Week 13 Quiz

A bakery owner hires more bakers when buyers start buying more bread and fewer when they buy less. Why do economists call the bakery's demand for bakers a derived demand?

Select one.

• Because the wage is set by law rather than by the market
• Because it comes from buyers' demand for bread
• Because bakers choose how many hours they want to work
• Because the bakery's kitchen is fixed in the short run

In the course's illustrative bakery, which takes the price of bread and the wage as given, 0 to 6 workers in a fixed kitchen bake 0, 10, 25, 45, 60, 70, and 75 loaves a day, so the marginal product of the 1st to 6th worker is 10, 15, 20, 15, 10, and 5 loaves. Bread sells for 4 dollars a loaf. What is the value of the marginal product of the 3rd worker?

Select one.

• 20 loaves, the 3rd worker's marginal product
• 180 dollars, the revenue from 45 loaves
• 80 dollars a day
• 15 loaves, the output per worker at 3 workers

In the course's illustrative bakery, which takes the price of bread and the wage as given, 0 to 6 workers in a fixed kitchen bake 0, 10, 25, 45, 60, 70, and 75 loaves a day, so the marginal product of the 1st to 6th worker is 10, 15, 20, 15, 10, and 5 loaves. Bread sells for 4 dollars a loaf, and the daily wage is 50 dollars. How many workers does the bakery hire?

Select one.

• 0 workers, because the 1st worker adds less than the wage
• 3 workers, where the value of the marginal product peaks
• 5 workers, the last one whose marginal product is at least 10 loaves
• 4 workers, reading the rule where the values fall

A manager at the course's illustrative bakery says: "Keep hiring until a worker's marginal product, in loaves, equals the daily wage of 50 dollars." Bread sells for 4 dollars a loaf. Which correction fixes the manager's rule?

Select one.

• Compare the price times the marginal product with the wage
• Compare the average product in loaves with the daily wage instead
• Compare the marginal product with the price of bread instead of the wage
• Hire until the total wage bill equals the bakery's total revenue

In the course's illustrative bakery, which takes the price of bread and the wage as given, 0 to 6 workers in a fixed kitchen bake 0, 10, 25, 45, 60, 70, and 75 loaves a day, so the marginal product of the 1st to 6th worker is 10, 15, 20, 15, 10, and 5 loaves. Bread sells for 4 dollars a loaf. The daily wage falls from 50 to 30 dollars, and nothing else changes. What happens?

Select one.

• The bakery hires 5 workers, a shift of its labor demand curve to the right
• The bakery hires 5 workers, a movement along its labor demand curve
• The bakery hires 6 workers, a movement along its labor demand curve
• The bakery keeps the workers it had, because its labor demand curve has not moved

In the course's illustrative bakery, which takes the price of bread and the wage as given, 0 to 6 workers in a fixed kitchen bake 0, 10, 25, 45, 60, 70, and 75 loaves a day, so the marginal product of the 1st to 6th worker is 10, 15, 20, 15, 10, and 5 loaves. The daily wage is 50 dollars. The price of bread rises from 4 to 6 dollars a loaf, so the value of the marginal product of the 1st to 6th worker becomes 60, 90, 120, 90, 60, and 30 dollars. Which describes the bakery's response?

Select one.

• Its hiring stays where it was, because the wage has not changed
• It hires 6 workers, and its labor demand curve shifts right
• It hires 5 workers, and its labor demand curve shifts right
• It hires 5 workers, a movement along its labor demand curve

In one city's labor market for lifeguards, many more people earn a lifeguard certificate, and nothing else changes. Using the supply-and-demand model, what happens?

Select one.

• Labor demand shifts right, so the market wage and employment both rise
• Labor supply shifts left, so the market wage rises and employment falls
• The market wage falls, which shifts labor demand to the left
• Labor supply shifts right, so the market wage falls and employment rises

True or false: in the supply-and-demand model of a labor market, a rise in the wage shifts the labor supply curve to the right.

True or false.

• True
• False

Two hospital nurses have the same training and experience. One works nights and is paid more per hour than the other, who works days. Which force best explains the pay gap?

Select one.

• A compensating differential for working unpopular hours
• Human capital, because the night nurse has more training
• A movement along the hospital's labor demand curve
• A binding minimum wage on the night shift

Select every statement below that is a positive statement, one that can be checked against a model or evidence.

Select every option that applies.

• In the simple competitive model, a binding minimum wage lowers the quantity of labor employed.
• Card and Krueger (1994) found no fall in fast-food jobs in New Jersey after its 1992 increase.
• Unions are worth any jobs they cost.
• Gig workers should receive the same benefits as employees.