Question 1

If labor is a small percentage of the total costs of an industry, this will tend to make the own wage elasticity of labor demand

Accepted Answer

A)  high. 
B)  low. 
C)  positive. 
D)  zero. 
A)  high. 
B)  low. 
C)  positive. 
D)  zero.

Question 2

If the own-wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by

Accepted Answer

A)  2%. 
B)  5%. 
C)  10%. 
D)  20%. 
A)  2%. 
B)  5%. 
C)  10%. 
D)  20%.

Question 3

Cross wage elasticities of demand are

Accepted Answer

A)  always positive in magnitude. 
B)  always negative in magnitude. 
C)  either positive or negative in magnitude. 
D)  positive for gross complements, negative for gross substitutes. 
A)  always positive in magnitude. 
B)  always negative in magnitude. 
C)  either positive or negative in magnitude. 
D)  positive for gross complements, negative for gross substitutes.

Question 4

If two inputs are gross complements, the cross-wage elasticity of demand for the two inputs will be

Accepted Answer

A)  zero. 
B)  one. 
C)  positive. 
D)  negative. 
A)  zero. 
B)  one. 
C)  positive. 
D)  negative.

Question 5

If an increase in the minimum wage leads to higher aggregate earnings by the workers affected, then the own-wage elasticity of demand is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  of unit elasticity. 
D)  uncertain; more information is needed. 
A)  elastic. 
B)  inelastic. 
C)  of unit elasticity. 
D)  uncertain; more information is needed.

Question 6

Other things equal, an elastic demand for an industry's output will tend to make the industry's own wage elasticity of demand

Accepted Answer

A)  high. 
B)  low. 
C)  positive. 
D)  zero. 
A)  high. 
B)  low. 
C)  positive. 
D)  zero.

Question 7

Other things equal, the own-wage elasticity of demand for a category of labor is higher when

Accepted Answer

A)  the price elasticity of demand for the product being produced is low. 
B)  other factors of production can be easily substituted for the category of labor. 
C)  the supply of other factors of production is highly inelastic. 
D)  the cost of employing the category of labor is a small share of the total costs of production. 
A)  the price elasticity of demand for the product being produced is low. 
B)  other factors of production can be easily substituted for the category of labor. 
C)  the supply of other factors of production is highly inelastic. 
D)  the cost of employing the category of labor is a small share of the total costs of production.

Question 8

Own wage elasticity of labor demand tends to

Accepted Answer

A)  increase with skill level. 
B)  decrease with skill level. 
C)  be unrelated to skill level. 
D)  remain unchanged with skill level. 
A)  increase with skill level. 
B)  decrease with skill level. 
C)  be unrelated to skill level. 
D)  remain unchanged with skill level.

Question 9

If teenagers and adults are substitutes in production, and the wage of teenagers falls, then

Accepted Answer

A)  they must be gross substitutes and the employment of adults will fall. 
B)  they must be gross complements and the employment of adults will fall. 
C)  they could be either gross substitutes or gross complements and the employment of adults could rise or fall. 
D)  they must be gross substitutes and the employment of adults will rise. 
A)  they must be gross substitutes and the employment of adults will fall. 
B)  they must be gross complements and the employment of adults will fall. 
C)  they could be either gross substitutes or gross complements and the employment of adults could rise or fall. 
D)  they must be gross substitutes and the employment of adults will rise.

Question 10

If Industry A can substitute capital for labor easily and Industry B can not, then (other things equal)

Accepted Answer

A)  Industry A's own-wage elasticity of demand will be higher than Industry B's. 
B)  Industry B's own-wage elasticity of demand will be higher than Industry A's. 
C)  the industries' own-wage elasticities of demand will be equal. 
D)  we cannot predict which firm's own-wage elasticity of demand will be higher. 
A)  Industry A's own-wage elasticity of demand will be higher than Industry B's. 
B)  Industry B's own-wage elasticity of demand will be higher than Industry A's. 
C)  the industries' own-wage elasticities of demand will be equal. 
D)  we cannot predict which firm's own-wage elasticity of demand will be higher.

Question 11

Along a straight-line demand curve for labor

Accepted Answer

A)  the slope becomes more negative as the wage rises. 
B)  the elasticity of demand remains constant. 
C)  demand becomes more elastic as the wage rises. 
D)  demand becomes less elastic as the wage rises. 
A)  the slope becomes more negative as the wage rises. 
B)  the elasticity of demand remains constant. 
C)  demand becomes more elastic as the wage rises. 
D)  demand becomes less elastic as the wage rises.

Question 12

Output is produced with capital and labor. If the price of capital goes up

Accepted Answer

A)  the price of output will fall. 
B)  output will be increased. 
C)  the firm will more labor per unit output. 
D)  none of the above will result when the price of capital goes up. 
A)  the price of output will fall. 
B)  output will be increased. 
C)  the firm will more labor per unit output. 
D)  none of the above will result when the price of capital goes up.

Question 13

Employment often increases after an increase in the minimum wage because

Accepted Answer

A)  more people want to work at the new, higher wage. 
B)  independently, labor demand increases significantly at the same time. 
C)  the minimum wage is below the equilibrium level of wages. 
D)  the labor supply curve is vertical. 
A)  more people want to work at the new, higher wage. 
B)  independently, labor demand increases significantly at the same time. 
C)  the minimum wage is below the equilibrium level of wages. 
D)  the labor supply curve is vertical.

Question 14

Other things equal, in which of the following will have the most elastic own-wage elasticity of demand?

Accepted Answer

A)  A steel firm with one plant in California. 
B)  All steel firms in California. 
C)  All steel firms in the United States. 
D)  All steel firms in the world. 
A)  A steel firm with one plant in California. 
B)  All steel firms in California. 
C)  All steel firms in the United States. 
D)  All steel firms in the world.

Question 15

The minimum wage is a relatively blunt instrument with which to reduce poverty because

Accepted Answer

A)  only about half the labor force is covered by the minimum wage. 
B)  only about half the employers comply with the law. 
C)  most workers whose wages are affected by minimum wage increases do not live in poor families. 
D)  minimum wage increases cause large increases in unemployment. 
A)  only about half the labor force is covered by the minimum wage. 
B)  only about half the employers comply with the law. 
C)  most workers whose wages are affected by minimum wage increases do not live in poor families. 
D)  minimum wage increases cause large increases in unemployment.

If labor is a small percentage of the total costs of an industry, this will tend to make the own wage elasticity of labor demand

If the own-wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by

Cross wage elasticities of demand are

If two inputs are gross complements, the cross-wage elasticity of demand for the two inputs will be

If an increase in the minimum wage leads to higher aggregate earnings by the workers affected, then the own-wage elasticity of demand is

Other things equal, an elastic demand for an industry's output will tend to make the industry's own wage elasticity of demand

Other things equal, the own-wage elasticity of demand for a category of labor is higher when

Own wage elasticity of labor demand tends to

If teenagers and adults are substitutes in production, and the wage of teenagers falls, then

If Industry A can substitute capital for labor easily and Industry B can not, then (other things equal)

Along a straight-line demand curve for labor

Output is produced with capital and labor. If the price of capital goes up

Employment often increases after an increase in the minimum wage because

Other things equal, in which of the following will have the most elastic own-wage elasticity of demand?

The minimum wage is a relatively blunt instrument with which to reduce poverty because

Introduction

Overview of the Labor Market

The Demand for Labor

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 4: Labor Demand Elasticities

If labor is a small percentage of the total costs of an industry, this will tend to make the own wage elasticity of labor demand

If the own-wage elasticity of demand for professors is -0.5, then an increase in the wage of professors from $45,000 to $55,000 will cause the quantity demanded to fall by

Cross wage elasticities of demand are

If two inputs are gross complements, the cross-wage elasticity of demand for the two inputs will be

If an increase in the minimum wage leads to higher aggregate earnings by the workers affected, then the own-wage elasticity of demand is

Other things equal, an elastic demand for an industry's output will tend to make the industry's own wage elasticity of demand

Other things equal, the own-wage elasticity of demand for a category of labor is higher when

Own wage elasticity of labor demand tends to

If teenagers and adults are substitutes in production, and the wage of teenagers falls, then

If Industry A can substitute capital for labor easily and Industry B can not, then (other things equal)

Along a straight-line demand curve for labor

Output is produced with capital and labor. If the price of capital goes up

Employment often increases after an increase in the minimum wage because

Other things equal, in which of the following will have the most elastic own-wage elasticity of demand?

The minimum wage is a relatively blunt instrument with which to reduce poverty because

Introduction

Overview of the Labor Market

The Demand for Labor

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