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Exam 14: The Markets for Labour and Other Factors of Production

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Question 71

True/False

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If the market wage rate increases, a firm's labour demand curve does not shift but the labour supply curve shifts to the right.

A) True
B) False

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Question 72

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Table 14.1 $\begin{array}{|c|c|}\hline \begin{array}{c}\text { Quantity of } \\\text { labour }\end{array} & \text { Output (units) } \\\hline 1 & 80 \\\hline 2 & 170 \\\hline 3 & 240 \\\hline 4 & 300 \\\hline 5 & 350 \\\hline 6 & 390 \\\hline 7 & 420 \\\hline\end{array}$ -Refer to Table 14.1.If the output price is $3, what is the marginal revenue product of the fifth unit of labour?

A) $1,050
B) $360
C) $210
D) $150

E) A) and D)
F) All of the above

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Question 73

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The Buda Agri Corporation is the sole employer in rural Hungary.In the labour market, Buda Agri is a

What is the signaling hypothesis of education?

Consider the market for pilots.What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62?

The firm's gain in profit from hiring another worker is

If education reform leads to a more skilled and better trained public, the economy would experience

At low wages, the labour supply curve for most people slopes upward because

The most important factor contributing to wage differences in the labour market is differences in the level of education and training among workers.

Painters who paint water towers earn higher wages relative to painters who paint houses because

Table 14.2 $\begin{array}{|c|c|c|c|c|}\hline \begin{array}{c}\text { Quantity of } \\\text { labour }\end{array} & \begin{array}{c}\text { Output of iPods per } \\\text { Week }\end{array} & \begin{array}{c}\text { Marginal Product of } \\\text { labour }\end{array} & \begin{array}{c}\text { Product Price } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Wage } \\\text { (dollars) }\end{array} \\\hline 1 & 8 & 8 & \$ 300 & \$ 350 \\\hline 2 & 15 & 7 & 280 & 350 \\\hline 3 & 21 & 6 & 260 & 350 \\\hline 4 & 26 & 5 & 240 & 350 \\\hline 5 & 30 & 4 & 220 & 350 \\\hline 6 & 33 & 3 & 200 & 350 \\\hline 7 & 35 & 2 & 180 & 350 \\\hline\end{array}$ -Refer to Table 14.2.The marginal profit from hiring the second unit of labour is

A commission system of compensation reduces the risk to workers during seasonal periods when business is sluggish.

Table 14.2 $\begin{array}{|c|c|c|c|c|}\hline \begin{array}{c}\text { Quantity of } \\\text { labour }\end{array} & \begin{array}{c}\text { Output of iPods per } \\\text { Week }\end{array} & \begin{array}{c}\text { Marginal Product of } \\\text { labour }\end{array} & \begin{array}{c}\text { Product Price } \\\text { (dollars) }\end{array} & \begin{array}{c}\text { Wage } \\\text { (dollars) }\end{array} \\\hline 1 & 8 & 8 & \$ 300 & \$ 350 \\\hline 2 & 15 & 7 & 280 & 350 \\\hline 3 & 21 & 6 & 260 & 350 \\\hline 4 & 26 & 5 & 240 & 350 \\\hline 5 & 30 & 4 & 220 & 350 \\\hline 6 & 33 & 3 & 200 & 350 \\\hline 7 & 35 & 2 & 180 & 350 \\\hline\end{array}$ -Refer to Table 14.2.The firm represented in the diagram

What is a compensating differential?

Table 14.1 $\begin{array}{|c|c|}\hline \begin{array}{c}\text { Quantity of } \\\text { labour }\end{array} & \text { Output (units) } \\\hline 1 & 80 \\\hline 2 & 170 \\\hline 3 & 240 \\\hline 4 & 300 \\\hline 5 & 350 \\\hline 6 & 390 \\\hline 7 & 420 \\\hline\end{array}$ -Refer to Table 14.1.The marginal product of the fourth unit of labour is

While labour unions tend to negotiate above-equilibrium wage rates for their members, they also tend to reduce the quantity of labour hired.

An increase in a perfectly competitive firm's demand for labour could be caused by

Worker discrimination occurs when

The income effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to purchase goods and services.

According to the marginal productivity theory of income,