Question 1

What is the impact of an increase in the magnitude of quasi-fixed labour costs on the demand curve for labour?

Accepted Answer

A)  The demand curve shifts downwards and to the left. 
B)  The demand curve becomes less elastic. 
C)  There is no change to the demand curve. 
D)  The demand curve becomes more elastic. 
E)  The demand curve shifts upwards and to the right. 
A)  The demand curve shifts downwards and to the left. 
B)  The demand curve becomes less elastic. 
C)  There is no change to the demand curve. 
D)  The demand curve becomes more elastic. 
E)  The demand curve shifts upwards and to the right. A

Question 2

If quasi-fixed labour costs are very high, employers may try to meet their labour demand needs by:

Accepted Answer

A)  Increasing the intensity of work effort 
B)  hiring more workers. 
C)  making their existing workers work overtime 
D)  starting a work-sharing program 
E)  hiring less workers 
A)  Increasing the intensity of work effort 
B)  hiring more workers. 
C)  making their existing workers work overtime 
D)  starting a work-sharing program 
E)  hiring less workers C

Question 3

In the context of quasi-fixed labour costs, the "buffer" refers to a gap between the value of the marginal revenue product of a worker and his/her wage. Which of the following statements is false?

Accepted Answer

A)  It is consistent with labour hoarding behaviour on the part of firms. 
B)  When labour demand rises, employment might not rise by as much. 
C)  When labour demand falls, employment might not fall by as much. 
D)  The buffer is created by the presence of quasi-fixed labour costs. 
E)  None of choices are correct. 
A)  It is consistent with labour hoarding behaviour on the part of firms. 
B)  When labour demand rises, employment might not rise by as much. 
C)  When labour demand falls, employment might not fall by as much. 
D)  The buffer is created by the presence of quasi-fixed labour costs. 
E)  None of choices are correct. E

Question 4

Which of the following statements regarding wage costs is true?

Accepted Answer

A)  They area deferred compensation. 
B)  They are a fixed labour cost. 
C)  They are a quasi-fixed labour cost. 
D)  They are a variable labour cost. 
E)  They are a one-time labour cost. 
A)  They area deferred compensation. 
B)  They are a fixed labour cost. 
C)  They are a quasi-fixed labour cost. 
D)  They are a variable labour cost. 
E)  They are a one-time labour cost.

Question 5

Suppose a government seeks to reduce the extent to which firms have their workers put in overtime hours. Which of the following would be ineffective?

Accepted Answer

A)  Reducing the absolute maximum number of hours that any worker can work 
B)  Granting workers the right to refuse overtime 
C)  Decreasing the overtime wage premium 
D)  Reducing the length of the standard work week beyond which an overtime premium must be paid 
E)  All the choices would have the desired effect 
A)  Reducing the absolute maximum number of hours that any worker can work 
B)  Granting workers the right to refuse overtime 
C)  Decreasing the overtime wage premium 
D)  Reducing the length of the standard work week beyond which an overtime premium must be paid 
E)  All the choices would have the desired effect

Question 6

Which of the following statements regarding the presence of non-wage benefits is false?

Accepted Answer

A)  Major components are pension and welfare plans 
B)  Pay for time not worked is the fastest growing component of the non-wage benefit since 1960s. 
C)  As a percentage of the payroll among large firms, they comprised about 37% in the late 1990s. 
D)  As a percentage of the payroll among large firms, there has been a downward trend in the presence of non-wage benefits over the past 60 years or so. 
E)  A major component is pay for hours that are not worked. 
A)  Major components are pension and welfare plans 
B)  Pay for time not worked is the fastest growing component of the non-wage benefit since 1960s. 
C)  As a percentage of the payroll among large firms, they comprised about 37% in the late 1990s. 
D)  As a percentage of the payroll among large firms, there has been a downward trend in the presence of non-wage benefits over the past 60 years or so. 
E)  A major component is pay for hours that are not worked.

Question 7

The practice of worksharing refers to:

Accepted Answer

A)  sharing the scarce number of jobs that are available by reducing the length of the standard work week. 
B)  sharing the scarce number of jobs that are available by banning overtime. 
C)  sharing the scarce number of work hours and jobs that are available by reducing the number of jobs. 
D)  sharing the scarce number of jobs that are available by hiring new workers. 
E)  sharing the scarce number of employees that are available. 
A)  sharing the scarce number of jobs that are available by reducing the length of the standard work week. 
B)  sharing the scarce number of jobs that are available by banning overtime. 
C)  sharing the scarce number of work hours and jobs that are available by reducing the number of jobs. 
D)  sharing the scarce number of jobs that are available by hiring new workers. 
E)  sharing the scarce number of employees that are available.

Question 8

Which of the following statements regarding the practice of labour hoarding is false?

Accepted Answer

A)  It is most likely to occur with high-skilled workers. 
B)  It is most likely to occur in situations where quasi-fixed labour costs are high. 
C)  There is not a lot of empirical evidence that firms adopt this practice. 
D)  It is most likely to occur when most labour costs are variable. 
E)  It is most likely to occur with low skilled workers. 
A)  It is most likely to occur with high-skilled workers. 
B)  It is most likely to occur in situations where quasi-fixed labour costs are high. 
C)  There is not a lot of empirical evidence that firms adopt this practice. 
D)  It is most likely to occur when most labour costs are variable. 
E)  It is most likely to occur with low skilled workers.

Question 9

Economists have made several recommendations to reduce barriers to employment sharing programs. Which of the following is an example of such a recommendation?

Accepted Answer

A)  banning the scheduling of overtime hours 
B)  reducing quasi-fixed labour costs 
C)  raising quasi-fixed labour costs 
D)  hiring more employees in order to reduce the need for overtime hours 
E)  prorating employer contributions to medical, dental, and life insurance plans according to the number of hours worked 
A)  banning the scheduling of overtime hours 
B)  reducing quasi-fixed labour costs 
C)  raising quasi-fixed labour costs 
D)  hiring more employees in order to reduce the need for overtime hours 
E)  prorating employer contributions to medical, dental, and life insurance plans according to the number of hours worked

Question 10

Why do employers have an interest in paying their workers some of their compensation in the form of non-wage benefits?

Accepted Answer

A)  Because they serve to reduce unwanted turnover and provide certain work incentives. 
B)  Because the government pays part of the compensation package. 
C)  Because they can reduce unwanted turnovers and certain work incentives. 
D)  Because they reduce the costs of the compensation package that the employers pay. 
E)  Because they increase certain work incentives and unwanted turnovers. 
A)  Because they serve to reduce unwanted turnover and provide certain work incentives. 
B)  Because the government pays part of the compensation package. 
C)  Because they can reduce unwanted turnovers and certain work incentives. 
D)  Because they reduce the costs of the compensation package that the employers pay. 
E)  Because they increase certain work incentives and unwanted turnovers.

Question 11

When labour costs are quasi-fixed, then which of the following statements are true?

Accepted Answer

A)  They are fixed in the short run but variable in the long run. 
B)  They are fixed in the long run but variable in the short run. 
C)  The employer has committed to them in a contract. 
D)  They are independent of the number of hours worked by a firm's workforce. 
E)  They are dependent on the number of hours worked by a firm's workforce. 
A)  They are fixed in the short run but variable in the long run. 
B)  They are fixed in the long run but variable in the short run. 
C)  The employer has committed to them in a contract. 
D)  They are independent of the number of hours worked by a firm's workforce. 
E)  They are dependent on the number of hours worked by a firm's workforce.

Question 12

Layoff rates are much higher among low-skilled workers compared to high-skilled workers because:

Accepted Answer

A)  The quasi-fixed labour costs of low-skilled workers are lower. 
B)  High-skilled workers have a smaller wedge or buffer between their marginal revenue product and their wage. 
C)  Low-skilled workers tend not to work as hard as high-skilled workers. 
D)  Hiring and training costs are significantly higher for high-skilled workers. 
E)  The quasi-fixed labour costs of low-skilled workers are higher. 
A)  The quasi-fixed labour costs of low-skilled workers are lower. 
B)  High-skilled workers have a smaller wedge or buffer between their marginal revenue product and their wage. 
C)  Low-skilled workers tend not to work as hard as high-skilled workers. 
D)  Hiring and training costs are significantly higher for high-skilled workers. 
E)  The quasi-fixed labour costs of low-skilled workers are higher.

Question 13

In the late 1990s, some observers wanted to alter the composition of labour input somewhat such that more jobs are created and those with jobs work fewer hours. What type of policy measure might promote that goal?

Accepted Answer

A)  Lowering the ceiling of wages and salaries to which social contributions apply 
B)  Wage cuts across the board 
C)  Increasing the fringe benefits that are available to workers with jobs 
D)  Increasing the overtime premium 
E)  None of the choices are correct. 
A)  Lowering the ceiling of wages and salaries to which social contributions apply 
B)  Wage cuts across the board 
C)  Increasing the fringe benefits that are available to workers with jobs 
D)  Increasing the overtime premium 
E)  None of the choices are correct.

Question 14

In which countries have short-time compensation programs been developed the most?

Accepted Answer

A)  Japan 
B)  Australia 
C)  Continental Europe 
D)  The United Kingdom 
E)  North American countries 
A)  Japan 
B)  Australia 
C)  Continental Europe 
D)  The United Kingdom 
E)  North American countries

Question 15

Deferred compensation refers to:

Accepted Answer

A)  benefits that the worker receives only after his/her performance has been evaluated 
B)  benefits that the worker receives after retirement 
C)  benefits that the worker receives at a later stage in his/her career 
D)  benefits that the worker receives after filling out the proper paperwork 
E)  None of choices are correct. 
A)  benefits that the worker receives only after his/her performance has been evaluated 
B)  benefits that the worker receives after retirement 
C)  benefits that the worker receives at a later stage in his/her career 
D)  benefits that the worker receives after filling out the proper paperwork 
E)  None of choices are correct.

Question 16

Why did the unemployment rate decline during the recession of 2008-09 in Germany?

Accepted Answer

A)  Because out of the 19 OECD countries, all but Germany had low unemployment rate prior to the recession. 
B)  Because the unemployment rate of all OECD countries had declined during this period. 
C)  Because out of the 19 OECD countries, only Germany had short-time work schedule programs. 
D)  Because of the presence of large and effective short-time work schedule programs in Germany. 
E)  None of choices are correct. 
A)  Because out of the 19 OECD countries, all but Germany had low unemployment rate prior to the recession. 
B)  Because the unemployment rate of all OECD countries had declined during this period. 
C)  Because out of the 19 OECD countries, only Germany had short-time work schedule programs. 
D)  Because of the presence of large and effective short-time work schedule programs in Germany. 
E)  None of choices are correct.

Question 17

Congratulations! Based on your performance advising the prime minister on employment related issues in the past, your contract has been renewed. This time your task is to analyze the effect of quasi-fixed labour costs on the demand for labour. In the report that you prepare for him or her, you should cover the following points.
• Define quasi-fixed labour costs and give some concrete examples.
• Explain intuitively the impact of quasi-fixed labour costs on labour market behaviour. You need not give a graph, but give some mention of the discounted present value of the stream of wages and the stream of the values of marginal product is desirable.
• The prime minister is very concerned about high unemployment and would like for you to explain why overtime is prevalent when employers could be meeting their labour force needs by hiring unemployed workers. He is also concerned about the growing use of casual and part-time labour rather than full-time labour. Do you have any policy recommendations that speak to this issue?

Accepted Answer

Nonwage benefits, such as paid vacations

Question 18

According to the "lump-of-labour fallacy," _______.

Accepted Answer

A)  Many workers have more than one job. 
B)  There is always a situation of high unemployment. 
C)  Unemployed workers always exist. 
D)  There is a fixed number of jobs in the economy regardless of wages. 
E)  There are always extra jobs available in the economy. 
A)  Many workers have more than one job. 
B)  There is always a situation of high unemployment. 
C)  Unemployed workers always exist. 
D)  There is a fixed number of jobs in the economy regardless of wages. 
E)  There are always extra jobs available in the economy.

Question 19

All of the following are factors contributing to the rise in the proportion of the labour force hired by temporary-help agencies, except that:

Accepted Answer

A)  Employers need to replace a permanent employee who is temporarily absent. 
B)  Employers seek to develop stable, loyal, and productive labour forces. 
C)  Employers can avoid hoarding excess labour. 
D)  Employers require the services of an employee for only a short period. 
E)  Employers seek to reduce quasi-fixed labour costs. 
A)  Employers need to replace a permanent employee who is temporarily absent. 
B)  Employers seek to develop stable, loyal, and productive labour forces. 
C)  Employers can avoid hoarding excess labour. 
D)  Employers require the services of an employee for only a short period. 
E)  Employers seek to reduce quasi-fixed labour costs.

Question 20

The benefits of using deferred compensation include all of the following, except that:

Accepted Answer

A)  It serves as a screening device for hiring new workers. 
B)  It drives a wedge between the marginal revenue product and the wage. 
C)  It raises the cost to the employee of being fired for poor work, absenteeism and other work-ethnic related issues. 
D)  It fosters employee loyalty and reduces unwanted turnover. 
E)  It strengthens work incentives. 
A)  It serves as a screening device for hiring new workers. 
B)  It drives a wedge between the marginal revenue product and the wage. 
C)  It raises the cost to the employee of being fired for poor work, absenteeism and other work-ethnic related issues. 
D)  It fosters employee loyalty and reduces unwanted turnover. 
E)  It strengthens work incentives.

What is the impact of an increase in the magnitude of quasi-fixed labour costs on the demand curve for labour?

If quasi-fixed labour costs are very high, employers may try to meet their labour demand needs by:

In the context of quasi-fixed labour costs, the "buffer" refers to a gap between the value of the marginal revenue product of a worker and his/her wage. Which of the following statements is false?

Which of the following statements regarding wage costs is true?

Suppose a government seeks to reduce the extent to which firms have their workers put in overtime hours. Which of the following would be ineffective?

Which of the following statements regarding the presence of non-wage benefits is false?

The practice of worksharing refers to:

Which of the following statements regarding the practice of labour hoarding is false?

Economists have made several recommendations to reduce barriers to employment sharing programs. Which of the following is an example of such a recommendation?

Why do employers have an interest in paying their workers some of their compensation in the form of non-wage benefits?

When labour costs are quasi-fixed, then which of the following statements are true?

Layoff rates are much higher among low-skilled workers compared to high-skilled workers because:

In the late 1990s, some observers wanted to alter the composition of labour input somewhat such that more jobs are created and those with jobs work fewer hours. What type of policy measure might promote that goal?

In which countries have short-time compensation programs been developed the most?

Deferred compensation refers to:

Why did the unemployment rate decline during the recession of 2008-09 in Germany?

According to the "lump-of-labour fallacy," _______.

All of the following are factors contributing to the rise in the proportion of the labour force hired by temporary-help agencies, except that:

The benefits of using deferred compensation include all of the following, except that:

Labour Supply: Individual Attachment to the Labour Market

Labour Supply and Public Policy: Work Incentive Effects of Alternative Income Maintenance Schemes

Labour Supply Over the Life Cycle

Demand for Labour in Competitive Labour Markets

Wages and Employment in a Single Labour Market

Compensating Wage Differentials

Human Capital Theory: Applications to Education and Training

Wage Structures Across Markets

The Economics of Immigration

Discrimination and Male-Female Earnings Differentials

Optimal Compensation Systems, Deferred Compensation, and Mandatory Retirement

Unions and Collective Bargaining

Union Impact on Wage and Non-Wage Outcomes

Unemployment: Meaning, Measurement, and Canadas Experience

Unemployment: Causes and Consequences

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Exam 6: Labour Demand, Non-Wage Benefits, and Quasi-Fixed Costs

What is the impact of an increase in the magnitude of quasi-fixed labour costs on the demand curve for labour?

If quasi-fixed labour costs are very high, employers may try to meet their labour demand needs by:

In the context of quasi-fixed labour costs, the "buffer" refers to a gap between the value of the marginal revenue product of a worker and his/her wage. Which of the following statements is false?

Which of the following statements regarding wage costs is true?

Suppose a government seeks to reduce the extent to which firms have their workers put in overtime hours. Which of the following would be ineffective?

Which of the following statements regarding the presence of non-wage benefits is false?

The practice of worksharing refers to:

Which of the following statements regarding the practice of labour hoarding is false?

Economists have made several recommendations to reduce barriers to employment sharing programs. Which of the following is an example of such a recommendation?

Why do employers have an interest in paying their workers some of their compensation in the form of non-wage benefits?

When labour costs are quasi-fixed, then which of the following statements are true?

Layoff rates are much higher among low-skilled workers compared to high-skilled workers because:

In the late 1990s, some observers wanted to alter the composition of labour input somewhat such that more jobs are created and those with jobs work fewer hours. What type of policy measure might promote that goal?

In which countries have short-time compensation programs been developed the most?

Deferred compensation refers to:

Why did the unemployment rate decline during the recession of 2008-09 in Germany?

According to the "lump-of-labour fallacy," _______.

All of the following are factors contributing to the rise in the proportion of the labour force hired by temporary-help agencies, except that:

The benefits of using deferred compensation include all of the following, except that:

Labour Supply: Individual Attachment to the Labour Market

Labour Supply and Public Policy: Work Incentive Effects of Alternative Income Maintenance Schemes

Labour Supply Over the Life Cycle

Demand for Labour in Competitive Labour Markets

Wages and Employment in a Single Labour Market

Compensating Wage Differentials

Human Capital Theory: Applications to Education and Training

Wage Structures Across Markets

The Economics of Immigration

Discrimination and Male-Female Earnings Differentials

Optimal Compensation Systems, Deferred Compensation, and Mandatory Retirement

Unions and Collective Bargaining

Union Impact on Wage and Non-Wage Outcomes

Unemployment: Meaning, Measurement, and Canadas Experience

Unemployment: Causes and Consequences

Filters