Question 1

Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

Accepted Answer

A) The low cost of transportation between the two countries 
B) The lower productivity of Mexican workers 
C) The absence of significant trade barriers 
D) The presence of many Japanese companies in Mexico 
A) The low cost of transportation between the two countries 
B) The lower productivity of Mexican workers 
C) The absence of significant trade barriers 
D) The presence of many Japanese companies in Mexico

Question 2

Discrimination based on institutional factors occurs when:

Accepted Answer

A) employers pay women less than men for doing the same job. 
B) women remain in low-paying jobs because of family responsibilities. 
C) employers hire a man who is more qualified than a woman. 
D) women postpone having children in order to succeed professionally. 
A) employers pay women less than men for doing the same job. 
B) women remain in low-paying jobs because of family responsibilities. 
C) employers hire a man who is more qualified than a woman. 
D) women postpone having children in order to succeed professionally.

Question 3

A single union that supplies all the labor in a particular market is an example of:

Accepted Answer

A) a monopsony. 
B) a monopoly. 
C) a bilateral monopoly. 
D) an oligopoly. 
A) a monopsony. 
B) a monopoly. 
C) a bilateral monopoly. 
D) an oligopoly.

Question 4

Refer to the table shown. $$\begin{array}{l}
\begin{array} { | c | c | } 
\hline \text { Number wf Warkers } & \text { Tatal Praduct per Huur }\
\hline 1 & 24 \
\hline 2 & 44 \
\hline 3 & 60 \
\hline 4 & 74 \
\hline 5 & 84 \
\hline 6 & 90 \
\hline 7 & 92 \
\hline
\end{array}
\end{array}$$ If the price per unit of product is $2 and the wage rate is $25, a profit-maximizing firm operating in competitive markets would hire:

Accepted Answer

A) three workers. 
B) four workers. 
C) five workers. 
D) six workers. 
A) three workers. 
B) four workers. 
C) five workers. 
D) six workers.

Question 5

Firms pay efficiency wages because these wages:

Accepted Answer

A) minimize short-run costs. 
B) maximize short-run profits. 
C) increase worker productivity. 
D) increase worker rivalry. 
A) minimize short-run costs. 
B) maximize short-run profits. 
C) increase worker productivity. 
D) increase worker rivalry.

Question 6

Which of the following statements best illustrates "Luddite reasoning"?

Accepted Answer

A) Technology makes it possible to replace workers with machines, and so it will decrease the overall demand for labor. 
B) New technology changes the type of labor demanded. 
C) Technology increases total output, and so it will increase the demand for labor. 
D) Labor is necessary for building and maintaining machines, and so increased demand for machines increases the demand for labor. 
A) Technology makes it possible to replace workers with machines, and so it will decrease the overall demand for labor. 
B) New technology changes the type of labor demanded. 
C) Technology increases total output, and so it will increase the demand for labor. 
D) Labor is necessary for building and maintaining machines, and so increased demand for machines increases the demand for labor.

Question 7

In the 1700s and 1800s:

Accepted Answer

A) labor laws were passed to protect workers from job-related injuries. 
B) labor laws were passed to prevent child labor. 
C) the invisible hand was free to push wage rates down to subsistence levels. 
D) the invisible hand was prevented from pushing wage rates down to subsistence levels. 
A) labor laws were passed to protect workers from job-related injuries. 
B) labor laws were passed to prevent child labor. 
C) the invisible hand was free to push wage rates down to subsistence levels. 
D) the invisible hand was prevented from pushing wage rates down to subsistence levels.

Question 8

The marginal factor cost curve for a monopsony:

Accepted Answer

A) lies above the labor supply curve. 
B) lies below the labor supply curve. 
C) is the labor supply curve. 
D) is unrelated to the labor supply curve. 
A) lies above the labor supply curve. 
B) lies below the labor supply curve. 
C) is the labor supply curve. 
D) is unrelated to the labor supply curve.

Question 9

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 10

Existing employees prefer:

Accepted Answer

A) inelastic supplies of labor. 
B) elastic supplies of labor. 
C) unit-elastic supplies of labor. 
D) negative elastic supplies of labor. 
A) inelastic supplies of labor. 
B) elastic supplies of labor. 
C) unit-elastic supplies of labor. 
D) negative elastic supplies of labor.

Question 11

Efficiency wages are above-market wages that are paid to workers to keep them productive.

Accepted Answer

A) True 
 B)False

Question 12

If the government simultaneously increases marginal income tax rates and unemployment compensation, the:

Accepted Answer

A) incentive to work will increase. 
B) incentive to work will diminish. 
C) incentive to work will not change. 
D) effect on the incentive to work cannot be predicted. 
A) incentive to work will increase. 
B) incentive to work will diminish. 
C) incentive to work will not change. 
D) effect on the incentive to work cannot be predicted.

Question 13

The supply of labor generally is considered to be downward-sloping because the opportunity cost of leisure decreases as wages increase.

Accepted Answer

A) True 
 B)False

Question 14

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 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. Are the farmers in Kenya justified in being upset with having a single coffee buyer?

Accepted Answer

A) Maybe; the single buyer may reduce quantity but also raise price of coffee beans. 
B) Maybe; the single buyer may reduce price but also will raise the quantity of coffee beans. 
C) No; the single buyer will increase the price and quantity of coffee beans. 
D) Yes; the single buyer will reduce both the quantity and price of coffee beans. 
A) Maybe; the single buyer may reduce quantity but also raise price of coffee beans. 
B) Maybe; the single buyer may reduce price but also will raise the quantity of coffee beans. 
C) No; the single buyer will increase the price and quantity of coffee beans. 
D) Yes; the single buyer will reduce both the quantity and price of coffee beans.

Question 15

Refer to the table shown. $$\begin{array} { | c | c | } 
\hline\text { Number wf Warkers } & \text { Tatal Praduct per Huur }\
\hline 1 & 24 \
\hline 2 & 44 \
\hline 3 & 60 \
\hline 4 & 74 \
\hline 5 & 84 \
\hline 6 & 90 \
\hline 7 & 92 \
\hline
\end{array}$$ The marginal physical product of the sixth worker is ________, and the average product of six workers is ________.

Accepted Answer

A) 15; 6 
B) 6; 15 
C) 13; 2 
D) 2; 13 
A) 15; 6 
B) 6; 15 
C) 13; 2 
D) 2; 13

Question 16

If an increase in the hourly wage rate from $5 to $6 causes a worker to work 5 hours rather than 4, the worker's elasticity of labor supply is equal to:

Accepted Answer

A) 0.8. 
B) 1.25. 
C) 0.833. 
D) 2. 
A) 0.8. 
B) 1.25. 
C) 0.833. 
D) 2.

Question 17

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 18

Demonstrate graphically and explain verbally a bilateral monopoly labor market.What will happen to wages and quantity of labor employed in comparison to a competitive market?

Accepted Answer

A bilateral monopoly is the case where t

Question 19

The demand for labor is derived from the demand for output.

Accepted Answer

A) True 
 B)False

Question 20

If the demand for legal services decreases, the demand for legal assistants probably will:

Accepted Answer

A) not be affected. 
B) increase. 
C) decrease. 
D) change in a manner that cannot be predicted. 
A) not be affected. 
B) increase. 
C) decrease. 
D) change in a manner that cannot be predicted.

Exam 17: Work and the Labor Market

Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

Discrimination based on institutional factors occurs when:

A single union that supplies all the labor in a particular market is an example of:

Refer to the table shown. Number wf Warkers Tatal Praduct per Huur 1 24 2 44 3 60 4 74 5 84 6 90 7 92 If the price per unit of product is $2 and the wage rate is $25, a profit-maximizing firm operating in competitive markets would hire:

Firms pay efficiency wages because these wages:

Which of the following statements best illustrates "Luddite reasoning"?

In the 1700s and 1800s:

The marginal factor cost curve for a monopsony:

Existing employees prefer:

Efficiency wages are above-market wages that are paid to workers to keep them productive.

If the government simultaneously increases marginal income tax rates and unemployment compensation, the:

The supply of labor generally is considered to be downward-sloping because the opportunity cost of leisure decreases as wages increase.

Refer to the table shown. Number wf Warkers Tatal Praduct per Huur 1 24 2 44 3 60 4 74 5 84 6 90 7 92 The marginal physical product of the sixth worker is ________, and the average product of six workers is ________.

If an increase in the hourly wage rate from $5 to $6 causes a worker to work 5 hours rather than 4, the worker's elasticity of labor supply is equal to:

Demonstrate graphically and explain verbally a bilateral monopoly labor market.What will happen to wages and quantity of labor employed in comparison to a competitive market?

The demand for labor is derived from the demand for output.

If the demand for legal services decreases, the demand for legal assistants probably will:

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 table shown. Number wf Warkers Tatal Praduct per Huur 1 24 2 44 3 60 4 74 5 84 6 90 7 92 The marginal physical product of the sixth worker is , and the average product of six workers is .