Question 1

In the markets for superstars:

Accepted Answer

A) the individuals competing are relatively numerous. 
B) the difference in talent between the ones that make it an those that don't is significant. 
C) highly talented individuals earn disproportionately higher wages. 
D) the homogeneity of incomes is similar with the ones of many professions. 
A) the individuals competing are relatively numerous. 
B) the difference in talent between the ones that make it an those that don't is significant. 
C) highly talented individuals earn disproportionately higher wages. 
D) the homogeneity of incomes is similar with the ones of many professions. C

Question 2

Superstar markets exist in:

Accepted Answer

A) PC sales but not in CD market. 
B) athletics but not entertainment. 
C) book sales but not in the market for clerical jobs. 
D) music but not in academia. 
A) PC sales but not in CD market. 
B) athletics but not entertainment. 
C) book sales but not in the market for clerical jobs. 
D) music but not in academia. C

Question 3

The fact that Lady Gaga earns tens of millions of dollars every year:

Accepted Answer

A) is due to the lack of substitutability between quality and quantity. 
B) is highly unfair. 
C) cannot be explained by the mechanism driving the New York Times bestseller list. 
D) is a matter of luck. 
A) is due to the lack of substitutability between quality and quantity. 
B) is highly unfair. 
C) cannot be explained by the mechanism driving the New York Times bestseller list. 
D) is a matter of luck. A

Question 4

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Accepted Answer

A) People are self- interested. 
B) Moral judgments must be impersonal. 
C) People accept risk. 
D) Impersonal judgments lead to equal incomes. 
A) People are self- interested. 
B) Moral judgments must be impersonal. 
C) People accept risk. 
D) Impersonal judgments lead to equal incomes.

Question 5

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Accepted Answer

A) will decrease employment. 
B) may increase employment. 
C) will decrease the wage rate in the long run. 
D) will reduce the average earnings of those employed in the initial competitive equilibrium. 
A) will decrease employment. 
B) may increase employment. 
C) will decrease the wage rate in the long run. 
D) will reduce the average earnings of those employed in the initial competitive equilibrium.

Question 6

Provide a few examples illustrating how luck plays a role in the distribution of income.

Accepted Answer

Being born with a set of talen

Question 7

In market 1, the demand for labour is w1 = 100 - z1, where w1 is the wage rate and z1 is the number of workers. Similarly, in market 2 the demand for labour is w2 = 100 - z2. There are 100 workers to be allocated to the two markets, and workers are concerned only with their expected wage. If the two labour markets are competitive, then in equilibrium workers are allocated to the two markets in which of the following ways?

Accepted Answer

A) 60 workers to market 1 and 40 to market 2 
B) 70 workers to market 1 and 30 to market 2 
C) 50 workers to market 1 and 50 to market 2 
D) 40 workers to market 1 and 60 to market 2 
A) 60 workers to market 1 and 40 to market 2 
B) 70 workers to market 1 and 30 to market 2 
C) 50 workers to market 1 and 50 to market 2 
D) 40 workers to market 1 and 60 to market 2

Question 8

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Accepted Answer

A) identical to the supply of labour at all wages. 
B) horizontal while the wage is greater than the supply of labour. 
C) steeper than the supply of labour at all wages. 
D) flatter than the supply of labour at all wages. 
A) identical to the supply of labour at all wages. 
B) horizontal while the wage is greater than the supply of labour. 
C) steeper than the supply of labour at all wages. 
D) flatter than the supply of labour at all wages.

Question 9

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Accepted Answer

The efficient transfer mechanism is conc

Question 10

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Accepted Answer

If the welfare of the first family is me

Question 11

Standard welfare systems are:

Accepted Answer

A) inefficient because they discourage recipients from working. 
B) ineffective programs for encouraging technological innovation. 
C) effective institutions for equalizing the income distribution. 
D) efficient because they rely on lump sum taxes. 
A) inefficient because they discourage recipients from working. 
B) ineffective programs for encouraging technological innovation. 
C) effective institutions for equalizing the income distribution. 
D) efficient because they rely on lump sum taxes.

Question 12

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour and a minimum wage is imposed on the firm. Relative to the initial monopsony equilibrium, the minimum wage will induce the firm to increase employment if the minimum wage is:

Accepted Answer

A) less than $30. 
B) less than $50. 
C) larger than $20, but less than $40. 
D) larger than $30, but less than $50. 
A) less than $30. 
B) less than $50. 
C) larger than $20, but less than $40. 
D) larger than $30, but less than $50.

Question 13

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

Accepted Answer

A) $20. 
B) $40. 
C) $30. 
D) $50. 
A) $20. 
B) $40. 
C) $30. 
D) $50.

Question 14

A wage- setting union in a monopsonistic market:

Accepted Answer

A) can raise both wages and employment above the level set by the monopsonist. 
B) can raise wages above the level set by the monopsony but only if it allows employment to fall below the level set by the monopsonist. 
C) gains its wage and employment demands by presenting the employer with a perfectly inelastic supply of labour. 
D) can raise wages to what would be the competitive level but no higher. 
A) can raise both wages and employment above the level set by the monopsonist. 
B) can raise wages above the level set by the monopsony but only if it allows employment to fall below the level set by the monopsonist. 
C) gains its wage and employment demands by presenting the employer with a perfectly inelastic supply of labour. 
D) can raise wages to what would be the competitive level but no higher.

Question 15

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

Accepted Answer

A) Wage rates in Cornwall decreased. 
B) Workers left the town in search of another monopsony market. 
C) Wage rates in Cornwall increased. 
D) The price of goods sold by the Cornwall company decreased. 
A) Wage rates in Cornwall decreased. 
B) Workers left the town in search of another monopsony market. 
C) Wage rates in Cornwall increased. 
D) The price of goods sold by the Cornwall company decreased.

Question 16

The distribution of income depends primarily on:

Accepted Answer

A) political power. 
B) initial endowments. 
C) hours worked. 
D) prevailing input prices. 
A) political power. 
B) initial endowments. 
C) hours worked. 
D) prevailing input prices.

Question 17

A union wage is like a minimum wage in that it does all of the following except:

Accepted Answer

A) increase employment in monopsony markets. 
B) decrease employment in competitive markets. 
C) increase income equality. 
D) increase efficiency in monopsony markets. 
A) increase employment in monopsony markets. 
B) decrease employment in competitive markets. 
C) increase income equality. 
D) increase efficiency in monopsony markets.

Question 18

The negative income tax:

Accepted Answer

A) is similar with the topping- up mechanism. 
B) provide a simple scheme to redistribute income to poorer members of society. 
C) introduces less inefficiency than the one associated with the topping- up mechanism. 
D) encourages potential recipients to give up work. 
A) is similar with the topping- up mechanism. 
B) provide a simple scheme to redistribute income to poorer members of society. 
C) introduces less inefficiency than the one associated with the topping- up mechanism. 
D) encourages potential recipients to give up work.

Question 19

A wage floor in a two- sector model does all of the following except:

Accepted Answer

A) reallocate workers to the low wage sector. 
B) allocate workers to their most productive jobs. 
C) reduce wages for unprotected workers. 
D) cause some workers to be underemployed. 
A) reallocate workers to the low wage sector. 
B) allocate workers to their most productive jobs. 
C) reduce wages for unprotected workers. 
D) cause some workers to be underemployed.

Question 20

Which of the following are reasons for altering the redistribution of income?

Accepted Answer

A) Reduce poverty. 
B) Income distribution rests too much on luck. 
C) Market distribution is inefficient. 
D) Government redistribution is not just. 
A) Reduce poverty. 
B) Income distribution rests too much on luck. 
C) Market distribution is inefficient. 
D) Government redistribution is not just.

In the markets for superstars:

Superstar markets exist in:

The fact that Lady Gaga earns tens of millions of dollars every year:

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Provide a few examples illustrating how luck plays a role in the distribution of income.

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Standard welfare systems are:

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

A wage- setting union in a monopsonistic market:

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

The distribution of income depends primarily on:

A union wage is like a minimum wage in that it does all of the following except:

The negative income tax:

A wage floor in a two- sector model does all of the following except:

Which of the following are reasons for altering the redistribution of income?

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters

Exam 12: Labour Market Applications

In the markets for superstars:

Superstar markets exist in:

The fact that Lady Gaga earns tens of millions of dollars every year:

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Provide a few examples illustrating how luck plays a role in the distribution of income.

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Standard welfare systems are:

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

A wage- setting union in a monopsonistic market:

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

The distribution of income depends primarily on:

A union wage is like a minimum wage in that it does all of the following except:

The negative income tax:

A wage floor in a two- sector model does all of the following except:

Which of the following are reasons for altering the redistribution of income?

Microeconomics: a Working Methodology

A Theory of Preferences

Demand Theory

More Demand Theory

Intertemporal Decision Making and Capital Values

Production Cost: One Variable Input

Production Cost: Many Variable Inputs

The Theory of Perfect Competition

Applications of the Competitive Model

Monopoly

Input Markets and the Allocation of Resources

Competitive General Equilibrium

Price Discrimination Monopoly Practices

Introduction to Game Theory

Game Theory and Oligopoly

Choice Making Under Uncertainty

Assymmetric Information, the Rules of the Game, and Externalities

The Theory of the Firm

Assymetric Information and Market Behaviour

Filters