Question 1

Other things constant, which of the following is inversely related to inflation?

Accepted Answer

A) nominal wage only 
B) real wage only 
C) average price level in the economy 
D) both nominal wage and real wage 
A) nominal wage only 
B) real wage only 
C) average price level in the economy 
D) both nominal wage and real wage

Question 2

Commissions or royalties may be an inexpensive way of reducing shirking on a job when the costs of monitoring work performance are high.

Accepted Answer

A) True 
 B)False

Question 3

Refer to the total product curve shown in the graph, and assume a competitive labor market. If the firm can sell widgets for $12, then what is the maximum amount it will pay the fourth worker each day?

Accepted Answer

A) $24 
B) $48 
C) $61 
D) $732 
A) $24 
B) $48 
C) $61 
D) $732

Question 4

If the nominal wages of carpenters rose by 1 percent in 2019 and the price level increased by 4 percent, then the real wages of carpenters

Accepted Answer

A) decreased by 4 percent. 
B) decreased by 3 percent. 
C) increased by 3 percent. 
D) increased by 5 percent. 
A) decreased by 4 percent. 
B) decreased by 3 percent. 
C) increased by 3 percent. 
D) increased by 5 percent.

Question 5

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

Accepted Answer

A) "purchases" labor in a purely competitive labor market. 
B) is a monopsonist. 
C) faces a perfectly inelastic labor supply curve. 
D) has a perfectly elastic labor demand curve. 
A) "purchases" labor in a purely competitive labor market. 
B) is a monopsonist. 
C) faces a perfectly inelastic labor supply curve. 
D) has a perfectly elastic labor demand curve.

Question 6

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Accepted Answer

A) be unaffected. 
B) rise by 4 percent. 
C) rise by 8 percent. 
D) fall by 4 percent. 
A) be unaffected. 
B) rise by 4 percent. 
C) rise by 8 percent. 
D) fall by 4 percent.

Question 7

Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of

Accepted Answer

A) total output. 
B) stock of capital. 
C) output per worker. 
D) international trade. 
A) total output. 
B) stock of capital. 
C) output per worker. 
D) international trade.

Question 8

Education is a form of human capital, and it helps explain wage differentials.

Accepted Answer

A) True 
 B)False

Question 9

Since 1960, real hourly compensation in the United States has approximately

Accepted Answer

A) remained the same. 
B) risen by 40 percent. 
C) doubled. 
D) tripled. 
A) remained the same. 
B) risen by 40 percent. 
C) doubled. 
D) tripled.

Question 10

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

Accepted Answer

A) "purchases" labor in a purely competitive labor market. 
B) is a monopsonist. 
C) faces a perfectly inelastic labor supply curve. 
D) has a perfectly elastic labor demand curve. 
A) "purchases" labor in a purely competitive labor market. 
B) is a monopsonist. 
C) faces a perfectly inelastic labor supply curve. 
D) has a perfectly elastic labor demand curve.

Question 11

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

Accepted Answer

A) $6 
B) $7 
C) $8 
D) $9 
A) $6 
B) $7 
C) $8 
D) $9

Question 12

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table.   If the wage rate decreases from $17 to $13, by how much will the firm expand employment?

Accepted Answer

A) 5 workers 
B) 4 workers 
C) 3 workers 
D) 2 workers 
A) 5 workers 
B) 4 workers 
C) 3 workers 
D) 2 workers

Question 13

Marginal revenue product (MRP)of labor refers to the

Accepted Answer

A) increase in total revenue resulting from selling an additional unit of output. 
B) amount by which a firm's total resource cost increases when it employs one more unit of labor. 
C) increase in total revenue resulting from hiring one more unit of labor. 
D) price at which additional units of labor can be employed in a monopsonized labor market. 
A) increase in total revenue resulting from selling an additional unit of output. 
B) amount by which a firm's total resource cost increases when it employs one more unit of labor. 
C) increase in total revenue resulting from hiring one more unit of labor. 
D) price at which additional units of labor can be employed in a monopsonized labor market.

Question 14

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

Accepted Answer

A) True 
 B)False

Question 15

A profit-maximizing firm will

Accepted Answer

A) expand employment if marginal revenue product exceeds marginal resource cost. 
B) reduce employment if marginal revenue product exceeds marginal resource cost. 
C) expand employment if marginal revenue product equals marginal resource cost. 
D) reduce employment if marginal revenue product equals marginal resource cost. 
A) expand employment if marginal revenue product exceeds marginal resource cost. 
B) reduce employment if marginal revenue product exceeds marginal resource cost. 
C) expand employment if marginal revenue product equals marginal resource cost. 
D) reduce employment if marginal revenue product equals marginal resource cost.

Question 16

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $0.5 per day?

Accepted Answer

A) 4 
B) 5 
C) 7 
D) 6 
A) 4 
B) 5 
C) 7 
D) 6

Question 17

Refer to the given data. This firm's product price is

Accepted Answer

A) $8. 
B) $4. 
C) $3. 
D) $12. 
A) $8. 
B) $4. 
C) $3. 
D) $12.

Question 18

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

Accepted Answer

A) True 
 B)False

Question 19

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day?

Accepted Answer

A) 3 
B) 4 
C) 6 
D) 5 
A) 3 
B) 4 
C) 6 
D) 5

Question 20

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Accepted Answer

A) True 
 B)False

Exam 17: Wage Determination

Other things constant, which of the following is inversely related to inflation?

Commissions or royalties may be an inexpensive way of reducing shirking on a job when the costs of monitoring work performance are high.

Refer to the total product curve shown in the graph, and assume a competitive labor market. If the firm can sell widgets for $12, then what is the maximum amount it will pay the fourth worker each day?

If the nominal wages of carpenters rose by 1 percent in 2019 and the price level increased by 4 percent, then the real wages of carpenters

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of

Education is a form of human capital, and it helps explain wage differentials.

Since 1960, real hourly compensation in the United States has approximately

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table. If the wage rate decreases from $17 to $13, by how much will the firm expand employment?

Marginal revenue product (MRP)of labor refers to the

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

A profit-maximizing firm will

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $0.5 per day?

Refer to the given data. This firm's product price is

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day?

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, RD, and Efficiency

The Demand for Resources

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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