Meeting 7

If firms are competitive and profit-maximizing, the

demand curve for labor is determined by

• the opportunity cost of workers’ time

• the value of the marginal product of labor

• the value of the marginal product of capital

• the ratio of the marginal product of labor to the

  marginal product of capital

Which of the following events will shift the labor

supply curve to the right?

• More dads leave the work force to spend time

  raising children

• Great new video games are introduced, enhancing

  the value of leisure

• Relaxed immigration laws allow more workers to

  come in from abroad

• Government benefits for the retired are increased

A storm destroys several factories, reducing the

stock of capital. What effect does this event have on

factor markets?

• Wages and the rental price of capital both rise

• Wages and the rental price of capital both fall

• Wages rise and the rental price of capital falls

• Wages fall and the rental price of capital rises

The forces of competition in markets with free entry

and exit tend to eliminate wage differentials that

arise from discrimination by

• employers

• customers

• government

• all of the above

It is difficult to measure to what extent

discrimination affects labor market outcomes

because

• data on wages are crucial but not readily

  available

• firms misreport the wages they pay to hide

  discriminatory practices

• workers differ in their attributes and the types of

  jobs they have

• the same minimum-wage law applies to workers

  in all groups

A business consulting firm hires Robin because she

was a math major in college. Her new job does not

require any of the mathematics she learned, but the

firm believes that anyone who can graduate with a

math degree must be very smart. This is an example of

a. a compensating differential.

• human capital

• a compensating differential

• signaling

• efficiency wages

Rawls’s thought experiment of the “original position”

behind the “veil of ignorance” is meant to draw

attention to the fact that

• most of the poor do not know how to find better

  jobs and escape poverty

• the station of life each of us was born into is

  largely a matter of luck

• the rich have so much money that they don’t

  know how to spend it all

• outcomes are efficient only if everyone begins

  with equal opportunity

A utilitarian believes that the redistribution of

income from the rich to the poor is worthwhile as

long as

• the worst-off members of society benefit from it

• those contributing to the system are in favor of it

• each person’s income, after taxes and transfers,

  reflects his marginal product

• the distortionary effect on work incentives is not

  too large

Because consumption is largely determined by

_________ income, consumption is _________

equally distributed than current income.

• permanent; more

• permanent; less

• transitory; more

• transitory; less

When comparing income inequality across nations,

one finds that the United States is

• the most equal nation in the world

• less equal than most nations but not the least

  equal

• the least equal nation in the world

• more equal than most nations but not the most

  equal