Question 1

The rising general level of real wages in the United States has occurred because the growing population has increased the supply of labor relative to the demand for it.

Accepted Answer

A) True 
 B)False

Question 2

A firm can hire 8 workers at a wage rate of $7 per hour but must pay $8 per hour to all of its employees to attract a ninth worker. The marginal wage cost of the ninth worker is

Accepted Answer

A) $8. 
B) $9. 
C) $16. 
D) $72. 
A) $8. 
B) $9. 
C) $16. 
D) $72.

Question 3

Refer to the given data. In maximizing its profit, this firm will employ

Accepted Answer

A) 2 units of labor. 
B) 3 units of labor. 
C) 4 units of labor. 
D) 5 units of labor. 
A) 2 units of labor. 
B) 3 units of labor. 
C) 4 units of labor. 
D) 5 units of labor.

Question 4

Union membership among workers in America has been declining since the 1950s.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is correct?

Accepted Answer

A) The nominal wage may fall, but the real wage can never decline. 
B) The real wage may fall, but the nominal wage can never decline. 
C) Both the nominal and the real wage must always rise. 
D) The nominal and the real wage may both fall. 
A) The nominal wage may fall, but the real wage can never decline. 
B) The real wage may fall, but the nominal wage can never decline. 
C) Both the nominal and the real wage must always rise. 
D) The nominal and the real wage may both fall.

Question 6

Assume that your nominal wage was fixed at $12 an hour, and the price index rose from 102 to 105. In this case, your real wage has

Accepted Answer

A) decreased to $11.76. 
B) increased to $11.76. 
C) decreased to $11.43. 
D) increased to $11.43. 
A) decreased to $11.76. 
B) increased to $11.76. 
C) decreased to $11.43. 
D) increased to $11.43.

Question 7

Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be

Accepted Answer

A) $16. 
B) $24. 
C) $30. 
D) $32. 
A) $16. 
B) $24. 
C) $30. 
D) $32.

Question 8

According to international comparisons, which nation had the highest hourly pay in U.S. dollar terms in 2013?

Accepted Answer

A) United States 
B) Germany 
C) Australia 
D) Sweden 
A) United States 
B) Germany 
C) Australia 
D) Sweden

Question 9

If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire 12 workers, its marginal resource cost of hiring the 12th worker is $40.

Accepted Answer

A) True 
 B)False

Question 10

If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will

Accepted Answer

A) decrease by 6 percent. 
B) decrease by 4 percent. 
C) decrease by 2 percent. 
D) increase by 2 percent. 
A) decrease by 6 percent. 
B) decrease by 4 percent. 
C) decrease by 2 percent. 
D) increase by 2 percent.

Question 11

There will be no principal-agent problem if a firm's owner (like a business consultant)does all the work of the firm.

Accepted Answer

A) True 
 B)False

Question 12

The graph shows a firm that buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be

Accepted Answer

A) L₀ . 
B) zero. 
C) lower than L₀ . 
D) higher than L₀ . 
A) L₀ . 
B) zero. 
C) lower than L₀ . 
D) higher than L₀ .

Question 13

The productivity and real wages of workers in industrially advanced economies have risen historically partly because

Accepted Answer

A) workers have acquired less education and training over time. 
B) workers have been able to use larger quantities of capital equipment. 
C) over time, the capital equipment used by workers has deteriorated in quality. 
D) the supply of labor has increased. 
A) workers have acquired less education and training over time. 
B) workers have been able to use larger quantities of capital equipment. 
C) over time, the capital equipment used by workers has deteriorated in quality. 
D) the supply of labor has increased.

Question 14

What do "wages" and "wage rates" mean in economics?

Accepted Answer

Wages are the price that employers pay f

Question 15

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 $19 to $13, by how much will the firm expand employment?

Accepted Answer

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

Question 16

A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

Accepted Answer

A) True 
 B)False

Question 17

Nominal monthly wages increase from $1,200 to $1,300, while the price level decreases by 2 percent. The percentage change in real monthly wages is about

Accepted Answer

A) 2 percent. 
B) -2 percent. 
C) 8.3 percent. 
D) 10.3 percent. 
A) 2 percent. 
B) -2 percent. 
C) 8.3 percent. 
D) 10.3 percent.

Question 18

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Accepted Answer

A) True 
 B)False

Question 19

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $150 and three workers are employed per day, the price of a unit of output must be

Accepted Answer

A) 1,000. 
B) 100. 
C) 20. 
D) 10. 
A) 1,000. 
B) 100. 
C) 20. 
D) 10.

Question 20

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) $5 
B) $25 
C) $-7 
D) $1 
A) $5 
B) $25 
C) $-7 
D) $1

Exam 17: Wage Determination

The rising general level of real wages in the United States has occurred because the growing population has increased the supply of labor relative to the demand for it.

A firm can hire 8 workers at a wage rate of $7 per hour but must pay $8 per hour to all of its employees to attract a ninth worker. The marginal wage cost of the ninth worker is

Refer to the given data. In maximizing its profit, this firm will employ

Union membership among workers in America has been declining since the 1950s.

Which of the following is correct?

Assume that your nominal wage was fixed at $12 an hour, and the price index rose from 102 to 105. In this case, your real wage has

Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be

According to international comparisons, which nation had the highest hourly pay in U.S. dollar terms in 2013?

If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire 12 workers, its marginal resource cost of hiring the 12th worker is $40.

If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will

There will be no principal-agent problem if a firm's owner (like a business consultant)does all the work of the firm.

The graph shows a firm that buys its inputs and sells its output in competitive markets. If the firm develops a new technology that increases labor productivity, the equilibrium level of employment for this firm is expected to be

The productivity and real wages of workers in industrially advanced economies have risen historically partly because

What do "wages" and "wage rates" mean in economics?

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 $19 to $13, by how much will the firm expand employment?

A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

Nominal monthly wages increase from $1,200 to $1,300, while the price level decreases by 2 percent. The percentage change in real monthly wages is about

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $150 and three workers are employed per day, the price of a unit of output must be

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?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

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Businesses and the Costs of Production

Pure Competition in the Short Run

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