Refer to the graph shown. If labor supply shifts from S1 to S2, the firm will:

A) reduce employment from q0 to q1 to maximize profit where MRP = W. B) reduce employment from q1 to q2 to maximize profit where MRP = W. C) raise employment from q1 to q0 to maximize profit where MRP = W. D) raise employment from q2 to q1 to maximize profit where MRP = W. A) reduce employment from q0 to q1 to maximize profit where MRP = W. B) reduce employment from q1 to q2 to maximize profit where MRP = W. C) raise employment from q1 to q0 to maximize profit where MRP = W. D) raise employment from q2 to q1 to maximize profit where MRP = W.

Exam 17: Work and the Labor Market

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Suppose that you are unemployed and collecting unemployment insurance benefits of $200 per week,and suppose that your income is tax-free.Your employment counselor calls you and reports that she has found you a job that offers 40 hours of work per week at $12.50 per hour.You do some quick calculations and discover that your after-tax earnings from this job would be $360 per week.If unemployment benefits are cut off as soon as you regain employment,what is the real take-home wage rate from your new job offer? What does that make the tax rate on your earnings? (Hint: the loss of benefits is an implicit tax. )

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Question 1

Correct Answer:

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The effective wage rate is the amount by which your income will rise divided by the number of hours worked.Before,you worked zero hours and made $200 per week.Now,you will clear $160 more after working 40 hours,for a net-of-tax wage of $4.00 per hour.The combination of explicit taxes that reduce your take-home from $500 to $360,and the implicit tax through the loss of benefits,essentially means you are facing a tax rate on earnings of 68 percent ($8.50/$12.50).
Problems and Applications

Comparable worth laws can be justified by the fact that wages are determined exclusively by market forces.

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Question 2

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Labor demand is less elastic when:

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Question 3

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An increase in the wages of truck drivers might be explained by which of the following factors?

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Question 4

Demand-side discrimination occurs when:

(Multiple Choice)

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Question 5

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

(Multiple Choice)

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Question 6

Refer to the graph shown. If labor supply shifts from S₁ to S₂, the firm will:

(Multiple Choice)

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Question 7

What is the income effect and the substitution effect in the context of the supply of labor?

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Question 8

How wages are determined is best described by:

(Multiple Choice)

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Question 9

Wages under a bilateral monopoly are generally:

(Multiple Choice)

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Question 10

Efficiency wages tend to:

(Multiple Choice)

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Question 11

The incentive effect refers to how much a person will change his or her:

(Multiple Choice)

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Question 12

The higher the after-tax wage, the greater the quantity of labor supplied.

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Question 13

Explain how each of the following events affects the equilibrium wage and the equilibrium quantity of labor (assume all else is constant with each event).Be sure to explain whether demand for or supply of labor has changed. (1)The price of output a firm produces rises. (2)A leisure-hour provides greater marginal benefit. (3)The marginal income tax rate rises. (4)New immigration laws restrict the hiring of illegal workers. (5)A reduction in welfare benefits. (6)The cost of machines falls (labor and machines are substitutes). (7)Technology makes labor more productive. (8)The industry becomes more monopolistic. (9)The price of the product a firm produced falls.

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Question 14

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP)of labor used to produce apples would:

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Question 15

The labor market is a market in which:

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Question 16

You are the owner of an auto body shop.Due to a recent hailstorm you have a twofold increase in the number of cars to repair.What is the short-term impact that this hailstorm will have on your demand for auto body technicians? What will be the results in the market for these technicians with respect to wages and the number employed? What will be the long-term results in the market for these technicians with respect to wages and the number employed? (NOTE: Your answer should include two diagrams. )

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Question 17

Refer to the graph shown. Which curve represents the firm's derived demand for labor curve?

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Question 18

Why would an increase in the marginal income tax rate likely to lead to a reduction in the number of hours worked (all other things held constant)? Why would an increase in the marginal income tax rate might actually lead to an increase in the number of hours worked?

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Question 19

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

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Question 20

Showing 1 - 20 of 150

Exam 17: Work and the Labor Market

Comparable worth laws can be justified by the fact that wages are determined exclusively by market forces.

Labor demand is less elastic when:

An increase in the wages of truck drivers might be explained by which of the following factors?

Demand-side discrimination occurs when:

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Refer to the graph shown. If labor supply shifts from S1 to S2, the firm will:

What is the income effect and the substitution effect in the context of the supply of labor?

How wages are determined is best described by:

Wages under a bilateral monopoly are generally:

Efficiency wages tend to:

The incentive effect refers to how much a person will change his or her:

The higher the after-tax wage, the greater the quantity of labor supplied.

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP)of labor used to produce apples would:

The labor market is a market in which:

Refer to the graph shown. Which curve represents the firm's derived demand for labor curve?

Why would an increase in the marginal income tax rate likely to lead to a reduction in the number of hours worked (all other things held constant)? Why would an increase in the marginal income tax rate might actually lead to an increase in the number of hours worked?

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

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

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

Filters

Refer to the graph shown. If labor supply shifts from S₁ to S₂, the firm will: