Deck 9: Wage Determination and Superstar Salaries

Question 1

This is the rate of output for a given period of time.

A)Marginal product
B)Total product
C)Average product
D)Standard product

Answer 1

B

Question 2

This would determine the cheapest combination of factors needed to produce a given product.

A)Total revenue
B)The production possibility frontier
C)The production function
D)The marginal product of labor

Answer 2

C

Question 3

Which of the following is true about the law of diminishing marginal product?

A)The law of diminishing marginal product implies negative marginal product.
B)The law of diminishing marginal product occurs at the same rate for different firms.
C)The law of diminishing marginal product is illustrated by a downward sloping marginal product of labor curve.
D)The law of diminishing marginal product illustrates the total product of labor hired.

Answer 3

C

Question 4

______________ is the acquired skills and knowledge that makes workers more productive.

A)Labor
B)Capital
C)Human capital
D)Entrepreneurial ability

Question 5

A production function can be explained as

A)The relationship between the quantity of resources used and the total output of a product
B)A process of the amounts of labor used to produce a good or service
C)The ability to produce a good or service given resources
D)The marginal output possible of a good or service with a given amount of labor and capital.

Question 6

This represents the demand curve for labor.

A)The diminishing marginal product
B)The marginal cost of labor
C)The value of the marginal cost of labor
D)The value of marginal product of labor

Question 7

This is determined by the productivity of workers and the price of the output produced.

A)The diminishing marginal product
B)The marginal cost of labor
C)The value of the marginal cost of labor
D)The value of marginal product of labor

Question 8

The rule that states that as a firm uses more of a variable resource with a fixed resource and fixed technology the additional, or extra, output will fall is known as

A)The law of substantiated return
B)The law of diminishing total product
C)The law of diminishing marginal product
D)The law of increasing marginal product

Question 9

Of the following which is not a factor of productivity?

A)Human capital
B)Technology
C)Availability to capital equipment
D)Wages

Question 10

The sum of a product produced in a given period of time is

A)Total product
B)Marginal product
C)Average product
D)Standard product

Question 11

Reference: Use the graph to answer questions 18-20.
Identify where hiring will maximize profits.

A)To the left of point B
B)To the right of point B
C)At point B
D)Any point on W

Question 12

Marginal product of labor is

A)The total output produced
B)The extra output produced with each additional unit of labor
C)The total revenue received from output
D)The extra revenue received from the output from each additional unit of labor

Question 13

The wage is $10 per hour.What is the marginal cost of labor for the fourth unit of labor?

A)$10
B)$20
C)$30
D)$40

Question 14

Consider the table.If the price per unit of output is $15 and wages paid each day is $225, how many people should the firm hire to maximize profit? $$\begin{array} { | c | c | } \hline \begin{array} { c } \text { Units af } \\\text { Labdr }\end{array} & \text { Output } \\\hline 0 & 0 \\\hline 1 & 7 \\\hline 2 & 19 \\\hline 3 & 34 \\\hline 4 & 47 \\\hline 5 & 57 \\\hline\end{array}$$

A)2
B)3
C)4
D)5

Question 15

Which is an accurate definition of the marginal cost of labor?

A)The marginal cost of labor is the fixed cost of production
B)The change in revenue from one more unit of product
C)The additional cost from producing one more unit of product
D)The additional cost from hiring one more worker

Question 16

Reference: Use the graph to answer questions 18-20.
Identify where hiring will increase profits.

A)To the left of point B
B)To the right of point B
C)At point B
D)Any point on W

Question 17

Profit maximizing firms will make their hiring and salary decisions by comparing

A)Marginal benefits and costs of producing one more product
B)Total benefits and costs of producing one more product
C)Marginal benefits and costs of hiring one more worker
D)Total benefits and costs of hiring one more worker

Question 18

Reference: Use the graph to answer questions 18-20.
Identify where hiring will decrease profits.

A)To the left of point B
B)To the right of point B
C)At point B
D)Any point on W

Question 19

The Value of the Marginal Product of Labor represents the

A)Increase in total revenue earned when the firm hires an additional worker
B)Decrease in total revenue earned when the firm hires an additional worker
C)Increase in marginal revenue earned when the firm hires an additional worker
D)Decrease in marginal revenue earned when the firm hires an additional worker

Question 20

The output gained from hiring one more unit of labor is known as

A)Marginal product of labor
B)Total product of labor
C)Marginal revenue of labor
D)Total revenue of labor

Question 21

Which of the following would lead to a pay difference?

A)Lack of interest by workers
B)Standardized workers
C)A special skill or talent by some of the labor force
D)Purely competitive markets

Question 22

Reference: Use the set of graphs to answer questions 27-30.
Which graph best depicts a labor market where there would be ability to demand a greater wage?

A)Graph A
B)Graph B
C)Graph C
D)Graphs A and B

Question 23

Salary differences will most likely be the greatest when

A)The labor demand is inelastic
B)The labor demand in elastic
C)The labor supply is elastic
D)The market is an oligopoly and the labor demand is elastic

Question 24

Explain the importance of thinking at the margin when explaining the discrepancies of pay for different occupations.

Question 25

Do you agree with the following statement? Why or why not?
A profit-maximizing firm will increase units of labor up to the point where the value of marginal product equals the wage rate.

Question 26

You find that you have a backlog of orders due to an increase in demand for your product.You determine that if you hire one more person you will be able to increase your sales volume by $300 because of projected output by this extra person.Wages per day for this extra person will be $100.The marginal revenue product for this extra worker is

A)$100
B)$200
C)$300
D)$400

Question 27

Reference: Use the set of graphs to answer questions 27-30.
Which would represent a demand for low-skilled labor?

A)Graph A
B)Graph B
C)Graph C
D)Graphs A and B

Question 28

Which of the following is not a correct evaluation of pay discrepancies?

A)Salaries reflect the value of marginal unit of labor hired
B)The difference is due to the margin
C)Demand and supply
D)The values society puts on the occupation

Question 29

How would the price of a product affect the demand for labor for the product?

Question 30

Reference: Use the set of graphs to answer questions 27-30.
Which would represent a demand curve for high-skilled labor?

A)Graph A
B)Graph B
C)Graph C
D)Graphs A and B

Question 31

The profit-maximizing level of employment is the quantity of labor where

A)Marginal revenue product is equal to marginal cost
B)Marginal product is equal to marginal cost
C)Marginal revenue product is equal to market price of the good
D)Marginal product is equal to market price of the good

Question 32

Which of the following would explain why skilled workers generally earn more than unskilled workers?

A)Skilled labor has higher value of the marginal product of labor.
B)Skilled labor has a more elastic demand curve.
C)There is more of a supply of unskilled labor.
D)There is more demand for unskilled labor.

Question 33

Reference: Use the set of graphs to answer questions 27-30.
Which graph best depicts a labor market where a greater wage could be demanded?

A)Graph A
B)Graph B
C)Graph C
D)Graphs A and B