(Complete) Chapter 13: Local markets, poverty, and Income Distribution

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The set of worker characteristics such as education, experience and work habits that affect the value of a worker's marginal product is referred to as a worker's:

Human capital

An amalgam of factors such as education, training, experience Intelligence, energy, work habits, trustworthiness, and Initiative that affects the value of a worker's marginal

human capltal

True or False: Two workers with the same amount of human capital may earn different wages if one of them belongs to a labor union and the other does not.

True

In a competitive labor market, a worker's wage will be ________ the value of the marginal product of labor.

equal to

In a competitive labor market, a worker's wage will be, of labor the value of the marginal product

equal to

A theory of pay determination that says a worker's wage will be proportional to his or her stock of human capital product

human capital theory

As wages rise, the _____ effect will lead people to consume more leisure.

income

If the wages in a given occupation increase, you would generally expect the quantity of labor supplied in that occupation to

increase

Winner-take-all markets are likely to occur in situations in which:

technology allows the most talented individuals to serve broad markets.

The marginal product of labor is

the additional output a firm gets by employing one additional unit of labor.

A poverty threshold is

the level of income below which the government classifies a family as poor.

A _____ labor market is one in which small differences in human capital translate into large differences in pay.

winner-take-all

One in which small differences in ability or other dimensions of human capital translate into large differences in pay

winner-take-all market

According to human capital theory, jobs that require more human capital will tend to pay _______ otherwise similar jobs.

More than

Since 1980, the growth in real earnings has been the largest for the top:

1 percent of U.S. earners

Given the numbers in the table below, if the net price of each unit of output is $10, and the competitive market wage is $125 per week, then the firm should hire ______ workers. #of Workers Total output/wk 0 0 1 20 2 35 3 45 4 50

2

A system under which the government would grant every citizen a cash payment each year, financed by an additional tax on earned income is known as

A negative income tax

An in-kind transfer is

A payment made in the form of a good or service

One concern economists have about the minimum wage is that it:

Could lower employment

Means-tested welfare programs typically _______ people's incentives to work.

Decrease

A payment made not in the form of cash but in the form of a good or service

In-kind transfer

Since 1980, Income inequality in the United States has:

Increased sharply

The earned-income tax credit (EITC) is a policy under which

Low-income workers receive credits on their federal income tax

The additional output a firm gets by employing one additional unit of labor is known as

Marginal product of Labor (MP)

federal law that transferred responsibility for welfare programs from the federal level to the state level and placed a five-year lifetime limit on payment of AFDC benefits to any given recipient

Personal Responsibility Act the 1996

Labor unions ______ the value of total output.

Reduce

What is an employer's reservation price for a worker?

The most the employer could pay without suffering a decline in profit

A worker's marginal product is the extra output the firm gets as a result of hiring that worker. When we multiply a workers marginal product by the net price for which each unit of the product sells, we get that worker's _________

Value of marginal product of labor (VMP)

The dollar value of the additional output a firm gets by employing one additional unit of labor is known as

Value of marginal product of labor (VMP)

The value of the marginal product of labor is the dollar value of the _____ output a firm gets by employing one additional unit of labor.

additional

As wages rise, the number of hours people choose to work:

could increase or decrease

In the short-run, as firms hire additional workers, the marginal product of labor

decreases

A means-tested benefit program is one in which the benefit level

decreases as the recipient earns additional income

Differences in _______ can result in some kinds of human capital being more valuable than others

demand

A decrease in the price of beer will lead the number of workers employed in beer manufacturing to:

fall

If the demand for car mechanics falls, the equilibrium wage of car mechanics will tend to:

fall

If the value of the marginal product of labor is greater than the market wage, the firm should

hire additional workers

In the short run, the value of the marginal product of labor decreases as the quantity of labor employed by a firm _______.

increases

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

labor union

A group of workers who bargain collectively with employers for better wages and working conditions

labor union

Discriminatory employers who pay men more than women simply because they prefer working with men are likely to earn ______ employers who do not discriminate.

lower profits than

The additional output a firm gets by employing one additional unit of labor is the

marginal product of labor

A benefit program whose benefit level declines as the recipient earns additional income

means-tested

Suppose Ellen and Suzanne are both nurses at the same hospital. Their jobs are identical, but Ellen works the night shift and Suzanne works the day shift. We would expect Ellen to earn ______ Suzanne.

more than

If the value of the marginal product of labor is $16 per hour, and the equilibrium wage rate is $12 per hour, then the firm should hire

more workers

A compensating wage differential is a difference in the wage rate that

reflects the attractiveness of a job

The _______ effect leads people to consume less leisure as wages rise.

substitution

A firm's labor demand curve is its

value of marginal product of labor curve.


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