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Exam 19: Factor Markets and the Distribution of Income

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Question 141

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Use the following to answer questions : Figure: Equilibrium in the Labour Market -At Hamill Manufacturing of Alberta,highly skilled senior machinists are paid $70 000,excluding benefits,but the average-skilled machinist generates approximately $137 000 in value added.This difference is due to the fact that the:

A) marginal productivity theory of income distribution does not apply in this case.
B) value of the marginal product of the last machinist hired is less than the average of all machinists employed.
C) value of the marginal product of the last machinist hired is greater than the average of all machinists employed.
D) value of the marginal product of the last machinist hired is equal to the average of all machinists employed.

E) A) and B)
F) A) and C)

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Question 142

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The individual producer's labour demand curve is the:

A) marginal product of labour curve.
B) value of the average product of labour curve.
C) average product curve.
D) value of the marginal product of labour curve.

E) None of the above
F) B) and C)

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Question 143

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Use the following to answer questions : Figure: Equilibrium in the Labour Market -The marginal productivity theory of income distribution assumes that factor markets are:

In 2015,about 69% of all unionized employees working belonged to national unions.

Use the following to answer questions : $\begin{array}{l}\text { Table: Workers and Corn Output }\\\begin{array} { l c } \hline \begin{array} { l } \text { Numbers } \\\text { of Workers }\end{array} & \begin{array} { c } \text { Output } \\\text { of Corn } \\\text { (units of corn) }\end{array} \\\hline 0 & 0 \\1 & 30 \\2 & 58 \\3 & 79 \\4 & 94 \\5 & 104 \\6 & 108 \\7 & 110 \\\hline\end{array}\end{array}$ -(Table: Workers and Corn Output) Use Table: Workers and Corn Output.Laura is a price-taking farmer who produces corn.Assume that the wage rate for workers is $130 and the price per kilogram of corn is $10.Suppose that Laura acquires more land and as a result the output that can be produced by any given number of workers doubles.Laura should hire _____ workers to maximize profits.

Use the following to answer questions : $\begin{array}{l}\text { Table: Total Product of Labour at Debbie's Bakery }\\\begin{array} { l c } \begin{array} { l } \text { Quantity of Labour } \\\text { (workers) }\end{array} & \begin{array} { c } \text { Total Product of Labour } \\\text { (cakes per worker) }\end{array} \\\hline 0 & 0 \\1 & 3 \\2 & 10 \\3 & 16 \\4 & 21 \\5 & 25 \\6 & 28\end{array}\end{array}$ -(Table: Total Product of Labour at Debbie's Bakery) Use Table: Total Product of Labour at Debbie's Bakery.Debbie can sell cakes at $10 each.If Debbie must pay each worker $40 per day,how many workers will she hire to maximize profit?

Firms that engage in discrimination are usually more profitable than firms that don't discriminate.

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

The value of the marginal product is the:

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers) Use Figure: The Demand for Bricklayers.If there is an increase in technology that increases the productivity of bricklayers,then the value of the marginal product of the sixth bricklayer will be _____ than _____.

Unions are organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining with employers.

Human capital:

The clearest sign of discrimination against an individual is that they are paid less than the value of their marginal productivity.

Use the following to answer questions : Scenario: The Decision to Hire Labour Assume that both the product market and the labour market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labour is given in the table that follows. $\begin{array}{llcc} \hline \text { Quantity } & \\ \text { of Labour } & \text { Quantity } \\ \text { (workers) } & \text {of Output }\\\hline 0&0\\1 &7\\2 &13\\3&18\\4&21\\\hline\end{array}$ -(Scenario: The Decision to Hire Labour) Use Scenario: The Decision to Hire Labour.This firm experiences diminishing marginal product after it hires the _____ worker.

Factor demand is called derived demand because it:

The invention of labour-saving appliances has decreased the supply of labour in Canada.

Suppose that a firm sells a good for a perfectly competitive price of $5.The equilibrium wage rate is $10.The first worker it hires produces five units.Two workers produce a total of nine units.If it hires 2 workers,the value of marginal product for the second worker is:

Use the following to answer questions : Figure: The Value of the Marginal Product Curve -(Figure: The Value of the Marginal Product Curve) Use Figure: The Value of the Marginal Product Curve.In the figure,if the price of the good increases and everything else stays the same,then the profit-maximizing quantity of labour:

An example of the substitution effect dominating the income effect occurs when people take summer vacations rather than winter vacations,even though their pay is the same year-round.

Use the following to answer questions : Figure: The Demand for Bricklayers -(Figure: The Demand for Bricklayers) Use Figure: The Demand for Bricklayers.If the equilibrium market wage for bricklayers is $100 per day,_____ bricklayers will be hired by this masonry firm.