Question 1

An employer who is a monopolist in the product market will probably

Accepted Answer

A)  hire more employees than a perfect competitor would. 
B)  hire fewer employees than a perfect competitor would. 
C)  hire the same number of employees as a perfect competitor, due to competitiveness in the labor market. 
D)  hire fewer workers at a higher wage than a perfect competitor would. 
A)  hire more employees than a perfect competitor would. 
B)  hire fewer employees than a perfect competitor would. 
C)  hire the same number of employees as a perfect competitor, due to competitiveness in the labor market. 
D)  hire fewer workers at a higher wage than a perfect competitor would. B

Question 2

Declining marginal product of labor

Accepted Answer

A)  is needed if competitive firms are to stop hiring workers at some point. 
B)  allows firms to make the most profit. 
C)  mainly exists because workers get tired after many hours of work. 
D)  implies workers get more productive as more of them are hired. 
A)  is needed if competitive firms are to stop hiring workers at some point. 
B)  allows firms to make the most profit. 
C)  mainly exists because workers get tired after many hours of work. 
D)  implies workers get more productive as more of them are hired. A

Question 3

In the long run a profit-maximizing firm will select capital and labor so that

Accepted Answer

A)  the marginal product of labor equals the marginal product of capital. 
B)  the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital. 
C)  labor equals capital. 
D)  the wage equals the rental cost of a unit of capital. 
A)  the marginal product of labor equals the marginal product of capital. 
B)  the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital. 
C)  labor equals capital. 
D)  the wage equals the rental cost of a unit of capital. B

Question 4

When a competitive firm hired nine workers, its profits were $100. When it hired 10 workers, its output was went from 9 to 11 units. Each unit of output sold for $10 while the wage of each worker was $12. What is the firm's new profit level?

Accepted Answer

A)  $20 
B)  $8 
C)  $108 
D)  $12 
A)  $20 
B)  $8 
C)  $108 
D)  $12

Question 5

Studies show that most of a payroll tax is paid by workers in the form of lowered wages. If true, these studies imply

Accepted Answer

A)  the supply of labor curve is very steep. 
B)  the supply of labor curve is very flat. 
C)  it would be better if employers were made to pay all of the tax. 
D)  the demand for labor curve is very steep. 
A)  the supply of labor curve is very steep. 
B)  the supply of labor curve is very flat. 
C)  it would be better if employers were made to pay all of the tax. 
D)  the demand for labor curve is very steep.

Question 6

A profit-maximizing firm decides to produce 100 units of output. This implies that the firm will

Accepted Answer

A)  produce on its lowest isoexpenditure line. 
B)  produce at a point where its isoexpenditure line is everywhere below the isoquant curve for 100 units of output. 
C)  produce at a point where its isoexpenditure line is tangent to the isoquant curve for 100 units of output. 
D)  produce where the marginal rate of technical substitution equals the wage rate. 
A)  produce on its lowest isoexpenditure line. 
B)  produce at a point where its isoexpenditure line is everywhere below the isoquant curve for 100 units of output. 
C)  produce at a point where its isoexpenditure line is tangent to the isoquant curve for 100 units of output. 
D)  produce where the marginal rate of technical substitution equals the wage rate.

Question 7

If skilled workers are gross complements with low-skilled immigrant labor, then when there is an increase in low-skilled immigrant labor

Accepted Answer

A)  skilled workers wages will go down but their employment will go up. 
B)  skilled workers wages will go down and their employment will go down. 
C)  skilled workers wages will go up and their employment will go up. 
D)  skilled workers wages will go up and their employment will go down. 
A)  skilled workers wages will go down but their employment will go up. 
B)  skilled workers wages will go down and their employment will go down. 
C)  skilled workers wages will go up and their employment will go up. 
D)  skilled workers wages will go up and their employment will go down.

Question 8

The marginal product of labor tells us

Accepted Answer

A)  which employee is the most productive. 
B)  the average output produced by each employee. 
C)  the additional output produced by the last employee hired. 
D)  how much money the firm can make from hiring each employee. 
A)  which employee is the most productive. 
B)  the average output produced by each employee. 
C)  the additional output produced by the last employee hired. 
D)  how much money the firm can make from hiring each employee.

Question 9

Most of a payroll tax is eventually paid by

Accepted Answer

A)  employers if the supply of labor curve is very inelastic. 
B)  employers if the labor demand curve is very elastic. 
C)  workers if the supply of labor curve is very inelastic. 
D)  workers if the supply of labor curve is very elastic. 
A)  employers if the supply of labor curve is very inelastic. 
B)  employers if the labor demand curve is very elastic. 
C)  workers if the supply of labor curve is very inelastic. 
D)  workers if the supply of labor curve is very elastic.

Question 10

Employee subsidies will be most effective at raising the effective wage of the poor when

Accepted Answer

A)  demand for labor is elastic. 
B)  supply for labor is inelastic. 
C)  both A and B 
D)  neither A nor B 
A)  demand for labor is elastic. 
B)  supply for labor is inelastic. 
C)  both A and B 
D)  neither A nor B

Question 11

For two substitutes in production, if the scale effect dominates

Accepted Answer

A)  then the inputs are gross complements. 
B)  then the inputs are gross substitutes. 
C)  then the inputs could be either gross complements or gross substitutes. 
D)  then the inputs can not be used at the same time. 
A)  then the inputs are gross complements. 
B)  then the inputs are gross substitutes. 
C)  then the inputs could be either gross complements or gross substitutes. 
D)  then the inputs can not be used at the same time.

Question 12

The firm's labor demand curve in the short run

Accepted Answer

A)  is upward sloping. 
B)  is horizontal. 
C)  is the downward sloping segment of the marginal revenue schedule. 
D)  is the downward sloping segment of the marginal product of labor schedule. 
A)  is upward sloping. 
B)  is horizontal. 
C)  is the downward sloping segment of the marginal revenue schedule. 
D)  is the downward sloping segment of the marginal product of labor schedule.

Question 13

If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?

Accepted Answer

A)  $18 
B)  $9 
C)  $1.50 
D)  $0.50 
A)  $18 
B)  $9 
C)  $1.50 
D)  $0.50

Question 14

All of the following firms are producing on the same output isoquant. Which firm will use the most labor?

Accepted Answer

A)  Wage $120; Hourly Price of Capital $240 
B)  Wage $60; Hourly Price of Capital $40 
C)  Wage $6; Hourly Price of Capital $2 
D)  Wage $15; Hourly Price of Capital $15 
A)  Wage $120; Hourly Price of Capital $240 
B)  Wage $60; Hourly Price of Capital $40 
C)  Wage $6; Hourly Price of Capital $2 
D)  Wage $15; Hourly Price of Capital $15

Question 15

If a tax is placed on an employer

Accepted Answer

A)  workers will not have to pay the tax. 
B)  both wages and employment levels will usually decrease. 
C)  customers will not have to pay the tax. 
D)  wages will decrease but employment levels will increase. 
A)  workers will not have to pay the tax. 
B)  both wages and employment levels will usually decrease. 
C)  customers will not have to pay the tax. 
D)  wages will decrease but employment levels will increase.

Question 16

If the firm hires to a point where the marginal expense of labor is greater than the marginal revenue product of labor, then

Accepted Answer

A)  profits could be increased by increasing employment. 
B)  profits could be increased by reducing employment. 
C)  profits are maximized. 
D)  total cost must be greater than total revenue. 
A)  profits could be increased by increasing employment. 
B)  profits could be increased by reducing employment. 
C)  profits are maximized. 
D)  total cost must be greater than total revenue.

Question 17

Table 3.1
  
-Referring to Table 3.1, if wages are $50.00 per day and pots sell for $20.00 each, how many potters will the firm hire?

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  five 
A)  two 
B)  three 
C)  four 
D)  five

Question 18

A competitive industry hires 1000 workers. The 1000th worker adds $500 a week to their employer's revenue. If a monopoly took over the industry, then the 1000th worker would likely

Accepted Answer

A)  add less than $500 a week to their employer's revenue. 
B)  still add $500 a week to their employer's revenue. 
C)  add more than $500 a week to their employer's revenue. 
D)  uncertain; it depends on the shape of the demand curve for output. 
A)  add less than $500 a week to their employer's revenue. 
B)  still add $500 a week to their employer's revenue. 
C)  add more than $500 a week to their employer's revenue. 
D)  uncertain; it depends on the shape of the demand curve for output.

Question 19

Diminishing marginal returns occur because

Accepted Answer

A)  hiring more employees means that each has less capital with which to work. 
B)  it is more difficult to manage a firm as the size of the workforce and capital stock both grow. 
C)  the best employees will always be hired first. 
D)  hiring more employees means that they will subdivide tasks and therefore become more efficient. 
A)  hiring more employees means that each has less capital with which to work. 
B)  it is more difficult to manage a firm as the size of the workforce and capital stock both grow. 
C)  the best employees will always be hired first. 
D)  hiring more employees means that they will subdivide tasks and therefore become more efficient.

Question 20

A worker's hourly wage is $25 and output sells for $5 a unit. What is the minimum marginal product a worker must produce in order for a competitive employer to break even when hiring the worker?

Accepted Answer

A)  1/5 
B)  5 
C)  25 
D)  125 
A)  1/5 
B)  5 
C)  25 
D)  125

An employer who is a monopolist in the product market will probably

Declining marginal product of labor

In the long run a profit-maximizing firm will select capital and labor so that

When a competitive firm hired nine workers, its profits were $100. When it hired 10 workers, its output was went from 9 to 11 units. Each unit of output sold for $10 while the wage of each worker was $12. What is the firm's new profit level?

Studies show that most of a payroll tax is paid by workers in the form of lowered wages. If true, these studies imply

A profit-maximizing firm decides to produce 100 units of output. This implies that the firm will

If skilled workers are gross complements with low-skilled immigrant labor, then when there is an increase in low-skilled immigrant labor

The marginal product of labor tells us

Most of a payroll tax is eventually paid by

Employee subsidies will be most effective at raising the effective wage of the poor when

For two substitutes in production, if the scale effect dominates

The firm's labor demand curve in the short run

If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?

All of the following firms are producing on the same output isoquant. Which firm will use the most labor?

If a tax is placed on an employer

If the firm hires to a point where the marginal expense of labor is greater than the marginal revenue product of labor, then

Table 3.1 -Referring to Table 3.1, if wages are $50.00 per day and pots sell for $20.00 each, how many potters will the firm hire?

A competitive industry hires 1000 workers. The 1000th worker adds $500 a week to their employer's revenue. If a monopoly took over the industry, then the 1000th worker would likely

Diminishing marginal returns occur because

A worker's hourly wage is $25 and output sells for $5 a unit. What is the minimum marginal product a worker must produce in order for a competitive employer to break even when hiring the worker?

Introduction

Overview of the Labor Market

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters

Exam 3: The Demand for Labor

An employer who is a monopolist in the product market will probably

Declining marginal product of labor

In the long run a profit-maximizing firm will select capital and labor so that

When a competitive firm hired nine workers, its profits were $100. When it hired 10 workers, its output was went from 9 to 11 units. Each unit of output sold for $10 while the wage of each worker was $12. What is the firm's new profit level?

Studies show that most of a payroll tax is paid by workers in the form of lowered wages. If true, these studies imply

A profit-maximizing firm decides to produce 100 units of output. This implies that the firm will

If skilled workers are gross complements with low-skilled immigrant labor, then when there is an increase in low-skilled immigrant labor

The marginal product of labor tells us

Most of a payroll tax is eventually paid by

Employee subsidies will be most effective at raising the effective wage of the poor when

For two substitutes in production, if the scale effect dominates

The firm's labor demand curve in the short run

If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?

All of the following firms are producing on the same output isoquant. Which firm will use the most labor?

If a tax is placed on an employer

If the firm hires to a point where the marginal expense of labor is greater than the marginal revenue product of labor, then

Table 3.1 -Referring to Table 3.1, if wages are $50.00 per day and pots sell for $20.00 each, how many potters will the firm hire?

A competitive industry hires 1000 workers. The 1000th worker adds $500 a week to their employer's revenue. If a monopoly took over the industry, then the 1000th worker would likely

Diminishing marginal returns occur because

A worker's hourly wage is $25 and output sells for $5 a unit. What is the minimum marginal product a worker must produce in order for a competitive employer to break even when hiring the worker?

Introduction

Overview of the Labor Market

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Compensating Wage Differentials and Labor Markets

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters