Question 1

Higher wage rates allow a person to reduce the hours worked without losing income.This is known as the

Accepted Answer

A) Substitution effect. 
B) Income effect. 
C) Law of diminishing marginal utility. 
A) Substitution effect. 
B) Income effect. 
C) Law of diminishing marginal utility.

Question 2

The value of an hour of leisure can best be estimated as

Accepted Answer

A) Zero since no income is earned. 
B) The hourly wage that could have been earned. 
C) Total recreational expenditures divided by hours of leisure. 
A) Zero since no income is earned. 
B) The hourly wage that could have been earned. 
C) Total recreational expenditures divided by hours of leisure.

Question 3

If you have an increasing marginal utility for leisure,then as you work more to make greater income,your

Accepted Answer

A) Total utility for leisure decreases. 
B) Marginal utility for income decreases. 
C) Marginal utility of income varies positively with the money you earn. 
A) Total utility for leisure decreases. 
B) Marginal utility for income decreases. 
C) Marginal utility of income varies positively with the money you earn.

Question 4

For a minimum wage to have any impact on a labor market,it must be set at a level

Accepted Answer

A) Higher than the equilibrium wage. 
B) Higher than MPP. 
C) Higher than MRP. 
A) Higher than the equilibrium wage. 
B) Higher than MPP. 
C) Higher than MRP.

Question 5

If the wage rate increases,there will be a

Accepted Answer

A) Leftward shift of the labor supply curve. 
B) Rightward shift of the labor supply curve. 
C) Movement up the labor supply curve to the right. 
A) Leftward shift of the labor supply curve. 
B) Rightward shift of the labor supply curve. 
C) Movement up the labor supply curve to the right.

Question 6

-Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.1,the contribution to total revenue of the fourth worker hired is

Accepted Answer

A) $76 per hour. 
B) $16 per hour. 
C) $4 per hour. 
A) $76 per hour. 
B) $16 per hour. 
C) $4 per hour.

Question 7

-Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided,compute the marginal physical product (MPP)of the hairstylists,total revenue,and the marginal revenue product of the stylists,assuming that a hairstylist charges $60 per appointment.In Table 30.4,what is the marginal revenue product of the second hairstylist?

Accepted Answer

A) $80 per week. 
B) $1,200 per week. 
C) $20 per week. 
A) $80 per week. 
B) $1,200 per week. 
C) $20 per week.

Question 8

- In Figure 30.2,the equilibrium wage rate is

Accepted Answer

A) $24 per hour. 
B) $20 per hour. 
C) $16 per hour. 
A) $24 per hour. 
B) $20 per hour. 
C) $16 per hour.

Question 9

If the number of employers for a particular type of labor increases,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 10

The demand for labor is derived from the demand for the goods and services labor can produce.

Accepted Answer

A) True 
 B)False

Question 11

-Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3,the marginal revenue product of the second worker hired is

Accepted Answer

A) $4 per hour. 
B) $6 per hour. 
C) $24 per hour. 
A) $4 per hour. 
B) $6 per hour. 
C) $24 per hour.

Question 12

As more hours are worked,the marginal utility of leisure time tends to

Accepted Answer

A) Increase. 
B) Decrease. 
C) Stay the same. 
A) Increase. 
B) Decrease. 
C) Stay the same.

Question 13

The elasticity of labor supply does not depend on

Accepted Answer

A) The demand for labor. 
B) The prices of consumer goods. 
C) Income and wealth. 
A) The demand for labor. 
B) The prices of consumer goods. 
C) Income and wealth.

Question 14

- Table 30.4 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided,compute the marginal physical product (MPP)of the hairstylists,total revenue,and the marginal revenue product of the stylists,assuming that a hairstylist charges $60 per appointment.In Table 30.4,as more stylists are hired,

Accepted Answer

A) There are diminishing returns. 
B) There are economies of scale. 
C) There are diseconomies of scale. 
A) There are diminishing returns. 
B) There are economies of scale. 
C) There are diseconomies of scale.

Question 15

The market supply of labor represents the sum of all individual labor supply decisions.

Accepted Answer

A) True 
 B)False

Question 16

Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of capital?

Accepted Answer

A) 6 units per $1 of cost. 
B) 36 units per $1 of cost. 
C) 56 units per $1 of cost. 
A) 6 units per $1 of cost. 
B) 36 units per $1 of cost. 
C) 56 units per $1 of cost.

Question 17

The demand for labor and other factors of production typically decline in a recession because those factors

Accepted Answer

A) Have become relatively scarcer than before the recession. 
B) Are no longer offered for sale in factor markets. 
C) Are derived from the demand for final output,which also declines in a recession. 
A) Have become relatively scarcer than before the recession. 
B) Are no longer offered for sale in factor markets. 
C) Are derived from the demand for final output,which also declines in a recession.

Question 18

The efficiency decision involves choosing the input combination or process that

Accepted Answer

A) Produces the greatest output. 
B) Results in the lowest output per dollar of input. 
C) Results in the least cost for a given output. 
A) Produces the greatest output. 
B) Results in the lowest output per dollar of input. 
C) Results in the least cost for a given output.

Question 19

Ceteris paribus,all of the following result when the minimum wage is raised in a competitive market,except

Accepted Answer

A) Some workers lose their jobs. 
B) There are fewer workers available to work. 
C) Workers with a marginal revenue product below the minimum wage are worse off. 
A) Some workers lose their jobs. 
B) There are fewer workers available to work. 
C) Workers with a marginal revenue product below the minimum wage are worse off.

Question 20

An individual's labor supply curve

Accepted Answer

A) Slopes upward initially,and then may bend backward. 
B) Slopes downward initially,and then may bend upward. 
C) Always slopes downward. 
A) Slopes upward initially,and then may bend backward. 
B) Slopes downward initially,and then may bend upward. 
C) Always slopes downward.

Exam 30: The Labor Market

Higher wage rates allow a person to reduce the hours worked without losing income.This is known as the

The value of an hour of leisure can best be estimated as

If you have an increasing marginal utility for leisure,then as you work more to make greater income,your

For a minimum wage to have any impact on a labor market,it must be set at a level

If the wage rate increases,there will be a

-Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.1,the contribution to total revenue of the fourth worker hired is

- In Figure 30.2,the equilibrium wage rate is

If the number of employers for a particular type of labor increases,which of the following shifts should occur in the labor market for the particular type of labor?

The demand for labor is derived from the demand for the goods and services labor can produce.

-Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.3,the marginal revenue product of the second worker hired is

As more hours are worked,the marginal utility of leisure time tends to

The elasticity of labor supply does not depend on

The market supply of labor represents the sum of all individual labor supply decisions.

Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of capital?

The demand for labor and other factors of production typically decline in a recession because those factors

The efficiency decision involves choosing the input combination or process that

Ceteris paribus,all of the following result when the minimum wage is raised in a competitive market,except

An individual's labor supply curve

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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