Question 1

The information revolution is:

Accepted Answer

A)  reducing overall employment. 
B)  changing the nature of employment. 
C)  increasing manufacturing employment. 
D)  putting upward pressure on wages. 
A)  reducing overall employment. 
B)  changing the nature of employment. 
C)  increasing manufacturing employment. 
D)  putting upward pressure on wages.

Question 2

If a large group of people are willing to enter the labor market when wages rise, the market labor supply will be highly elastic even if individuals' supply curves are inelastic.

Accepted Answer

A) True 
 B)False

Question 3

Two members of the Kenyan parliament from coffee-growing areas said that no firm should have a monopoly to market Kenyan coffee. The retail coffee company Tetu Coffee has sparked a storm in the industry by promising to earn the country Sh400 (Kenyan Shilling) billion annually if given exclusive licenses to market Kenyan coffee. The members of parliament said the coffee bean farmers should be free to sell their beans to the highest bidder. What would create a market with one buyer in the situation described?

Accepted Answer

A)  The government prohibits other buyers. 
B)  There are economies of scale in purchasing coffee. 
C)  Tetu Coffee has the ability to outcompete other coffee buyers. 
D)  There are economies of scope. 
A)  The government prohibits other buyers. 
B)  There are economies of scale in purchasing coffee. 
C)  Tetu Coffee has the ability to outcompete other coffee buyers. 
D)  There are economies of scope.

Question 4

Refer to the graph shown.   If product demand increases from D1 to D2, the equilibrium price of the product will:

Accepted Answer

A)  increase from P1 to P2 and equilibrium quantity will increase from Q1 to Q2. 
B)  increase from P1 to P2 and equilibrium quantity will decrease from Q2 to Q1. 
C)  decrease from P2 to P1 and equilibrium quantity will increase from Q1 to Q2. 
D)  decrease from P2 to P1 and equilibrium quantity will decrease from Q2 to Q1. 
A)  increase from P1 to P2 and equilibrium quantity will increase from Q1 to Q2. 
B)  increase from P1 to P2 and equilibrium quantity will decrease from Q2 to Q1. 
C)  decrease from P2 to P1 and equilibrium quantity will increase from Q1 to Q2. 
D)  decrease from P2 to P1 and equilibrium quantity will decrease from Q2 to Q1.

Question 5

Refer to the graphs shown.   If product demand increases from D1 to D2, causing the product price to increase, firm A (a supplier of this product) will:

Accepted Answer

A)  pay a higher wage rate and reduce employment from q2 to q1. 
B)  pay a lower wage rate and increase employment from q3 to q4. 
C)  increase employment because its MRP curve will shift rightward. 
D)  decrease employment because its MRP curve will shift leftward. 
A)  pay a higher wage rate and reduce employment from q2 to q1. 
B)  pay a lower wage rate and increase employment from q3 to q4. 
C)  increase employment because its MRP curve will shift rightward. 
D)  decrease employment because its MRP curve will shift leftward.

Question 6

An increase in the marginal income tax rate is likely to:

Accepted Answer

A)  increase the quantity of labor supplied. 
B)  decrease the quantity of labor supplied. 
C)  decrease the quantity of labor demanded. 
D)  increase the quantity of labor demanded. 
A)  increase the quantity of labor supplied. 
B)  decrease the quantity of labor supplied. 
C)  decrease the quantity of labor demanded. 
D)  increase the quantity of labor demanded.

Question 7

A labor supply elasticity of 1.4 means that a wage increase of:

Accepted Answer

A)  10 percent will reduce the quantity of labor supplied by 14 percent. 
B)  10 percent will increase the quantity of labor supplied by 14 percent. 
C)  14 percent will reduce the quantity of labor supplied by 10 percent. 
D)  14 percent will increase the quantity of labor supplied by 10 percent. 
A)  10 percent will reduce the quantity of labor supplied by 14 percent. 
B)  10 percent will increase the quantity of labor supplied by 14 percent. 
C)  14 percent will reduce the quantity of labor supplied by 10 percent. 
D)  14 percent will increase the quantity of labor supplied by 10 percent.

Question 8

If the law of diminishing marginal product holds true and workers emigrate from Haiti, the wage rate of workers who remain in Haiti would be expected to:

Accepted Answer

A)  rise because more workers are working with the same amount of capital. 
B)  rise because fewer workers are working with the same amount of capital. 
C)  fall because more workers are working with the same amount of capital. 
D)  fall because fewer workers are working with the same amount of capital. 
A)  rise because more workers are working with the same amount of capital. 
B)  rise because fewer workers are working with the same amount of capital. 
C)  fall because more workers are working with the same amount of capital. 
D)  fall because fewer workers are working with the same amount of capital.

Question 9

An increase in the marginal income tax rate will increase the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 10

The marginal income tax rate is:

Accepted Answer

A)  always less than the average tax rate. 
B)  always equal to the average tax rate. 
C)  the tax rate applied to all income. 
D)  the tax rate applied to an additional dollar of income. 
A)  always less than the average tax rate. 
B)  always equal to the average tax rate. 
C)  the tax rate applied to all income. 
D)  the tax rate applied to an additional dollar of income.

Question 11

The marginal income tax rate is a person's tax burden as a percentage of total income.

Accepted Answer

A) True 
 B)False

Question 12

The more elastic the demand for the good labor produces, the less elastic the demand for labor.

Accepted Answer

A) True 
 B)False

Question 13

Harvard University once paid two financial managers, who helped manage Harvard's $20 billion endowment, each about $25 million. Harvard defended their pay "as normal in the community of hedge-fund managers with which Harvard Management competes for talent." An economist probably would say that these pay levels:

Accepted Answer

A)  make sense if their marginal factor costs exceed $25 million. 
B)  make sense if the value of their marginal product exceeds $25 million. 
C)  makes sense if their efficiency value calculates out to that level. 
D)  does not make sense because Harvard has the option of simply putting its funds into a random selection of assets that would do as well. 
A)  make sense if their marginal factor costs exceed $25 million. 
B)  make sense if the value of their marginal product exceeds $25 million. 
C)  makes sense if their efficiency value calculates out to that level. 
D)  does not make sense because Harvard has the option of simply putting its funds into a random selection of assets that would do as well.

Question 14

After adjusting for institutional factors, economists have found that:

Accepted Answer

A)  institutional factors explain all of the pay difference between men and women. 
B)  workplace discrimination explains all of the pay difference between men and women. 
C)  institutional factors explain some of the lower pay that women receive, but workplace discrimination also appears to play a role. 
D)  there is no discrimination; all of the pay difference between men and women can be explained by differences in education and experience. 
A)  institutional factors explain all of the pay difference between men and women. 
B)  workplace discrimination explains all of the pay difference between men and women. 
C)  institutional factors explain some of the lower pay that women receive, but workplace discrimination also appears to play a role. 
D)  there is no discrimination; all of the pay difference between men and women can be explained by differences in education and experience.

Question 15

If the wages and productivity of U.S. workers are higher than those of Mexican workers, a Japanese company would:

Accepted Answer

A)  build a plant in the United States. 
B)  build a plant in Mexico. 
C)  be indifferent about where the plant is built. 
D)  require more information before deciding where the plant is built. 
A)  build a plant in the United States. 
B)  build a plant in Mexico. 
C)  be indifferent about where the plant is built. 
D)  require more information before deciding where the plant is built.

Question 16

When the labor supply curve is inelastic:

Accepted Answer

A)  the percentage change in the quantity of labor supplied exceeds the percentage change in the wage. 
B)  the percentage change in the quantity of labor supplied is less than the percentage change in the wage. 
C)  the percentage change in the quantity of labor supplied equals the percentage change in the wage. 
D)  employers cannot lower wages without losing all their workers. 
A)  the percentage change in the quantity of labor supplied exceeds the percentage change in the wage. 
B)  the percentage change in the quantity of labor supplied is less than the percentage change in the wage. 
C)  the percentage change in the quantity of labor supplied equals the percentage change in the wage. 
D)  employers cannot lower wages without losing all their workers.

Question 17

According to the author, the development of complex algorithms that perform "brain work" in the future is most likely to:

Accepted Answer

A)  shorten the overall workweek. 
B)  reduce overall employment. 
C)  make the distribution of income more equal. 
D)  make the distribution of income less equal. 
A)  shorten the overall workweek. 
B)  reduce overall employment. 
C)  make the distribution of income more equal. 
D)  make the distribution of income less equal.

Question 18

A firm's demand for labor is derived from the:

Accepted Answer

A)  opportunity costs associated with labor and leisure. 
B)  desires and needs of the entrepreneur. 
C)  cost of labor inputs. 
D)  demand for its output. 
A)  opportunity costs associated with labor and leisure. 
B)  desires and needs of the entrepreneur. 
C)  cost of labor inputs. 
D)  demand for its output.

Question 19

The labor supply curve is generally considered to be upward-sloping because the opportunity cost of leisure:

Accepted Answer

A)  increases as wages get higher. 
B)  decreases as wages get higher. 
C)  remains unchanged as wages get higher. 
D)  has nothing to do with wages. 
A)  increases as wages get higher. 
B)  decreases as wages get higher. 
C)  remains unchanged as wages get higher. 
D)  has nothing to do with wages.

Question 20

Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly wage rate of $17.85 while the market equilibrium hourly wage rate is $16.50, the:

Accepted Answer

A)  quantity of workers supplied will exceed the quantity of workers demanded. 
B)  quantity of workers demanded will exceed the quantity of workers supplied. 
C)  demand for labor will increase until the equilibrium wage rate is $17.85. 
D)  supply of labor will decrease until the equilibrium wage rate is $17.85. 
A)  quantity of workers supplied will exceed the quantity of workers demanded. 
B)  quantity of workers demanded will exceed the quantity of workers supplied. 
C)  demand for labor will increase until the equilibrium wage rate is $17.85. 
D)  supply of labor will decrease until the equilibrium wage rate is $17.85.

Exam 17: Work and the Labor Market

The information revolution is:

If a large group of people are willing to enter the labor market when wages rise, the market labor supply will be highly elastic even if individuals' supply curves are inelastic.

Refer to the graph shown. If product demand increases from D1 to D2, the equilibrium price of the product will:

Refer to the graphs shown. If product demand increases from D1 to D2, causing the product price to increase, firm A (a supplier of this product) will:

An increase in the marginal income tax rate is likely to:

A labor supply elasticity of 1.4 means that a wage increase of:

If the law of diminishing marginal product holds true and workers emigrate from Haiti, the wage rate of workers who remain in Haiti would be expected to:

An increase in the marginal income tax rate will increase the quantity of labor supplied.

The marginal income tax rate is:

The marginal income tax rate is a person's tax burden as a percentage of total income.

The more elastic the demand for the good labor produces, the less elastic the demand for labor.

After adjusting for institutional factors, economists have found that:

If the wages and productivity of U.S. workers are higher than those of Mexican workers, a Japanese company would:

When the labor supply curve is inelastic:

According to the author, the development of complex algorithms that perform "brain work" in the future is most likely to:

A firm's demand for labor is derived from the:

The labor supply curve is generally considered to be upward-sloping because the opportunity cost of leisure:

Other things held constant in a competitive labor market, if workers negotiate a contract in which the employer agrees to pay an hourly wage rate of $17.85 while the market equilibrium hourly wage rate is $16.50, the:

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Game Theory, Strategic Decision Making, and Behavioral Economics

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Filters

Refer to the graph shown. If product demand increases from D₁ to D₂, the equilibrium price of the product will:

Refer to the graphs shown. If product demand increases from D₁ to D₂, causing the product price to increase, firm A (a supplier of this product) will: