Question 1

Nonmonetary considerations tend to be most important in the allocation of:

Accepted Answer

A)   land.
B)   capital.
C)   labor.
D)   natural resources.E) B) and D)
F) B) and C)

Question 2

Other things being equal,the wages of clerical workers would tend to decrease if there was an increase in:

Accepted Answer

A)   the marginal revenue product of clerical workers.
B)   the minimum entry requirements for clerical work.
C)   the period of training required for clerical work.
D)   nonmonetary benefits available to clerical workers.E) B) and C)
F) C) and D)

Question 3

The average cost curve of labor facing the monopsonist:

Accepted Answer

A)   is the supply curve of labor.
B)   lies below its supply curve.
C)   lies above its supply curve.
D)   is the marginal cost curve of labor.E) All of the above
F) A) and B)

Question 4

The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by:

Accepted Answer

A)   discrimination.
B)   geographic immobilities.
C)   compensating differences.
D)   noncompeting labor groups.E) B) and C)
F) All of the above

Question 5

1 to D2? A)  A decrease in productivity B)  An increase in product demand C)  An increase in the price of complementary input D)  A decrease in the price of a substitute input (if the substitution effect is greater than the output effect) " class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.What will shift D1 to D2?

Accepted Answer

A)   A decrease in productivity
B)   An increase in product demand
C)   An increase in the price of complementary input
D)   A decrease in the price of a substitute input (if the substitution effect is greater than the output effect) E) A) and B)
F) A) and C)

Question 6

An example of derived demand is the demand for:

Accepted Answer

A)   new automobiles.
B)   used automobiles.
C)   labor used to produce automobiles.
D)   foreign instead of domestic automobiles.E) C) and D)
F) B) and D)

Question 7

Which is an example of a change in productivity that increases labor demand?

Accepted Answer

A)   Mail-order catalog sales rise,thus increasing the demand for workers in the mail-order business.
B)   Sport utility vehicles increase in popularity,thus increasing the demand for the workers who make them.
C)   A decrease in the price of lumber decreases the cost of building homes,thus increasing the demand for construction workers.
D)   A technological change increases output per worker in the computer industry,thus increasing the demand for computer workers.E) B) and D)
F) A) and B)

Question 8

2 to D1? A)  An increase in productivity B)  A decrease in product demand C)  A decrease in the price of complementary input D)  An increase in the price of a substitute input (if the substitution effect is greater than the output effect) " class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.What will shift D2 to D1?

Accepted Answer

A)   An increase in productivity
B)   A decrease in product demand
C)   A decrease in the price of complementary input
D)   An increase in the price of a substitute input (if the substitution effect is greater than the output effect) E) None of the above
F) A) and B)

Question 9

Other things being equal,how would the market for personal computers be affected by a large increase in productivity in the computer industry?

Accepted Answer

A)   A decrease in price and a leftward movement along the supply curve
B)   A decrease in price and a rightward movement along the demand curve
C)   A decrease in price and a rightward movement along the supply curve
D)   An increase in price and a rightward movement along the demand curveE) A) and C)
F) C) and D)

Question 10

min,stating:  Even if the labor market is monopsonistic,economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall.  Senator Approxmire is: A)  correct because the law of demand states that as the wage rises,the firm demands less labor. B)  incorrect because the monopsonist would offer a wage of WA,which is higher than Wmin,and maintain its employment at L1. C)  incorrect because the monopsonist's effective MRC curve becomes ABCD,which means that it would choose to hire more workers,from L1 to L2,following the imposition of the minimum wage. D)  correct because the graph indicates that at the wage of Wmin,the monopsonist would not make a profit from hiring labor and so would not hire any at all." class="answers-bank-image d-inline" rel="preload" > Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least Wmin,stating: "Even if the labor market is monopsonistic,economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

Accepted Answer

A)   correct because the law of demand states that as the wage rises,the firm demands less labor.
B)   incorrect because the monopsonist would offer a wage of WA,which is higher than Wmin,and maintain its employment at L1.
C)   incorrect because the monopsonist's effective MRC curve becomes ABCD,which means that it would choose to hire more workers,from L1 to L2,following the imposition of the minimum wage.
D)   correct because the graph indicates that at the wage of Wmin,the monopsonist would not make a profit from hiring labor and so would not hire any at all.E) A) and B)
F) A) and C)

Question 11

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Accepted Answer

A) True 
 B)False

Question 12

1 to D2? A)  An increase in the price of a substitute input (if the output effect is greater than the substitution effect)  B)  A decrease in the price of a substitute input (if the substitution effect is greater than the output effect)  C)  A decrease in the price of a substitute input (if the output effect is greater than the substitution effect)  D)  An increase in the price of a complementary resource" class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.What will shift D1 to D2?

Accepted Answer

A)   An increase in the price of a substitute input (if the output effect is greater than the substitution effect) 
B)   A decrease in the price of a substitute input (if the substitution effect is greater than the output effect) 
C)   A decrease in the price of a substitute input (if the output effect is greater than the substitution effect) 
D)   An increase in the price of a complementary resourceE) B) and C)
F) None of the above

Question 13

Which is an example of a change in product demand that increases labor demand?

Accepted Answer

A)   Access to computers increases the productivity of mail-order businesses,thus increasing the demand for their workers.
B)   Tourism increases in popularity,increasing the demand for workers at tourist resorts.
C)   A decrease in the price of trucks decreases the cost of transporting goods,thus increasing the demand for truckers.
D)   A change in work rules increases output per worker in the auto industry,thus increasing the demand for auto workers.E) A) and D)
F) All of the above

Question 14

Labor mobility is:

Accepted Answer

A)   higher in the short run than in the long run.
B)   higher in the long run than in the short run.
C)   approximately the same in the long run as in the short run.
D)   higher for the entire labor force than for individuals.E) B) and C)
F) A) and D)

Question 15

If the wage rate in a purely competitive labor market increases,it will cause the:

Accepted Answer

A)   marginal resource cost curve for a single competitive firm in the industry to shift rightward.
B)   marginal resource cost curve for a single competitive firm in the industry to shift leftward.
C)   labor supply curve for a single competitive firm to shift downward.
D)   labor supply curve for the industry to shift rightward.E) A) and B)
F) A) and C)

Question 16

Why do skilled workers generally earn more than unskilled workers?

Accepted Answer

A)   The demand for unskilled labor is more inelastic than the demand for skilled labor.
B)   Skilled labor has higher marginal revenue products than unskilled labor.
C)   The demand for unskilled labor is greater than the demand for skilled labor.
D)   The supply of skilled labor is greater than the supply of unskilled labor.E) A) and D)
F) A) and B)

Question 17

Other things being the same,if the demand for labor is inelastic:

Accepted Answer

A)   decreases in wage rates will result in greater payrolls.
B)   increases in wage rates will result in greater payrolls.
C)   increases in wage rates will result in smaller payrolls.
D)   decreases in wage rates will increase both employment and worker incomes.E) None of the above
F) C) and D)

Question 18

Which will not directly be a determinant of the price elasticity of demand for labor?

Accepted Answer

A)   The price of labor
B)   The substitutability of other resources for labor
C)   The elasticity of demand for the product it produces
D)   The total cost of labor as a proportion of the total cost of producing units of outputE) B) and C)
F) A) and D)

Question 19

Supporters of the minimum wage contend that:

Accepted Answer

A)   it reduces the profits of firms in the industry.
B)   it reduces employment in the industry.
C)   it helps workers receive a "living wage."
D)   it increases labor turnover.E) A) and B)
F) All of the above

Question 20

1 and Q1 workers will be hired. B)  W2 and Q2 workers will be hired. C)  W2 and Q1 workers will be hired. D)  W3 and Q1 workers will be hired." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.Under purely competitive conditions in the sale of output and hiring of labor services,the wage rate will be:

Accepted Answer

A)   W1 and Q1 workers will be hired.
B)   W2 and Q2 workers will be hired.
C)   W2 and Q1 workers will be hired.
D)   W3 and Q1 workers will be hired.E) A) and B)
F) A) and C)

Exam 10: Wage Determination

Refer to the above graph.What will shift D1 to D2?

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Why do skilled workers generally earn more than unskilled workers?

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Which is an example of a change in productivity that increases labor demand?

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Refer to the above graph.What will shift D2 to D1?

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Other things being equal,the wages of clerical workers would tend to decrease if there was an increase in:

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Labor mobility is:

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If the wage rate in a purely competitive labor market increases,it will cause the:

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Refer to the above graph.Under purely competitive conditions in the sale of output and hiring of labor services,the wage rate will be:

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Nonmonetary considerations tend to be most important in the allocation of:

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Supporters of the minimum wage contend that:

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Other things being equal,how would the market for personal computers be affected by a large increase in productivity in the computer industry?

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The average cost curve of labor facing the monopsonist:

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Refer to the above graph.What will shift D1 to D2?

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Which will not directly be a determinant of the price elasticity of demand for labor?

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Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

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An example of derived demand is the demand for:

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The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by:

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Other things being the same,if the demand for labor is inelastic:

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Which is an example of a change in product demand that increases labor demand?

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Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least Wmin,stating: "Even if the labor market is monopsonistic,economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

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Refer to the above graph.What will shift D₁ to D₂?

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Refer to the above graph.What will shift D₂ to D₁?

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Refer to the above graph.What will shift D₁ to D₂?

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Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least W_min,stating: "Even if the labor market is monopsonistic,economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

Correct Answer
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