Factor markets and labor market inefficiencies

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

the marginal product productivity theory of income distribution

which of the following is NOT by itself a cause of labor market inefficiency

-compensating wage differentials

-uncompetitive markets for labor

-wage differential

-efficiency wages

compensating wage differentials

the federal government decides to adopt a new visa policy for guest workers seeking to immigrate to the United States in order to find jobs. As a result, 30% more work visas are given out than had been previously granted the change is expected to be permanent. The increase in the nunber o visas leads to a ___ movement of the ___labor.

rightward ; supply of

large disparities in wages are often used as

a means to question the validity of the marginal productivity theory of income distribution

Refer to the graph below of the value of the marginal product of labor for stonemasons. The equilibrium market wage for stonemasons is $100 a day (6 workers), but a minimum wage of $130 (3 workers) a day for stonemasons is set by the government. As a result:

3 workers who would have been employed at the previous $100 market wage are now unemployed.

Which of the following is NOT one of the phenomena that may have contributed to the growing divide between real wages and productivity in the US in the past forty years?

-The automation of many tasks previously done by workers.

-A decline in the percentage of workers represented by a trade union.

-An increase in the Herfindahl-Hirschman index in many industries.

-A greater awareness of and efforts to address discriminatory hiring and wage practices.

A greater awareness of and efforts to address discriminatory hiring and wage practices.

In which occupational category is the demand for labor the least competitive?

Healthcare

Within the labor-leisure framework, when an individual's income effect is stronger than the substitution effect from a wage increase, it means they have a(n):

downward-sloping labor supply curve in the wage range in question.

Suppose that a firm sells a good for a perfectly competitive price of $5. The equilibrium wage rate is $10. The first worker it hires produces five units. Two workers produce a total of nine units. Given this information, the firm will:

hire both the first and second workers.

People with lower levels of human capital will tend to:

receive lower salaries than those with higher levels of human capital.

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:

compensating differentials.

The quantity demanded of labor will increase if:

the price of labor falls.

In the past 30 years, the ability of unions to increase wages and improve working conditions for their members has:

decreased.

Suppose you open an artisanal studio specializing in the production of hand-woven carpets. You pay $5 in fixed costs for equipment and $9 per day to each of your artists (employees) who make the carpets. If the industry is perfectly competitive, and the current market price is $1, how many carpets should you produce, using the table below?

L Q

1. 10

2. 25

3. 35

4. 43

5. 48

35

In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2 and the market wage rate is $100 per hour, the profit-maximizing quantity of labor is _____ workers.

l. Q

0. 0

1. 20

2. 50

3. 90

0

In general, because of the nature of opportunity costs, the price of an extra hour of leisure is:

the hourly wage rate.

Suppose the birth rate has dropped significantly this year compared to previous years. Assuming nothing else has changed, what do you expect to happen in the labor market two decades from now?

The supply curve will shift to the left and the wage rate will increase.

The graph show a candy factory's production for one day. The firm pays each worker $110 a day and sells its toffee candy for $0.50 each. How many workers should the firm employ?

5

Between which two points on the graph of labor supply does the income effect outweigh the substitution effect?

c and E

Refer to the table below of the output of a sandwich shop. If sandwiches are sold at $10 each, what is the value of the marginal product of the fourth worker?

L Q

0 0

1 3

2 10

3 16

4 21

5 25

6 28

50$

Which of the following would shift the labor supply curve to the right?

An increase in the labor force participation rate

An increase in wealth will cause the labor supply curve to

shift leftward if leisure is a normal good.

A dairy farm produces cow's milk and sells it to a local store for $2.20 per gallon. Agricultural workers in the area are paid a fixed wage rate of $75 per day. Assume that the milk farm is profit maximizing. Referring to the table below, how many employees should the farm employ?

L Q

0 0

1 50

2 95

3 125

4 145

5 155

6 160

2

A decrease in the demand for autoworkers would NOT come about because of a(n):

-decrease in the price of cars.

-increase in the market wage rate.

-decrease in the supply of other factors that autoworkers use in production.

-decrease in the productivity of autoworkers.

increase in the market wage rate.

Which of the following is a factor of production at Rutgers?

the faculty