Question 1

Explain the circumstances under which some component of labor income is economic rent.

Accepted Answer

Economic rent is a payment to a factor above the opportunity cost of the resource.If an individual has an ability that other workers cannot acquire or a skill which is very difficult to duplicate, then the income earned by that individual will contain an element of economic rent as a return to that unique ability or skill.The supply of labor of such individuals would be described as highly inelastic so that increases in demand results in relatively large increases in earnings.

Question 2

Labor markets are generally perfectly competitive markets.

Accepted Answer

A) True 
 B)False  False

Question 3

There is only a small difference in wages between college graduates and workers who did not attend college.

Accepted Answer

A) True 
 B)False  False

Question 4

Describe the profit-maximizing firm's decision about how much to spend on innovation.

Accepted Answer

The profit-maximizing firm will decide h

Question 5

Cannon Mills used to be virtually the only employer in Kannapolis, North Carolina.What is the name for a single hirer of labor, and how do wages and the number of jobs available compare to a competitive labor market?

Accepted Answer

Monopsonists hire fewer workers and pay

Question 6

The initial stage of the procedure in which a union and an employer negotiate over a contract is known as

Accepted Answer

A) featherbedding. 
B) collective bargaining. 
C) mediation. 
D) arbitration. 
A) featherbedding. 
B) collective bargaining. 
C) mediation. 
D) arbitration.

Question 7

Why has the free market system produced the most rapid rates of growth of any economic system?

Accepted Answer

The features of competitive markets put

Question 8

A firm will tend to follow competitors when they increase spending on R&D, but will not follow them when they decrease such spending.

Accepted Answer

A) True 
 B)False

Question 9

One of the reasons for the growth performance of free market economies is firms' use of innovation to compete with one another.

Accepted Answer

A) True 
 B)False

Question 10

A firm's demand curve for labor shifts when the

Accepted Answer

A) price of its output changes. 
B) wage rate changes. 
C) number of available workers changes. 
D) All of the above are correct. 
A) price of its output changes. 
B) wage rate changes. 
C) number of available workers changes. 
D) All of the above are correct.

Question 11

A minimum wage law might increase wages without reducing employment if the hiring firm is

Accepted Answer

A) in perfect competition. 
B) a monopolist. 
C) a monopolistic competitor. 
D) a monopsonist. 
A) in perfect competition. 
B) a monopolist. 
C) a monopolistic competitor. 
D) a monopsonist.

Question 12

The relationship between professional basketball players and the owners' association is an example of a bilateral monopoly.

Accepted Answer

A) True 
 B)False

Question 13

The goal of a union may be to maximize the

Accepted Answer

A) number of union members. 
B) income received by workers in the relevant industry. 
C) number of workers employed in the relevant industry. 
D) All of the above are correct. 
A) number of union members. 
B) income received by workers in the relevant industry. 
C) number of workers employed in the relevant industry. 
D) All of the above are correct.

Question 14

For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?

Accepted Answer

A) air traffic controller 
B) marketing manager 
C) waitress 
D) dentist 
A) air traffic controller 
B) marketing manager 
C) waitress 
D) dentist

Question 15

The United States suffers more from strikes than Japan but fewer strikes than Canada.

Accepted Answer

A) True 
 B)False

Question 16

High-wage workers are

Accepted Answer

A) more likely than low-wage workers to supply more labor when the wage rate rises. 
B) about as likely as low-wage workers to supply more labor when the wage rate rises. 
C) less likely than low-wage workers to supply more labor when the wage rate rises. 
D) The available evidence does not indicate how high-wage workers and low-wage workers differ in responding to changes in the wage rate. 
A) more likely than low-wage workers to supply more labor when the wage rate rises. 
B) about as likely as low-wage workers to supply more labor when the wage rate rises. 
C) less likely than low-wage workers to supply more labor when the wage rate rises. 
D) The available evidence does not indicate how high-wage workers and low-wage workers differ in responding to changes in the wage rate.

Question 17

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

Accepted Answer

There are three oft-cited factors that c

Question 18

Average growth rates of per capita income were close to zero, on average, prior to the Industrial Revolution.

Accepted Answer

A) True 
 B)False

Question 19

Give some explanations for the decline in union membership in the United States.

Accepted Answer

One reason unionization in the United St

Question 20

Expenditures for attending college can be viewed as an investment in human capital.

Accepted Answer

A) True 
 B)False

Exam 19: Labor and Entrepreneurship the Human Inputs

Explain the circumstances under which some component of labor income is economic rent.

Labor markets are generally perfectly competitive markets.

There is only a small difference in wages between college graduates and workers who did not attend college.

Describe the profit-maximizing firm's decision about how much to spend on innovation.

Cannon Mills used to be virtually the only employer in Kannapolis, North Carolina.What is the name for a single hirer of labor, and how do wages and the number of jobs available compare to a competitive labor market?

The initial stage of the procedure in which a union and an employer negotiate over a contract is known as

Why has the free market system produced the most rapid rates of growth of any economic system?

A firm will tend to follow competitors when they increase spending on R&D, but will not follow them when they decrease such spending.

One of the reasons for the growth performance of free market economies is firms' use of innovation to compete with one another.

A firm's demand curve for labor shifts when the

A minimum wage law might increase wages without reducing employment if the hiring firm is

The relationship between professional basketball players and the owners' association is an example of a bilateral monopoly.

The goal of a union may be to maximize the

For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?

The United States suffers more from strikes than Japan but fewer strikes than Canada.

High-wage workers are

What are the factors that contribute to productivity growth in the market economy and which of them is considered most important?

Average growth rates of per capita income were close to zero, on average, prior to the Industrial Revolution.

Give some explanations for the decline in union membership in the United States.

Expenditures for attending college can be viewed as an investment in human capital.

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand an Initial Look

Consumer Choice Individual and Market Demand

Demand and Elasticity

Production Inputs and Cost Building Blocks for Supply Analysis

Output Price and Profit the Importance of Marginal Analysis

Securities Business Finance and the Economy the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power Regulation and Antitrust

The Case for Free Markets the Price System

The Shortcomings of Free Markets

Externalities the Environment and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty Inequality and Discrimination

Is Us Economic Leadership Threatened

International Trade and Comparative Advantage

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