Question 1

In a Lorenz curve diagram,the size of the area between the Lorenz curve and the diagonal line represents

Accepted Answer

A) the degree of inequality in the distribution of income. 
B) the percentage of income received by the bottom 20% of families. 
C) the dollar incomes of the bottom 40% of families. 
D) the percentage of income received by the top 5% of families. 
E) complete income equality. 
A) the degree of inequality in the distribution of income. 
B) the percentage of income received by the bottom 20% of families. 
C) the dollar incomes of the bottom 40% of families. 
D) the percentage of income received by the top 5% of families. 
E) complete income equality. A

Question 2

Which of the following statements about minimum-wage laws is most accurate?

Accepted Answer

A) All Canadian provinces have the same minimum wage. 
B) There is some evidence that minimum-wage laws cause additional unemployment,particularly among youths. 
C) Minimum-wage laws only affect the income of the higher-skilled,lowest-wage workers. 
D) Minimum-wage laws are unfair. 
E) There is some evidence that minimum-wage laws create a lot of jobs,particularly among youths. 
A) All Canadian provinces have the same minimum wage. 
B) There is some evidence that minimum-wage laws cause additional unemployment,particularly among youths. 
C) Minimum-wage laws only affect the income of the higher-skilled,lowest-wage workers. 
D) Minimum-wage laws are unfair. 
E) There is some evidence that minimum-wage laws create a lot of jobs,particularly among youths. B

Question 3

If a union succeeds in shifting the labour supply curve to the left,it can achieve wages above the

Accepted Answer

A) competitive level and all workers will gain. 
B) equilibrium level and an increase in employment. 
C) equilibrium level without affecting employment. 
D) competitive level but will reduce the level of employment. 
E) competitive level without a pool of unemployed workers seeking to work at the higher wage. 
A) competitive level and all workers will gain. 
B) equilibrium level and an increase in employment. 
C) equilibrium level without affecting employment. 
D) competitive level but will reduce the level of employment. 
E) competitive level without a pool of unemployed workers seeking to work at the higher wage. D

Question 4

Labour-market discrimination results in a

Accepted Answer

A) lower supply in discriminating occupations and a higher supply in non -discriminating occupations. 
B) higher supply in discriminating occupations and a lower supply in non -discriminating occupations. 
C) lower supply in all occupations. 
D) lower demand in all occupations. 
E) higher demand in both occupations. 
A) lower supply in discriminating occupations and a higher supply in non -discriminating occupations. 
B) higher supply in discriminating occupations and a lower supply in non -discriminating occupations. 
C) lower supply in all occupations. 
D) lower demand in all occupations. 
E) higher demand in both occupations.

Question 5

The average union wage premium in Canada is

Accepted Answer

A) less than 10%. 
B) between 10 and 15%. 
C) between 15 and 30%. 
D) between 30 and 50%. 
E) more than 50%. 
A) less than 10%. 
B) between 10 and 15%. 
C) between 15 and 30%. 
D) between 30 and 50%. 
E) more than 50%.

Question 6

If there is only a single buyer in the labour market,that buyer is called

Accepted Answer

A) a monopolist. 
B) a monopsonist. 
C) an oligopolist. 
D) an oligopsonist. 
E) a single-product firm. 
A) a monopolist. 
B) a monopsonist. 
C) an oligopolist. 
D) an oligopsonist. 
E) a single-product firm.

Question 7

Consider a small,remote town with only one employer - a gold mining company.Suppose the current work force is 875 workers,each of whom is paid $6000 per month.In order to attract one additional worker,the employer must increase the wage to $6025 per month.The marginal cost of this additional worker is

Accepted Answer

A) $21 875 per month. 
B) $21 900 per month. 
C) $27 900 per month. 
D) $5.25 million per month. 
E) $5.28 million per month. 
A) $21 875 per month. 
B) $21 900 per month. 
C) $27 900 per month. 
D) $5.25 million per month. 
E) $5.28 million per month.

Question 8

If a wage-setting union enters a monopsonistic labour market,the union can cause

Accepted Answer

A) wages to rise to what would have been the competitive level but no higher. 
B) wages to rise above the level set by the monopsonist,but only if it allows employment to fall below the level set by the monopsonist. 
C) both wages and employment to rise over the monopsonistic level. 
D) wages or employment to rise above the level set by the monopsonist,but not both. 
E) the level of non-wage benefits to rise but cannot affect either wages or employment. 
A) wages to rise to what would have been the competitive level but no higher. 
B) wages to rise above the level set by the monopsonist,but only if it allows employment to fall below the level set by the monopsonist. 
C) both wages and employment to rise over the monopsonistic level. 
D) wages or employment to rise above the level set by the monopsonist,but not both. 
E) the level of non-wage benefits to rise but cannot affect either wages or employment.

Question 9

When studying income distribution,the Classical economists were primarily concerned with the distribution of income among

Accepted Answer

A) workers and the government. 
B) workers and capitalists. 
C) the government and capitalists. 
D) workers and landowners. 
E) workers,capitalists,and landowners. 
A) workers and the government. 
B) workers and capitalists. 
C) the government and capitalists. 
D) workers and landowners. 
E) workers,capitalists,and landowners.

Question 10

Certain professions limit the number of students who are eligible to enroll in their programs in university - engineering,architecture,dentistry,and law,for example.What is the predicted effect of such a policy in each of these professions?

Accepted Answer

A) An increase in supply and a wage that is lower than it otherwise would be. 
B) A reduction in supply and a wage that is lower than it otherwise would be. 
C) An increase in supply and a wage that is higher than it otherwise would be. 
D) A reduction in supply and a wage that is higher than it otherwise would be. 
E) These professions are a relatively small portion of the labour market and so there will be no detectible change in wages. 
A) An increase in supply and a wage that is lower than it otherwise would be. 
B) A reduction in supply and a wage that is lower than it otherwise would be. 
C) An increase in supply and a wage that is higher than it otherwise would be. 
D) A reduction in supply and a wage that is higher than it otherwise would be. 
E) These professions are a relatively small portion of the labour market and so there will be no detectible change in wages.

Question 11

The table below shows the labour demand and labour supply schedules in a competitive labour market.   TABLE 14-1
-Refer to Table 14-1.In a competitive labour market that clears,the equilibrium employment level would be

Accepted Answer

A) 400 units. 
B) 500 units. 
C) 800 units. 
D) 1000 units. 
E) 1300 units. 
A) 400 units. 
B) 500 units. 
C) 800 units. 
D) 1000 units. 
E) 1300 units.

Question 12

If competitive labour market E discriminates against one group of workers and market O does not,we can predict an increase in

Accepted Answer

A) employment in market E. 
B) wages in market E. 
C) wages in market O. 
D) the welfare of the average worker. 
E) economy-wide wage rates. 
A) employment in market E. 
B) wages in market E. 
C) wages in market O. 
D) the welfare of the average worker. 
E) economy-wide wage rates.

Question 13

Consider a monopsonistic labour market.Ten units of labour will be supplied if the wage rate is $12,and 11 units of labour will be supplied if the wage rate is $14.The marginal cost of the eleventh worker is

Accepted Answer

A) $2. 
B) $12. 
C) between $12 and $14. 
D) $14. 
E) more than $14. 
A) $2. 
B) $12. 
C) between $12 and $14. 
D) $14. 
E) more than $14.

Question 14

If you choose to stay in school beyond the compulsory minimum period,you are

Accepted Answer

A) realizing the benefits of your investment in human capital. 
B) delaying your investment in human capital. 
C) refusing to invest in your human capital. 
D) investing further in your human capital. 
E) wasting your time from an economic standpoint. 
A) realizing the benefits of your investment in human capital. 
B) delaying your investment in human capital. 
C) refusing to invest in your human capital. 
D) investing further in your human capital. 
E) wasting your time from an economic standpoint.

Question 15

Consider a wage-setting union in an otherwise competitive labour market.If the union sets a wage above the competitive level,the effect will be

Accepted Answer

A) to raise wages for all workers who wish to work in the industry. 
B) to increase the amount of employment in the industry. 
C) to create a group of workers who would like to obtain jobs in the industry but cannot do so. 
D) a level of employment which is the same as that at the competitive equilibrium wage. 
E) to cause the labour supply curve to shift to the right. 
A) to raise wages for all workers who wish to work in the industry. 
B) to increase the amount of employment in the industry. 
C) to create a group of workers who would like to obtain jobs in the industry but cannot do so. 
D) a level of employment which is the same as that at the competitive equilibrium wage. 
E) to cause the labour supply curve to shift to the right.

Question 16

The diagonal line on a Lorenz curve diagram represents

Accepted Answer

A) the degree of inequality in the distribution of income. 
B) the percentage of income received by the bottom 50% of families. 
C) the dollar incomes of the bottom 50% of families. 
D) the percentage of income received by the top 50% of families. 
E) where the Lorenz curve would be if there were complete income equality. 
A) the degree of inequality in the distribution of income. 
B) the percentage of income received by the bottom 50% of families. 
C) the dollar incomes of the bottom 50% of families. 
D) the percentage of income received by the top 50% of families. 
E) where the Lorenz curve would be if there were complete income equality.

Question 17

Suppose that a professional association strengthened the limits to entry into their profession and at the same time lengthened its required apprenticeship program.The likely effect would be that

Accepted Answer

A) the supply curve for labour would shift to the left. 
B) the supply curve for labour would shift to the right. 
C) both the demand and supply curves for labour would shift to the left. 
D) the demand curve for labour would shift to the right. 
E) there would be an increase in the quantity of labour supplied. 
A) the supply curve for labour would shift to the left. 
B) the supply curve for labour would shift to the right. 
C) both the demand and supply curves for labour would shift to the left. 
D) the demand curve for labour would shift to the right. 
E) there would be an increase in the quantity of labour supplied.

Question 18

To a monopsonist in a labour market,the average cost curve of labour

Accepted Answer

A) lies above the supply curve of labour. 
B) lies below the supply curve of labour. 
C) is the supply curve of labour,which lies below the marginal cost curve for labour. 
D) is the marginal cost curve of labour when the supply curve is upward sloping. 
E) coincides with the marginal cost curve of labour only below the profit -maximizing wage rate. 
A) lies above the supply curve of labour. 
B) lies below the supply curve of labour. 
C) is the supply curve of labour,which lies below the marginal cost curve for labour. 
D) is the marginal cost curve of labour when the supply curve is upward sloping. 
E) coincides with the marginal cost curve of labour only below the profit -maximizing wage rate.

Question 19

Some types of discrimination in the labour market will be limited by

Accepted Answer

A) the minimum wage. 
B) entry of of discriminating firms into the market. 
C) an increase in the number of individuals discriminated against. 
D) the desire of firms to maximize profits. 
E) greater monopoly power in the market. 
A) the minimum wage. 
B) entry of of discriminating firms into the market. 
C) an increase in the number of individuals discriminated against. 
D) the desire of firms to maximize profits. 
E) greater monopoly power in the market.

Question 20

One of the most unionized industries in Canada is

Accepted Answer

A) agriculture. 
B) finance and insurance. 
C) real estate. 
D) education. 
E) non-governmental administrative services. 
A) agriculture. 
B) finance and insurance. 
C) real estate. 
D) education. 
E) non-governmental administrative services.

Exam 14: Labour Markets and Income Inequality

In a Lorenz curve diagram,the size of the area between the Lorenz curve and the diagonal line represents

Which of the following statements about minimum-wage laws is most accurate?

If a union succeeds in shifting the labour supply curve to the left,it can achieve wages above the

Labour-market discrimination results in a

The average union wage premium in Canada is

If there is only a single buyer in the labour market,that buyer is called

If a wage-setting union enters a monopsonistic labour market,the union can cause

When studying income distribution,the Classical economists were primarily concerned with the distribution of income among

Certain professions limit the number of students who are eligible to enroll in their programs in university - engineering,architecture,dentistry,and law,for example.What is the predicted effect of such a policy in each of these professions?

The table below shows the labour demand and labour supply schedules in a competitive labour market. TABLE 14-1 -Refer to Table 14-1.In a competitive labour market that clears,the equilibrium employment level would be

If competitive labour market E discriminates against one group of workers and market O does not,we can predict an increase in

Consider a monopsonistic labour market.Ten units of labour will be supplied if the wage rate is $12,and 11 units of labour will be supplied if the wage rate is $14.The marginal cost of the eleventh worker is

If you choose to stay in school beyond the compulsory minimum period,you are

Consider a wage-setting union in an otherwise competitive labour market.If the union sets a wage above the competitive level,the effect will be

The diagonal line on a Lorenz curve diagram represents

Suppose that a professional association strengthened the limits to entry into their profession and at the same time lengthened its required apprenticeship program.The likely effect would be that

To a monopsonist in a labour market,the average cost curve of labour

Some types of discrimination in the labour market will be limited by

One of the most unionized industries in Canada is

Economic Issues and Concepts

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What Macroeconomics Is All About

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Adding Government and Trade to the Simple Macro Model

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From the Short Run to the Long Run: the Adjustment of Factor Prices

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