ALLIED ECN150 module 7 Check Your Understanding

Question Points
1. If the
U.S. government determines that the cost of feeding an urban family of four is
$5,200 per year, then the official poverty line for a family of that type is:
a. $10,400.
b. $15,600.
c. $20,800.
d. $26,000.
2. Which of
the following would not be considered human capital?
a. The golf clubs a
professional golfer uses to play golf.
b. The golf balls a
professional golfer uses to play golf.
c. The device a
golfer uses to accurately measure distances on a golf course.
d. None of the
choices apply.
3. Suppose
that eight workers can manufacture 70 radios per day and that nine workers can
manufacture 90 radios per day. If radios can be sold for $10 each, the value of
marginal product of the ninth worker is:
a. 20 radios.
b. 90 radios.
c. $200.
d. $900.
4. If men’s
preferences for work change such that more men want to be stay-at-home fathers,
the wages paid to men who remain in the workplace would rise, all else equal.
a. True
b. False
5. Suppose
that a competitive firm hires labor up to the point at which the value of the
marginal product equals the wage and that labor is the only input that varies
for the firm. If the firm pays a wage of $700 per week and the marginal product
of labor equals 100 units per week, then the marginal cost of producing an
additional unit of output is:
a. $7.
b. $70.
c. $700.
d. We do not have
enough information to answer this question.
6. It is
illegal in the United States for firms to pay different employees different
wages for doing the same job.
a. True
b. False
7. Suppose
that Jake and Abby each win $1,000 in a state lottery . Jake spends his
winnings on a new television. Abby saves her winnings for a “rainy
day.” Which of the following is correct?
a. Both Jake’s and
Abby’s behavior suggest that they base their purchasing decisions on transitory
income.
b. Jake’s behavior
suggests that he bases his purchasing decisions on transitory income rather
than permanent income. Abby’s behavior suggest that she bases her purchasing
decisions on permanent income rather than transitory income.
c. Jake’s behavior
suggests that he bases his purchasing decisions on permanent income rather than
transitory income. Abby’s behavior suggests that she bases her purchasing
decisions on transitory income rather than permanent income.
d. Both Jake’s and
Abby’s behavior suggest that they base their purchasing decisions on permanent
income.
8. In
general, less productive workers are paid less than more productive workers.
a. True
b. False
9. In order
to calculate the value of the marginal product of labor, a manager must know the
marginal product of labor and the wage rate of the worker.
a. True
b. False
10. Which of
the following is an example of a compensating differential?
a. Two workers with
different levels of on-the-job training earn different salaries.
b. Two workers whose
jobs entail different working conditions earn different salaries.
c. Two workers whose
jobs require different levels of technical expertise earn different salaries.
d. Two workers with
different levels of natural ability earn different salaries.
11. The
signaling theory of education maintains that workers who complete specific
levels of education signal their high productivity to potential to employers.
a. True
b. False
12. A
disadvantage associated with an Earned Income Tax Credit (EITC) program to
reduce poverty is that it:
a. encourages
illegitimate births because single women with children receive higher payments.
b. rewards laziness
because it provides payments to those with low incomes regardless of their work
effort.
c. does not help the
poor who are unemployed.
d. creates
unemployment by increasing the wage paid to unskilled workers above the
equilibrium wage.
13. When
comparing average wages for male and female workers in the United States, wages
paid to females have been about 40 percent less than those paid to male
workers.
a. True
b. False
14. Working in
a slaughterhouse is much riskier and more unpleasant than working in a
bookstore. As a result, we’d expect a difference in wages between the two jobs.
The difference is known as:
a. an efficiency
wage.
b. a compensating
differential.
c. a wage
adjustment.
d. a minimum wage.
15. If the
demand curve for beef shifts to the right, then the value of the marginal
product of labor for butchers will:
a. rise.
b. fall.
c. remain unchanged.
d. rise or fall;
either is possible.
16. Fewer than
three percent of families are poor for eight or more years.
a. True
b. False
17. If the
government imposes a minimum wage above Wo, it is likely to:

a. increase
employment to a level above Qo.
b. reduce employment
to a level below Qo.
c. provide more
income to the working poor than they collectively received before the minimum
wage was set.
d. have no effect on
employment.
18. Evidence
of discrimination in labor markets:
a. applies only to
race and gender.
b. is conclusively
identified in large differences in average wages rates between men and women.
c. is difficult to
verify by reference to differences in average wage rates.
d. is more easily
identified on the basis of race than gender.
19. The
distinction between purchase price and rental price applies to which factor(s)
of production?
a. land only
b. capital only
c. land and capital
only
d. land, capital,
and labor
20. Libertarians
believe that the government should enforce individual rights to ensure that all
people have the same opportunities to use their talents to achieve success.
a. True
b. False