Question 1

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that

Accepted Answer

A)  each applicant has a unique skill set. 
B)  the jobs available at the manufacturing plant represent the best possible opportunity for each applicant. 
C)  applicants have the ability to negotiate their wage based on their qualifications. 
D)  the quantity of workers available is greater than the quantity of workers that are required. 
A)  each applicant has a unique skill set. 
B)  the jobs available at the manufacturing plant represent the best possible opportunity for each applicant. 
C)  applicants have the ability to negotiate their wage based on their qualifications. 
D)  the quantity of workers available is greater than the quantity of workers that are required.

Question 2

Which of these is NOT a reason for shifts of the labor demand curve?

Accepted Answer

A)  a change in the price of a related input 
B)  a change in the market wage rate 
C)  changes in labor productivity 
D)  changes in demand for the final product 
A)  a change in the price of a related input 
B)  a change in the market wage rate 
C)  changes in labor productivity 
D)  changes in demand for the final product

Question 3

When labor markets are segmented, what is the cause of the resulting wage gap?

Accepted Answer

A)  supply of discriminated workers being forced from one labor market to another 
B)  demand for workers increasing in the favored labor market 
C)  supply of workers increasing in both the favored and unfavored labor markets 
D)  demand for workers falling in both the favored and unfavored labor markets 
A)  supply of discriminated workers being forced from one labor market to another 
B)  demand for workers increasing in the favored labor market 
C)  supply of workers increasing in both the favored and unfavored labor markets 
D)  demand for workers falling in both the favored and unfavored labor markets

Question 4

Reece Inc. has just discovered that the marginal revenue product generated by the last worker hired was $90, while the marginal factor cost was $120. What should Reece Inc. do?

Accepted Answer

A)  It should increase the level of production. 
B)  It should reduce the amount of labor hired. 
C)  It should leave the level of production unchanged. 
D)  It should increase the amount of labor hired. 
A)  It should increase the level of production. 
B)  It should reduce the amount of labor hired. 
C)  It should leave the level of production unchanged. 
D)  It should increase the amount of labor hired.

Question 5

Which of these statements is TRUE?
I. In general, the union wage differential is 10% to 20% above those of nonunion members.
II. The union wage differential varies substantially across employment sectors.
III. Union wage effects are most pronounced among blue-collar workers.

Accepted Answer

A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III 
A)  I only 
B)  II only 
C)  III only 
D)  I, II, and III

Question 6

Suppose that wages in the automobile industry increase. The labor supply curve for other types of manufacturing jobs should shift ____, and the number of workers available at any given wage rate will _____.

Accepted Answer

A)  left; decrease 
B)  left; increase 
C)  right; decrease 
D)  right; increase 
A)  left; decrease 
B)  left; increase 
C)  right; decrease 
D)  right; increase

Question 7

(Figure: Input/Output Monopsony) The monopsony in the input, which is a monopoly in the output market (as shown in the graph), would hire _____ workers.

Accepted Answer

A)  35 
B)  33 
C)  50 
D)  70 
A)  35 
B)  33 
C)  50 
D)  70

Question 8

In general, how large is the union wage differential above those of nonunion members?

Accepted Answer

A)  0% to 10 % 
B)  10% to 20% 
C)  20% to 30% 
D)  30% to 40% 
A)  0% to 10 % 
B)  10% to 20% 
C)  20% to 30% 
D)  30% to 40%

Question 9

All of these would explain a change in labor supply EXCEPT a(n)

Accepted Answer

A)  decrease in productivity. 
B)  increase in population. 
C)  increase in job status or prestige. 
D)  decrease in immigration. 
A)  decrease in productivity. 
B)  increase in population. 
C)  increase in job status or prestige. 
D)  decrease in immigration.

Question 10

Based on wage differentials between union and nonunion sectors, if unions were abolished, wages in the union sector would _____, and wages in the nonunion sector would _____.

Accepted Answer

A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall 
A)  rise; rise 
B)  rise; fall 
C)  fall; rise 
D)  fall; fall

Question 11

Which act prohibited unfair labor practices by employers?

Accepted Answer

A)  Wagner Act 
B)  Civil Rights Act of 1964 
C)  Executive Order 11246 
D)  Taft-Hartley Act of 1947 
A)  Wagner Act 
B)  Civil Rights Act of 1964 
C)  Executive Order 11246 
D)  Taft-Hartley Act of 1947

Question 12

In a competitive labor market, each firm hires its employees on the basis of where the market equilibrium wage equals the firm's marginal revenue product (MRPL).

Accepted Answer

A) True 
 B)False

Question 13

If the marginal revenue product for a firm exceeds the market wage rate, the firm should _____ in order to maximize profits.

Accepted Answer

A)  reduce the number of workers 
B)  hire more workers 
C)  keep the number of workers the same 
D)  close the shop 
A)  reduce the number of workers 
B)  hire more workers 
C)  keep the number of workers the same 
D)  close the shop

Question 14

The main difference between marginal revenue product (MRP) and the value of marginal product (VMP) is that VMP

Accepted Answer

A)  applies to firms selling in competitive markets, while MRP applies to firms selling in all markets. 
B)  applies to monopolists, and MRP applies to all markets. 
C)  applies to firms selling in all markets, while MRP applies to firms selling in competitive markets. 
D)  measures a worker's net contribution to revenue, while MRP measures a worker's gross contribution to revenue. 
A)  applies to firms selling in competitive markets, while MRP applies to firms selling in all markets. 
B)  applies to monopolists, and MRP applies to all markets. 
C)  applies to firms selling in all markets, while MRP applies to firms selling in competitive markets. 
D)  measures a worker's net contribution to revenue, while MRP measures a worker's gross contribution to revenue.

Question 15

Assume that the going wage for a worker at a competitive firm is $50 a day. If the marginal revenue product for the sixth worker is $55 a day, the

Accepted Answer

A)  sixth worker should be hired. 
B)  firm is maximizing its profits. 
C)  firm should hire fewer than six workers. 
D)  competitive firm can change the wage rate. 
A)  sixth worker should be hired. 
B)  firm is maximizing its profits. 
C)  firm should hire fewer than six workers. 
D)  competitive firm can change the wage rate.

Question 16

Between 1980 and 1990, a union worker earned 30% more than a nonunion worker.

Accepted Answer

A) True 
 B)False

Question 17

(Figure: Market Wages and Labor Demand) Based on the figure, if the market wage is $80, the firm will employ _____ workers.

Accepted Answer

A)  four 
B)  six 
C)  seven 
D)  eight 
A)  four 
B)  six 
C)  seven 
D)  eight

Question 18

(Table) According to the table, the firm should hire ____ workers.
$\begin{array}{c}
\text { Competitive Labor Market }\
\begin{array}{|c|c|c|c|c|c|}
\hline L & Q & M P P & \boldsymbol{P} & \boldsymbol{M M P} & \boldsymbol{W} \
\hline 0 & 0 & 0 & 8 & 0 & 80 \
\hline 1 & 5 & 5 & 8 & 40 & 80 \
\hline 2 & 11 & 6 & 8 & 48 & 80 \
\hline 3 & 18 & 7 & 8 & 56 & 80 \
\hline 4 & \mathrm{~A} & 9 & 8 & 72 & 80 \
\hline 5 & 38 & \mathrm{~B} & 8 & 88 & 80 \
\hline 6 & 50 & 12 & 8 & \mathrm{C} & 80 \
\hline 7 & 61 & 11 & 8 & 88 & 80 \
\hline 8 & 71 & 10 & 8 & 80 & 80 \
\hline 9 & 80 & 9 & 8 & 72 & 80 \
\hline 10 & 85 & 5 & 8 & 40 & 80 \
\hline
\end{array}
\end{array}$

Accepted Answer

A)  six 
B)  five 
C)  four 
D)  eight 
A)  six 
B)  five 
C)  four 
D)  eight

Question 19

(Table) Based on the table, if the wage rate is $65, how many workers should this firm hire?
$\begin{array}{|c|c|c|c|}
\hline \text { Units of Labor } & \begin{array}{c}
\text { Quantity of } \
\text { Output }
\end{array} & \text { Product Price } & \begin{array}{c}
\text { Marginal } \
\text { Revenue Product }
\end{array} \
\hline 1 & 20 & \$ 10 & \
\hline 2 & 28 & 10 & \text { A } \
\hline 3 & 35 & 10 & \text { B } \
\hline 4 & 41 & 10 & \text { C } \
\hline 5 & \text { D } & 10 & \$ 30 \
\hline 6 & 35 & 10 & \
\hline
\end{array}$

Accepted Answer

A)  1 worker 
B)  2 workers 
C)  3 workers 
D)  4 workers 
A)  1 worker 
B)  2 workers 
C)  3 workers 
D)  4 workers

Question 20

The idea that the demand for labor is a derived demand means that

Accepted Answer

A)  most households derive their income from their labor. 
B)  the demand consumers have for goods and services depends on the income they earn. 
C)  the demand for labor depends on the demand for the product the labor produces. 
D)  firms' profits are derived from their employees' labor. 
A)  most households derive their income from their labor. 
B)  the demand consumers have for goods and services depends on the income they earn. 
C)  the demand for labor depends on the demand for the product the labor produces. 
D)  firms' profits are derived from their employees' labor.

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that

Which of these is NOT a reason for shifts of the labor demand curve?

When labor markets are segmented, what is the cause of the resulting wage gap?

Reece Inc. has just discovered that the marginal revenue product generated by the last worker hired was $90, while the marginal factor cost was $120. What should Reece Inc. do?

Which of these statements is TRUE? I. In general, the union wage differential is 10% to 20% above those of nonunion members. II. The union wage differential varies substantially across employment sectors. III. Union wage effects are most pronounced among blue-collar workers.

Suppose that wages in the automobile industry increase. The labor supply curve for other types of manufacturing jobs should shift , and the number of workers available at any given wage rate will _.

(Figure: Input/Output Monopsony) The monopsony in the input, which is a monopoly in the output market (as shown in the graph), would hire _____ workers.

In general, how large is the union wage differential above those of nonunion members?

All of these would explain a change in labor supply EXCEPT a(n)

Based on wage differentials between union and nonunion sectors, if unions were abolished, wages in the union sector would _, and wages in the nonunion sector would _.

Which act prohibited unfair labor practices by employers?

In a competitive labor market, each firm hires its employees on the basis of where the market equilibrium wage equals the firm's marginal revenue product (MRP_L).

If the marginal revenue product for a firm exceeds the market wage rate, the firm should _____ in order to maximize profits.

The main difference between marginal revenue product (MRP) and the value of marginal product (VMP) is that VMP

Assume that the going wage for a worker at a competitive firm is $50 a day. If the marginal revenue product for the sixth worker is $55 a day, the

Between 1980 and 1990, a union worker earned 30% more than a nonunion worker.

(Figure: Market Wages and Labor Demand) Based on the figure, if the market wage is $80, the firm will employ _____ workers.

(Table) According to the table, the firm should hire ____ workers. Competitive Labor Market L Q MPP 0 0 0 8 0 80 1 5 5 8 40 80 2 11 6 8 48 80 3 18 7 8 56 80 4 9 8 72 80 5 38 8 88 80 6 50 12 8 80 7 61 11 8 88 80 8 71 10 8 80 80 9 80 9 8 72 80 10 85 5 8 40 80

(Table) Based on the table, if the wage rate is $65, how many workers should this firm hire? Units of Labor Quantity of Output Product Price Marginal Revenue Product 1 20 \ 10 2 28 10 A 3 35 10 B 4 41 10 C 5 D 10 \ 30 6 35 10

The idea that the demand for labor is a derived demand means that

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Exam 11: The Labor Market

In a competitive labor market, if a new manufacturing plant seeks to build its labor force, it is assumed that

Which of these is NOT a reason for shifts of the labor demand curve?

When labor markets are segmented, what is the cause of the resulting wage gap?

Reece Inc. has just discovered that the marginal revenue product generated by the last worker hired was $90, while the marginal factor cost was $120. What should Reece Inc. do?

Which of these statements is TRUE? I. In general, the union wage differential is 10% to 20% above those of nonunion members. II. The union wage differential varies substantially across employment sectors. III. Union wage effects are most pronounced among blue-collar workers.

Suppose that wages in the automobile industry increase. The labor supply curve for other types of manufacturing jobs should shift ____, and the number of workers available at any given wage rate will _____.

(Figure: Input/Output Monopsony) The monopsony in the input, which is a monopoly in the output market (as shown in the graph), would hire _____ workers.

In general, how large is the union wage differential above those of nonunion members?

All of these would explain a change in labor supply EXCEPT a(n)

Based on wage differentials between union and nonunion sectors, if unions were abolished, wages in the union sector would _____, and wages in the nonunion sector would _____.

Which act prohibited unfair labor practices by employers?

In a competitive labor market, each firm hires its employees on the basis of where the market equilibrium wage equals the firm's marginal revenue product (MRPL).

If the marginal revenue product for a firm exceeds the market wage rate, the firm should _____ in order to maximize profits.

The main difference between marginal revenue product (MRP) and the value of marginal product (VMP) is that VMP

Assume that the going wage for a worker at a competitive firm is $50 a day. If the marginal revenue product for the sixth worker is $55 a day, the

Between 1980 and 1990, a union worker earned 30% more than a nonunion worker.

(Figure: Market Wages and Labor Demand) Based on the figure, if the market wage is $80, the firm will employ _____ workers.

(Table) According to the table, the firm should hire ____ workers. Competitive Labor Market L Q MPP 0 0 0 8 0 80 1 5 5 8 40 80 2 11 6 8 48 80 3 18 7 8 56 80 4 9 8 72 80 5 38 8 88 80 6 50 12 8 80 7 61 11 8 88 80 8 71 10 8 80 80 9 80 9 8 72 80 10 85 5 8 40 80

(Table) Based on the table, if the wage rate is $65, how many workers should this firm hire? Units of Labor Quantity of Output Product Price Marginal Revenue Product 1 20 \ 10 2 28 10 A 3 35 10 B 4 41 10 C 5 D 10 \ 30 6 35 10

The idea that the demand for labor is a derived demand means that

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Elasticity

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters

Suppose that wages in the automobile industry increase. The labor supply curve for other types of manufacturing jobs should shift , and the number of workers available at any given wage rate will _.

Based on wage differentials between union and nonunion sectors, if unions were abolished, wages in the union sector would _, and wages in the nonunion sector would _.

In a competitive labor market, each firm hires its employees on the basis of where the market equilibrium wage equals the firm's marginal revenue product (MRP_L).