Question 1

If the wage rate rises,labor's share in the total costs of a production process

Accepted Answer

A)  will increase. 
B)  will decrease. 
C)  may increase or decrease depending on the elasticity of demand for the product. 
D)  may increase or decrease depending on the ease of substitution of other inputs for labor. 
A)  will increase. 
B)  will decrease. 
C)  may increase or decrease depending on the elasticity of demand for the product. 
D)  may increase or decrease depending on the ease of substitution of other inputs for labor. D

Question 2

In the study of labor supply,"leisure" refers to

Accepted Answer

A)  time spent sleeping. 
B)  time spent doing absolutely nothing (except breathing). 
C)  time spent in one's place of residence. 
D)  time spent that is not spent in market work. 
A)  time spent sleeping. 
B)  time spent doing absolutely nothing (except breathing). 
C)  time spent in one's place of residence. 
D)  time spent that is not spent in market work. D

Question 3

Suppose Woody Chuck's business is to clear trees for housing developments.Given the constraints of fixed capital,the production function is   .Suppose Woody Chuck's is one of many firms clearing land and that the market price per cleared lot is $5000.(Note   )The marginal Revenue Product of labor is

Accepted Answer

A)  constant at $5000. 
B)  constant at 25 
C)    
D)    
A)  constant at $5000. 
B)  constant at 25 
C)    
D)    C

Question 4

If a firm is a monopsonistic hirer of labor,

Accepted Answer

A)  its marginal expense for labor is greater than the market wage. 
B)  its marginal expense for labor is equal to the market wage. 
C)  its marginal expense for labor is less than the market wage. 
D)  it is a price taker in the labor market. 
A)  its marginal expense for labor is greater than the market wage. 
B)  its marginal expense for labor is equal to the market wage. 
C)  its marginal expense for labor is less than the market wage. 
D)  it is a price taker in the labor market.

Question 5

Suppose a firm is a monopolist in its output market and a perfect competitor in its input market.The demand for its output is   
  .The firm's production is given by   and the market wage is $50.The profit maximizing level of labor input is

Accepted Answer

A)  100 
B)  1,000 
C)  3,600 
D)  5,000 
A)  100 
B)  1,000 
C)  3,600 
D)  5,000

Question 6

Suppose Woody Chuck's business is to clear trees for housing developments.Given the constraints of fixed capital,the production function is   .Suppose Woody Chuck's is one of many firms clearing land and that the market price per cleared lot is $5000.(Note   )How many workers will Woody Chuck hire at w = 5?

Accepted Answer

A)  1 
B)  4 
C)  16 
D)  25 
A)  1 
B)  4 
C)  16 
D)  25

Question 7

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .If a minimum wage is imposed at W = 8,the deadweight loss of the imposition of the minimum wage is

Accepted Answer

A)  10 
B)  20 
C)  30 
D)  40 
A)  10 
B)  20 
C)  30 
D)  40

Question 8

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .If a minimum wage is imposed at W = 8,the number of workers hired will be

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
A)  20 
B)  40 
C)  60 
D)  80

Question 9

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .If a minimum wage is imposed at W = 8,the net gain to all workers,not just those who keep their jobs,(in producer surplus terms)will be

Accepted Answer

A)  10 
B)  20 
C)  30 
D)  40 
A)  10 
B)  20 
C)  30 
D)  40

Question 10

A firm's demand for labor is known as a "derived demand" because

Accepted Answer

A)  the firm gains utility from hiring more labor. 
B)  the amount of labor hired depends upon how much output the firm can sell. 
C)  the wage rate paid to workers is derived from the market for labor. 
D)  it is derived from the demand for capital. 
A)  the firm gains utility from hiring more labor. 
B)  the amount of labor hired depends upon how much output the firm can sell. 
C)  the wage rate paid to workers is derived from the market for labor. 
D)  it is derived from the demand for capital.

Question 11

When an individual's wage rises,the substitution effect tends to

Accepted Answer

A)  increase hours worked. 
B)  decrease hours worked. 
C)  leave hours worked unchanged. 
D)  it is impossible to predict what will happen to hours worked. 
A)  increase hours worked. 
B)  decrease hours worked. 
C)  leave hours worked unchanged. 
D)  it is impossible to predict what will happen to hours worked.

Question 12

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .If a minimum wage is imposed at W = 8,the gain to workers who keep their jobs,(in producer surplus terms)will be

Accepted Answer

A)  10 
B)  20 
C)  30 
D)  40 
A)  10 
B)  20 
C)  30 
D)  40

Question 13

When an individual's wage rises,the income effect tends to

Accepted Answer

A)  increase hours worked. 
B)  decrease hours worked. 
C)  leave hours worked unchanged. 
D)  it is impossible to predict what will happen to hours worked. 
A)  increase hours worked. 
B)  decrease hours worked. 
C)  leave hours worked unchanged. 
D)  it is impossible to predict what will happen to hours worked.

Question 14

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .If a minimum wage is imposed at W = 8,the loss to firms will be

Accepted Answer

A)  20 
B)  40 
C)  60 
D)  80 
A)  20 
B)  40 
C)  60 
D)  80

Question 15

For a monopsonistic hirer of labor,the gap between labor's marginal value product and its wage rate will be greater

Accepted Answer

A)  the more elastic the supply curve for labor. 
B)  the more inelastic the supply curve for labor. 
C)  the more elastic the firm's demand for labor. 
D)  the more inelastic the firm's demand for labor. 
A)  the more elastic the supply curve for labor. 
B)  the more inelastic the supply curve for labor. 
C)  the more elastic the firm's demand for labor. 
D)  the more inelastic the firm's demand for labor.

Question 16

Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero.Then the wage elasticity of demand for labor by widget makers will be

Accepted Answer

A)  +1. 
B)  -1. 
C)  0. 
D)  infinite. 
A)  +1. 
B)  -1. 
C)  0. 
D)  infinite.

Question 17

In an input market,economic rent is defined as

Accepted Answer

A)  the total remuneration paid to a factor of production. 
B)  the minimum amount required to retain a factor of production in its present use. 
C)  the total cost for a firm of renting land, equipment, and buildings. 
D)  the extent to which payments to a factor of production exceed the minimum amount required to retain it in its present use. 
A)  the total remuneration paid to a factor of production. 
B)  the minimum amount required to retain a factor of production in its present use. 
C)  the total cost for a firm of renting land, equipment, and buildings. 
D)  the extent to which payments to a factor of production exceed the minimum amount required to retain it in its present use.

Question 18

A monopolist union that desired to maximize its total wage bill (w . L)would offer that quantity of labor for which

Accepted Answer

A)  labor's marginal productivity is zero. 
B)  labor's wage falls to zero. 
C)  the quantity of labor hired is as great as possible given the firm's demand curve. 
D)  the marginal revenue from providing one more worker to the market is zero. 
A)  labor's marginal productivity is zero. 
B)  labor's wage falls to zero. 
C)  the quantity of labor hired is as great as possible given the firm's demand curve. 
D)  the marginal revenue from providing one more worker to the market is zero.

Question 19

Suppose the market for labor is perfectly competitive and the demand for labor is   and market supply is   .The equilibrium wage will be

Accepted Answer

A)  5 
B)  6 
C)  7 
D)  8 
A)  5 
B)  6 
C)  7 
D)  8

Question 20

If a factor of production comes to have more and more alternative uses,its supply curve to any one use

Accepted Answer

A)  remains unchanged. 
B)  becomes more inelastic. 
C)  becomes more elastic. 
D)  may move in any direction. 
A)  remains unchanged. 
B)  becomes more inelastic. 
C)  becomes more elastic. 
D)  may move in any direction.

If the wage rate rises,labor's share in the total costs of a production process

In the study of labor supply,"leisure" refers to

Suppose Woody Chuck's business is to clear trees for housing developments.Given the constraints of fixed capital,the production function is .Suppose Woody Chuck's is one of many firms clearing land and that the market price per cleared lot is $5000.(Note )The marginal Revenue Product of labor is

If a firm is a monopsonistic hirer of labor,

Suppose a firm is a monopolist in its output market and a perfect competitor in its input market.The demand for its output is .The firm's production is given by and the market wage is $50.The profit maximizing level of labor input is

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the deadweight loss of the imposition of the minimum wage is

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the number of workers hired will be

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the net gain to all workers,not just those who keep their jobs,(in producer surplus terms)will be

A firm's demand for labor is known as a "derived demand" because

When an individual's wage rises,the substitution effect tends to

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the gain to workers who keep their jobs,(in producer surplus terms)will be

When an individual's wage rises,the income effect tends to

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the loss to firms will be

For a monopsonistic hirer of labor,the gap between labor's marginal value product and its wage rate will be greater

Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero.Then the wage elasticity of demand for labor by widget makers will be

In an input market,economic rent is defined as

A monopolist union that desired to maximize its total wage bill (w . L)would offer that quantity of labor for which

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .The equilibrium wage will be

If a factor of production comes to have more and more alternative uses,its supply curve to any one use

Economic Models

Utility and Choice

Individual Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

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Exam 13: Pricing in Input Markets

If the wage rate rises,labor's share in the total costs of a production process

In the study of labor supply,"leisure" refers to

Suppose Woody Chuck's business is to clear trees for housing developments.Given the constraints of fixed capital,the production function is .Suppose Woody Chuck's is one of many firms clearing land and that the market price per cleared lot is $5000.(Note )The marginal Revenue Product of labor is

If a firm is a monopsonistic hirer of labor,

Suppose a firm is a monopolist in its output market and a perfect competitor in its input market.The demand for its output is .The firm's production is given by and the market wage is $50.The profit maximizing level of labor input is

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the deadweight loss of the imposition of the minimum wage is

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the number of workers hired will be

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the net gain to all workers,not just those who keep their jobs,(in producer surplus terms)will be

A firm's demand for labor is known as a "derived demand" because

When an individual's wage rises,the substitution effect tends to

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the gain to workers who keep their jobs,(in producer surplus terms)will be

When an individual's wage rises,the income effect tends to

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .If a minimum wage is imposed at W = 8,the loss to firms will be

For a monopsonistic hirer of labor,the gap between labor's marginal value product and its wage rate will be greater

Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero.Then the wage elasticity of demand for labor by widget makers will be

In an input market,economic rent is defined as

A monopolist union that desired to maximize its total wage bill (w . L)would offer that quantity of labor for which

Suppose the market for labor is perfectly competitive and the demand for labor is and market supply is .The equilibrium wage will be

If a factor of production comes to have more and more alternative uses,its supply curve to any one use

Economic Models

Utility and Choice

Individual Demand Curves

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters