Micro Chapter 13: Labor Markets, Poverty, & Income Distribution

If the labor market for doctors is perfectly competitive, then an increase in the demand for doctors is likely to cause:

doctors' wages to increase.

Food stamps and Medicaid are examples of:

in-kind transfer programs.

In a competitive labor market, if a firm pays a worker less than that worker's VMP, then in the long run:

competing firms will hire the worker away.

Suppose it is observed that the equilibrium wage and employment level have both risen in a competitive labor market. One can infer that the:

demand for labor has increased.

Mountain Breeze supplies air filters to the retail market and hires workers to assemble the components. An air filter sells for $26, and Mountain Breeze can buy the components for each filter for $1. Sandra and Bobby are two workers for Mountain Breeze. Sandra can assemble 60 air filters per month and Bobby can assemble 70. If the labor market is perfectly competitive, how much will Sandra and Bobby be paid?

1,500; 1,750

Suppose Sarah has been offered a position as web designer at Firm A and Firm B. Both firms require their employees to work for 9 hours a day, but Firm A allows its employees to have a flexible work schedule, while Firm B requires its employees to be at work from 9am to 5pm. Otherwise, the jobs are identical. You would expect:

Sarah's wages to be lower at Firm A than at Firm B.

To derive the labor demand curve for a particular market, one should ______for all the firms in the market.

To derive the labor demand curve for a particular market, one should ______for all the firms in the market.

When the government transfers resources to the poor in the form of a good or service, it is called:

an in-kind transfer.

Differences in wage rates associated with differences in working conditions are called:

compensating wage differentials.

In competitive labor markets, _____ demand labor and ______ supply labor.

firms, workers

Union membership in the United States probably ______ an important explanation for why workers with similar qualifications earn different incomes because union membership rates are relatively ______.

is not; low

In a competitive labor market, the equilibrium wage rate is determined by:

labor demand and labor supply.

A group of workers who bargain collectively with employers for higher wages and better working conditions is called a:

labor union.

Males major in engineering much more frequently than females. Starting salaries for engineers (male or female) are much higher than average. As a result, the observed gender wage gap for all college graduates will be ______ than the gender wage gaps in specific majors because ______.

larger; males and females choose different majors

Imposing a minimum wage above the equilibrium wage:

makes some workers worse off.

The value of marginal product of labor equals the

marginal product of labor times the net price for which each unit of output sells.

The additional output a firm gets from hiring an additional unit of labor is the

marginal product of labor.

A welfare payment that is reduced when the recipient earns more income is a(n):

means-tested benefit.

A program under which the government gives all citizens a substantial lump sum payment that is financed by a tax earned income is termed a(n):

negative income tax.

Jobs in which there is a higher risk of injury or death will:

pay more than otherwise similar jobs.

In 1996, the Personal Responsibility Act:

placed a five-year lifetime limit on welfare payments to any given recipient.

Those who do not favor programs aimed at reducing inequality argue that these programs:

reduce people's incentive to work hard.

If workers in one part of the labor market unionize, then all else equal, we would expect the wages of unionized workers to ______, and the wages of nonunionized workers to ______.

rise; fall

To say that a given welfare program is means-tested implies that:

the more income one earns, the smaller the size of the benefit.

In the market for labor, the demand function describes

the number of workers a firm is willing to hire at each wage.

The optimal number of workers for a perfectly competitive firm to hire occurs when

the wage rate equals the value of marginal product of the last worker.