product of labor and the marginal revenue product of labor,respectively. -Refer to Table 17-2.What are the price and quantity of workers that result in the maximum amount of revenue Apple would earn from selling iPods?

Table 17-1 Hotspur Incorporated,a manufacturer of microwave ovens,is a price taker in its input and output markets.The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80.Table 17-1 shows the relationship between the quantity of labor it hires and the quantity of microwave ovens it produces. -Refer to Table 17-1.What is the amount of revenue added as a result of hiring the fourth worker?

Along an upward sloping labor supply curve,as the wage rate increases,the opportunity cost of leisure ________,causing individuals to supply a ________ quantity of labor.

The market supply curve for labor is

If the income effect of a wage increase equals the substitution effect,the labor supply curve is horizontal at the equilibrium wage.

Holding the price of a firm's output constant,if the marginal product of labor increases

Wally,Vijay,Sandra and Consuela make up a software development team at Javasoft.The firm is considering implementing one of two incentive compensation schemes.In scheme A,each programmer receives an annual bonus if he or she meets all individual programming deadlines.In scheme B,members of the team share equally in a joint bonus if the team meets all of its product delivery deadlines.All four employees are equally talented but Wally is a slacker who does as little work as he can get away with.Which scheme might team members prefer? Which scheme will management prefer?

The marginal product of labor curve is the demand curve for labor.

Compensating differentials are associated most closely with which of the following?

The demand for capital is similar to the demand for labor in that

How will an increase in labor productivity affect equilibrium in the labor market?

Most economists believe that only a small gap between the wages of white males and the wages of other groups is due to education.Most of the gap is explained by discrimination.

Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games) .An example of capital used by teams to produce their products is

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

Daniel Hammermesh and Stephen Donald studied the determinants of the earnings of college graduates years after they graduated.Which of the following is one result of their study?