Question 1

How do efficiency wages help increase a firm's profits?

Accepted Answer

Efficiency wages are wages offered above the wages that workers would accept,where the premium is paid to increase worker productivity.They help increase a firm's profits in a number of ways,including the following:
i)Efficiency wages reduce worker turnover.
ii)The risk of losing a high-paying job motivates employees to work harder than they otherwise would.
iii)There is a possibility that employees are grateful for receiving an above-market wage,leading them to work harder.

Question 2

The following figure shows two labor demand curves, LD₁ and LD₂, and two labor supply curves, LS₁ and LS₂.
  
-Refer to the figure above.What is the equilibrium wage rate if the labor demand curve is LD₁ and the labor supply curve is LS₁?

Accepted Answer

A)  $15 
B)  $20 
C)  $25 
D)  $30 
A)  $15 
B)  $20 
C)  $25 
D)  $30 C

Question 3

The figure below shows labor supply and labor demand curves.
  
-Refer to the figure above.What is the equilibrium wage rate and quantity of labor?

Accepted Answer

A)  Wage rate = 5; Quantity of labor = 6 
B)  Wage rate = 3.75; Quantity of labor = 4.5 
C)  Wage rate = 3.25; Quantity of labor = 4.25 
D)  Wage rate = 4.5; Quantity of labor = 3.5 
A)  Wage rate = 5; Quantity of labor = 6 
B)  Wage rate = 3.75; Quantity of labor = 4.5 
C)  Wage rate = 3.25; Quantity of labor = 4.25 
D)  Wage rate = 4.5; Quantity of labor = 3.5 B

Question 4

Which of the following statements is true of the unemployment rate in an economy?

Accepted Answer

A)  During periods of expansion, the unemployment rate in an economy increases. 
B)  During periods of contraction, the unemployment rate in an economy decreases. 
C)  The unemployment rate in most of the developed nations of the world is 0 percent. 
D)  The rate of unemployment is positive in any well-functioning economy. 
A)  During periods of expansion, the unemployment rate in an economy increases. 
B)  During periods of contraction, the unemployment rate in an economy decreases. 
C)  The unemployment rate in most of the developed nations of the world is 0 percent. 
D)  The rate of unemployment is positive in any well-functioning economy.

Question 5

Scenario: 100 people live in Country X, and 60 of these people are working full time. Tara and Jen have been able to find only part-time jobs. John, Peter, and Luna just had to close their coffee shop; and John and Peter are looking for a new business venture. Luna has inherited a large sum of money and feels that she does need to work anymore. Her sister Sara feels the same way. Four people in Country X are living in care facilities. Ten people are full-time students, and two of them currently are hoping to find a job. All other people are retirees or under the age of 16.
-Refer to the scenario above.What is the size of the labor force in Country X?

Accepted Answer

A)  55 
B)  64 
C)  70 
D)  78 
A)  55 
B)  64 
C)  70 
D)  78

Question 6

If,at a given wage,the quantity of labor supplied exceeds the quantity of labor demanded,________.

Accepted Answer

A)  the wage rate will increase 
B)  the wage rate will fall 
C)  the aggregate price index will rise 
D)  the aggregate price index will fall 
A)  the wage rate will increase 
B)  the wage rate will fall 
C)  the aggregate price index will rise 
D)  the aggregate price index will fall

Question 7

Scenario: Truck drivers across the country are on strike in an effort to negotiate higher wages. Currently the labor market in this industry clears at WM and QM, as shown in the figure below.
  
-Refer to the scenario above.Assume that the negotiations were successful and a minimum wage has been implemented.Shortly thereafter,new technology that allows trucks to drive without drivers becomes available.How is the equilibrium in the driver market likely going to change?

Accepted Answer

A)  The new wage rate will be above WM, the new quantity of drivers supplied will be above QM, and the new quantity of drivers demanded will be below QM. 
B)  The new wage rate will be below WM, and the new quantity of labor will be above QM. 
C)  The new wage rate will be above WM, and the new quantity of labor will be below QM. 
D)  The new wage rate will be below WM, the new quantity of drivers supplied will be below QM, and the new quantity of drivers demanded will be above QM. 
A)  The new wage rate will be above WM, the new quantity of drivers supplied will be above QM, and the new quantity of drivers demanded will be below QM. 
B)  The new wage rate will be below WM, and the new quantity of labor will be above QM. 
C)  The new wage rate will be above WM, and the new quantity of labor will be below QM. 
D)  The new wage rate will be below WM, the new quantity of drivers supplied will be below QM, and the new quantity of drivers demanded will be above QM.

Question 8

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market.
  
-Refer to the figure above.If the government institutes a minimum wage rate of $30,the unemployment in the market will be ________.

Accepted Answer

A)  10 units of labor 
B)  15 units of labor 
C)  20 units of labor 
D)  25 units of labor 
A)  10 units of labor 
B)  15 units of labor 
C)  20 units of labor 
D)  25 units of labor

Question 9

For the textile industries of England in 1811,the invention of new technology that allowed workers to complete tasks that had previously taken hours in minutes resulted in a(n)________ in these industries.

Accepted Answer

A)  decrease in the demand for labor 
B)  increase in the demand for labor 
C)  decrease in the quantity of labor demanded 
D)  increase in the quantity of labor demanded 
A)  decrease in the demand for labor 
B)  increase in the demand for labor 
C)  decrease in the quantity of labor demanded 
D)  increase in the quantity of labor demanded

Question 10

Which of the following groups of people would be considered unemployed?

Accepted Answer

A)  Workers who experienced a wage cut due to recession 
B)  Employees working in public sector undertakings 
C)  Housewives raising kids at home and not looking for jobs 
D)  Workers who have been looking for jobs for the past 4 weeks 
A)  Workers who experienced a wage cut due to recession 
B)  Employees working in public sector undertakings 
C)  Housewives raising kids at home and not looking for jobs 
D)  Workers who have been looking for jobs for the past 4 weeks

Question 11

Collective bargaining between unions and employers often leads to ________.

Accepted Answer

A)  wages that are lower than what workers would have received at equilibrium 
B)  wages that are higher than what workers would have received at equilibrium 
C)  wages equal to what workers would have received at equilibrium 
D)  a reduction in the unemployment rate 
A)  wages that are lower than what workers would have received at equilibrium 
B)  wages that are higher than what workers would have received at equilibrium 
C)  wages equal to what workers would have received at equilibrium 
D)  a reduction in the unemployment rate

Question 12

The following table shows some labor statistics for four years.
  
-Refer to the table above.Based on these 4 years of data,what is the best estimate for the natural rate of unemployment?

Accepted Answer

A)  7.1 percent 
B)  7.4 percent 
C)  7.7 percent 
D)  8.1 percent 
A)  7.1 percent 
B)  7.4 percent 
C)  7.7 percent 
D)  8.1 percent

Question 13

Wages that are higher than the current market wage ________.

Accepted Answer

A)  dissuade workers from shirking 
B)  lower the productivity of workers 
C)  lower the aggregate price index 
D)  reduce the cost of production of various goods 
A)  dissuade workers from shirking 
B)  lower the productivity of workers 
C)  lower the aggregate price index 
D)  reduce the cost of production of various goods

Question 14

If the natural rate of unemployment in a country is 6 percent and the unemployment rate in the country is 8 percent,the cyclical unemployment in the country must be ________.

Accepted Answer

A)  2 percent 
B)  6 percent 
C)  8 percent 
D)  14 percent 
A)  2 percent 
B)  6 percent 
C)  8 percent 
D)  14 percent

Question 15

Scenario: Suppose that professors pay their teaching assistants $10 an hour to grade papers for their classes, and then the professors sell the graded papers back to the students in their classes for $.75 a paper. The following table shows the number of papers graded in a given number of hours.
  
-Refer to the scenario above.If the teaching assistants' hourly rate increases to $15,then how many hours of labor should the professors employ to maximize their profits?

Accepted Answer

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

Question 16

________ keeps the market wage above the level that would clear the labor market.

Accepted Answer

A)  Wage discrimination 
B)  Wage fluctuation 
C)  Wage stability 
D)  Wage rigidity 
A)  Wage discrimination 
B)  Wage fluctuation 
C)  Wage stability 
D)  Wage rigidity

Question 17

Rapid unemployment increases ________.

Accepted Answer

A)  happen in all areas of the United States at the same time 
B)  may happen in one area but not in adjacent areas 
C)  only happen if there is a recession 
D)  may be the consequence of a small increase in the minimum wage 
A)  happen in all areas of the United States at the same time 
B)  may happen in one area but not in adjacent areas 
C)  only happen if there is a recession 
D)  may be the consequence of a small increase in the minimum wage

Question 18

The following figure shows wage versus labor supply.
  
-Refer to the figure above.Assuming the supply for labor is equal to S₁ and the demand for labor is equal to D₂,how would a shift of the minimum wage from w₂ to w₃ affect unemployment?

Accepted Answer

A)  It would decrease to zero unemployment. 
B)  It would increase from Q₄ − Q₂ to Q₅ − Q₁. 
C)  It would increase from zero unemployment to Q₅ − Q₂. 
D)  It would increase from zero unemployment to Q₄ − Q₂. 
A)  It would decrease to zero unemployment. 
B)  It would increase from Q₄ − Q₂ to Q₅ − Q₁. 
C)  It would increase from zero unemployment to Q₅ − Q₂. 
D)  It would increase from zero unemployment to Q₄ − Q₂.

Question 19

The following table compares labor statistics for two countries.
  
-Refer to the table above.Which category do underemployed workers fall under?

Accepted Answer

A)  Not in labor force 
B)  Potential workers 
C)  Unemployed workers 
D)  All of the above 
A)  Not in labor force 
B)  Potential workers 
C)  Unemployed workers 
D)  All of the above

Question 20

The following figure shows curves for labor demand and labor supply.
  
-Refer to the figure above.If labor unions negotiate the wage to be fixed at WH,we refer to the difference between ________ and ________ as ________.

Accepted Answer

A)  Q₅; Q₃; involuntary unemployment 
B)  Q₃; Q₁; wage rigidity 
C)  Q₅; Q₁; structural unemployment 
D)  Q₄; Q₂; voluntary unemployment 
A)  Q₅; Q₃; involuntary unemployment 
B)  Q₃; Q₁; wage rigidity 
C)  Q₅; Q₁; structural unemployment 
D)  Q₄; Q₂; voluntary unemployment

How do efficiency wages help increase a firm's profits?

The following figure shows two labor demand curves, LD₁ and LD₂, and two labor supply curves, LS₁ and LS₂. -Refer to the figure above.What is the equilibrium wage rate if the labor demand curve is LD₁ and the labor supply curve is LS₁?

The figure below shows labor supply and labor demand curves. -Refer to the figure above.What is the equilibrium wage rate and quantity of labor?

Which of the following statements is true of the unemployment rate in an economy?

If,at a given wage,the quantity of labor supplied exceeds the quantity of labor demanded,________.

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. -Refer to the figure above.If the government institutes a minimum wage rate of $30,the unemployment in the market will be ________.

For the textile industries of England in 1811,the invention of new technology that allowed workers to complete tasks that had previously taken hours in minutes resulted in a(n)________ in these industries.

Which of the following groups of people would be considered unemployed?

Collective bargaining between unions and employers often leads to ________.

The following table shows some labor statistics for four years. -Refer to the table above.Based on these 4 years of data,what is the best estimate for the natural rate of unemployment?

Wages that are higher than the current market wage ________.

If the natural rate of unemployment in a country is 6 percent and the unemployment rate in the country is 8 percent,the cyclical unemployment in the country must be ________.

________ keeps the market wage above the level that would clear the labor market.

Rapid unemployment increases ________.

The following figure shows wage versus labor supply. -Refer to the figure above.Assuming the supply for labor is equal to S₁ and the demand for labor is equal to D₂,how would a shift of the minimum wage from w₂ to w₃ affect unemployment?

The following table compares labor statistics for two countries. -Refer to the table above.Which category do underemployed workers fall under?

The following figure shows curves for labor demand and labor supply. -Refer to the figure above.If labor unions negotiate the wage to be fixed at WH,we refer to the difference between and as .

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

Exam 9: Employment and Unemployment

How do efficiency wages help increase a firm's profits?

The following figure shows two labor demand curves, LD₁ and LD₂, and two labor supply curves, LS₁ and LS₂. -Refer to the figure above.What is the equilibrium wage rate if the labor demand curve is LD₁ and the labor supply curve is LS₁?

The figure below shows labor supply and labor demand curves. -Refer to the figure above.What is the equilibrium wage rate and quantity of labor?

Which of the following statements is true of the unemployment rate in an economy?

If,at a given wage,the quantity of labor supplied exceeds the quantity of labor demanded,________.

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. -Refer to the figure above.If the government institutes a minimum wage rate of $30,the unemployment in the market will be ________.

For the textile industries of England in 1811,the invention of new technology that allowed workers to complete tasks that had previously taken hours in minutes resulted in a(n)________ in these industries.

Which of the following groups of people would be considered unemployed?

Collective bargaining between unions and employers often leads to ________.

The following table shows some labor statistics for four years. -Refer to the table above.Based on these 4 years of data,what is the best estimate for the natural rate of unemployment?

Wages that are higher than the current market wage ________.

If the natural rate of unemployment in a country is 6 percent and the unemployment rate in the country is 8 percent,the cyclical unemployment in the country must be ________.

________ keeps the market wage above the level that would clear the labor market.

Rapid unemployment increases ________.

The following figure shows wage versus labor supply. -Refer to the figure above.Assuming the supply for labor is equal to S₁ and the demand for labor is equal to D₂,how would a shift of the minimum wage from w₂ to w₃ affect unemployment?

The following table compares labor statistics for two countries. -Refer to the table above.Which category do underemployed workers fall under?

The following figure shows curves for labor demand and labor supply. -Refer to the figure above.If labor unions negotiate the wage to be fixed at WH,we refer to the difference between ________ and ________ as ________.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

The following figure shows curves for labor demand and labor supply. -Refer to the figure above.If labor unions negotiate the wage to be fixed at WH,we refer to the difference between and as .