Question 1

The labor supply curve will be negatively sloped if the substitution effect of wages is

Accepted Answer

A) Weaker than the income effect of wages. 
B) Stronger than the income effect of wages. 
C) Equal to the income effect of wages. 
A) Weaker than the income effect of wages. 
B) Stronger than the income effect of wages. 
C) Equal to the income effect of wages. A

Question 2

When an individual's MRP is not measurable,his or her market wage is usually determined by

Accepted Answer

A) The individual's MPP. 
B) His or her opportunity wage. 
C) The selling price of his or her output. 
A) The individual's MPP. 
B) His or her opportunity wage. 
C) The selling price of his or her output. B

Question 3

When the minimum wage is set below the market equilibrium wage,it does not affect the market.

Accepted Answer

A) True 
 B)False  True

Question 4

For wages to be higher without sacrificing jobs,productivity must decrease.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following would not shift the market demand for labor,ceteris paribus?

Accepted Answer

A) The wage paid to labor. 
B) The demand for final products. 
C) The productivity of labor. 
A) The wage paid to labor. 
B) The demand for final products. 
C) The productivity of labor.

Question 6

The demand for labor is downward-sloping because of

Accepted Answer

A) Rising MPP. 
B) Falling MC. 
C) Diminishing returns to labor. 
A) Rising MPP. 
B) Falling MC. 
C) Diminishing returns to labor.

Question 7

When the minimum wage is raised in a competitive market,ceteris paribus,

Accepted Answer

A) All workers are better off. 
B) All workers are worse off. 
C) Some workers are better off and some are worse off. 
A) All workers are better off. 
B) All workers are worse off. 
C) Some workers are better off and some are worse off.

Question 8

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

Accepted Answer

A) The wage rate. 
B) The value of leisure time. 
C) Payroll taxes. 
A) The wage rate. 
B) The value of leisure time. 
C) Payroll taxes.

Question 9

A firm's demand for labor is referred to as a derived demand because

Accepted Answer

A) It is derived from the MPP of labor. 
B) It is derived from the demand for the product that the labor is producing. 
C) The quantity of goods and services labor can purchase is derived from the wages labor receives from the firm. 
A) It is derived from the MPP of labor. 
B) It is derived from the demand for the product that the labor is producing. 
C) The quantity of goods and services labor can purchase is derived from the wages labor receives from the firm.

Question 10

Because of the law of diminishing returns,as additional workers are hired,total output

Accepted Answer

A) Rises at a constant rate at all output levels. 
B) Rises at a diminishing rate initially and eventually falls. 
C) Falls at a diminishing rate at all output levels. 
A) Rises at a constant rate at all output levels. 
B) Rises at a diminishing rate initially and eventually falls. 
C) Falls at a diminishing rate at all output levels.

Question 11

If the price of the output produced by a particular type of labor decreases,which of the following shifts should occur in the labor market for the particular type of labor?

Accepted Answer

A) Demand for labor should shift to the left. 
B) Supply of labor should shift to the left. 
C) Demand for labor should shift to the right. 
A) Demand for labor should shift to the left. 
B) Supply of labor should shift to the left. 
C) Demand for labor should shift to the right.

Question 12

The labor supply curve starts to bend backward once the

Accepted Answer

A) Income effect exceeds the substitution effect. 
B) Substitution effect exceeds the income effect. 
C) Marginal revenue product of labor equals the marginal utility of leisure. 
A) Income effect exceeds the substitution effect. 
B) Substitution effect exceeds the income effect. 
C) Marginal revenue product of labor equals the marginal utility of leisure.

Question 13

A profit-maximizing firm should continue to hire workers until the MRP has declined to the level of the market wage rate in a competitive labor market.

Accepted Answer

A) True 
 B)False

Question 14

If the demand for hair gel increases,the effect on the hair gel manufacturing job market will be to

Accepted Answer

A) Increase the demand for labor and increase equilibrium wages. 
B) Reduce the supply of labor and increase equilibrium wages. 
C) Decrease the demand for labor and reduce equilibrium wages. 
A) Increase the demand for labor and increase equilibrium wages. 
B) Reduce the supply of labor and increase equilibrium wages. 
C) Decrease the demand for labor and reduce equilibrium wages.

Question 15

The cost efficiency of labor is equal to the

Accepted Answer

A) Marginal cost of output. 
B) MPP of labor times the wage rate. 
C) MPP of labor divided by the wage rate. 
A) Marginal cost of output. 
B) MPP of labor times the wage rate. 
C) MPP of labor divided by the wage rate.

Question 16

A production process is a specific combination of resources used to produce a good or service.

Accepted Answer

A) True 
 B)False

Question 17

The marginal revenue product of labor curve is the firm's

Accepted Answer

A) MPP of labor curve divided by the wage rate. 
B) Marginal revenue curve. 
C) Demand curve for labor. 
A) MPP of labor curve divided by the wage rate. 
B) Marginal revenue curve. 
C) Demand curve for labor.

Question 18

When a labor supply curve is backward-bending,the elasticity of labor supply in the backward-bending portion is

Accepted Answer

A) Negative. 
B) Positive but less than 1. 
C) Greater than 1. 
A) Negative. 
B) Positive but less than 1. 
C) Greater than 1.

Question 19

As we work fewer hours and our leisure time increases,the opportunity cost of labor

Accepted Answer

A) Falls and the marginal utility of income falls. 
B) Rises and the marginal utility of income falls. 
C) Falls and the marginal utility of income rises. 
A) Falls and the marginal utility of income falls. 
B) Rises and the marginal utility of income falls. 
C) Falls and the marginal utility of income rises.

Question 20

As marginal physical product diminishes,marginal revenue product

Accepted Answer

A) Also diminishes. 
B) Is not affected. 
C) Rises at a diminishing rate and eventually falls. 
A) Also diminishes. 
B) Is not affected. 
C) Rises at a diminishing rate and eventually falls.

Exam 30: The Labor Market

The labor supply curve will be negatively sloped if the substitution effect of wages is

When an individual's MRP is not measurable,his or her market wage is usually determined by

When the minimum wage is set below the market equilibrium wage,it does not affect the market.

For wages to be higher without sacrificing jobs,productivity must decrease.

Which of the following would not shift the market demand for labor,ceteris paribus?

The demand for labor is downward-sloping because of

When the minimum wage is raised in a competitive market,ceteris paribus,

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

A firm's demand for labor is referred to as a derived demand because

Because of the law of diminishing returns,as additional workers are hired,total output

If the price of the output produced by a particular type of labor decreases,which of the following shifts should occur in the labor market for the particular type of labor?

The labor supply curve starts to bend backward once the

A profit-maximizing firm should continue to hire workers until the MRP has declined to the level of the market wage rate in a competitive labor market.

If the demand for hair gel increases,the effect on the hair gel manufacturing job market will be to

The cost efficiency of labor is equal to the

A production process is a specific combination of resources used to produce a good or service.

The marginal revenue product of labor curve is the firm's

When a labor supply curve is backward-bending,the elasticity of labor supply in the backward-bending portion is

As we work fewer hours and our leisure time increases,the opportunity cost of labor

As marginal physical product diminishes,marginal revenue product

Economics: the Core Issues Appendix: Using Graphs

The Us Economy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand Appendix: the Keynesian Cross

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice Appendix: Indifference Curves

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty Glossary Index Reference Tables

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