Graded Homework - Chapter 19

(Problem 8d). For the following situation, in which similar workers are paid different wages, choose the most likely explanation for these wage differences. Unionized workers are generally better paid than nonunionized workers. A. This wage difference is not explained by marginal productivity theory. B. differences in talent C. compensating differentials D. differences in human capital

A. This wage difference is not explained by marginal productivity theory.

(Problem 3). The production function for Patty's Pizza Parlor is given in the table below. The price of pizza is $2, but the hourly wage rate rises from $10 to $15. How does Patty's demand for workers respond to this wage rate increase? A. As the wage rate increases, Patty should hire more workers. B. As the wage rate increases, Patty should hire fewer workers. C. As the wage rate increases, Patty should hire the same number of workers.

B. As the wage rate increases, Patty should hire fewer workers.

(Problem 2a). Marty's Frozen Yogurt has the production function per day shown in the accompanying table. The equilibrium wage rate for a worker is $80 per day. Each cup of frozen yogurt sells for $2. Calculate the marginal product of labor for each worker and the value of the marginal product of labor per worker. Based on your calculations, choose the correct statement. A. MPL increases and VMPL decreases as more output is produced. B. MPL decreases and VMPL increases as more output is produced. C. Both MPL and VMPL decrease as more output is produced. D. Both MPL and VMPL increase as more output is produced.

C. Both MPL and VMPL decrease as more output is produced.

(Problem 9). Research consistently finds that despite nondiscrimination policies, African-American workers on average receive lower wages than white workers do. What are the possible reasons for this? Are these reasons consistent with marginal productivity theory? Choose the correct statement. A. It may be a result of past discrimination, which is not consistent with marginal productivity theory. B. This could be the result of discrimination, and discrimination is consistent with marginal productivity theory. C. This could be the result of discrimination, and discrimination is not consistent with marginal productivity theory.

C. This could be the result of discrimination, and discrimination is not consistent with marginal productivity theory.

(Problem 8a). For the following situation, in which similar workers are paid different wages, choose the most likely explanation for these wage differences. Test pilots for new jet aircraft earn higher wages than airline pilots. A. This wage difference is not explained by marginal productivity theory. B. differences in human capital C. compensating differentials D. differences in talent

C. compensating differentials

(Problem 2b). Marty's Frozen Yogurt has the production function per day shown in the accompanying table. The equilibrium wage rate for a worker is $80 per day. Each cup of frozen yogurt sells for $2. How many workers should Marty employ? A. 5 B. 4 C. 2 D. 3

D. 3

(Problem 8b). For the following situation, in which similar workers are paid different wages, choose the most likely explanation for these wage differences. College graduates usually have higher earnings in their first year on the job than workers without college degrees have in their first year on the job. A. compensating differentials B. differences in talent C. This wage difference is not explained by marginal productivity theory. D. differences in human capital

D. differences in human capital

(Problem 8c). For the following situation, in which similar workers are paid different wages, choose the most likely explanation for these wage differences. Full professors command higher salaries than assistant professors for teaching the same class. A. compensating differentials B. This wage difference is not explained by marginal productivity theory. C. differences in talent D. differences in human capital

D. differences in human capital

The firm's value of marginal product curve slopes downward: only if the firm is a perfect competitor in both the labor and product markets. only if the firm is a perfect competitor in the labor market. only if the firm is a perfect competitor in the product market. because of diminishing returns.

because of diminishing returns.

If a firm hires labor such that W < VMPL, then profit: can be increased by hiring less labor. can be increased by increasing the wage. is maximized. can be increased by hiring more labor.

can be increased by hiring more labor.

Reference: Ref 19-5 (Table: Workers and Corn Output) Look at the table Workers and Corn Output. Laura is a price-taking farmer who produces corn. Assume the wage rate for workers is $250 and the price per bushel of corn is $20. Laura should hire _____ workers to maximize profits. two seven four one

four

Alex's boss notices that with each course Alex takes, he becomes a more knowledgeable and efficient worker. This is an example of: value of marginal product. income effects. derived demand. human capital development.

human capital development.

Figure: The Demand for Bricklayers Reference: Ref 19-9 (Figure: The Demand for Bricklayers) Look at the figure The Demand for Bricklayers. The equilibrium market wage for bricklayers is $100. For a profit-maximizing firm at the equilibrium level of output, the VMPLbricklayers: is $200. is equal to the market wage rate. is irrelevant, since the firm is a price taker. cannot be determined from the information provided.

is equal to the market wage rate.

The equilibrium value of the marginal product of a factor is the additional value produced by the _____ unit of that factor employed in the factor market as a whole. last least productive most productive first

last

When labor is hired in a competitive market, the value of the marginal product of labor is computed by: multiplying the wage paid to labor by the marginal product of labor. multiplying the price of the output by the wage paid to labor. multiplying the price of the output by the marginal product of labor. dividing the marginal product of labor by the price of the output.

multiplying the price of the output by the marginal product of labor.

Mary is considering hiring another worker in an assembly line for MP3 speakers. Mary knows the average product of labor is 15 speakers per day. She also believes that the next worker hired will produce an extra 12 speakers per day. A speaker sells for $10. Assuming that the market for speakers is perfectly competitive, Mary should hire another worker: since the marginal product is below the average product. only if the new worker's marginal product is 12 or more. only if the new worker's daily wage is $120 or less. only if the new worker's daily wage is $150 or less.

only if the new worker's daily wage is $120 or less.

Phil's Copy Studio pays its workers $60 per day and sells poster-size copies for $10 per print. If the market wage rises to $70: the quantity demanded of labor increases, but the demand for labor curve does not shift. the demand for labor increases. the quantity demanded of labor decreases, but the demand for labor curve does not shift. the demand for labor decreases.

the quantity demanded of labor decreases, but the demand for labor curve does not shift.

A shift in demand for a given factor of production will NOT occur if: the price of that factor falls. the productivity of that factor increases. the productivity of that factor decreases. there is a decrease in the price of a substitute factor.

there is a decrease in the price of a substitute factor. (WRONG)

Scenario: The Decision to Hire Labor Assume that both the product market and the labor market are perfectly competitive. The price of this firm's product is $5. The firm's total product with respect to labor is given in the table that follows. Reference: Ref 19-13 (Scenario: The Decision to Hire Labor) Look at the scenario The Decision to Hire Labor. How many workers will this perfectly competitive, profit-maximizing firm choose to hire if the equilibrium wage is $30? three one four two

two

Figure: The Value of the Marginal Product Curve Reference: Ref 19-7 (Figure: The Value of the Marginal Product Curve) In the figure The Value of the Marginal Product Curve, if a technological advance makes labor more productive and everything else stays the same, then the profit-maximizing quantity of labor: will stay the same. will decrease. cannot be determined. will increase.

will increase.