Question 1

Labor markets are generally perfectly competitive markets.

Accepted Answer

A) True 
 B)False  False

Question 2

Economists would describe a labor union as a

Accepted Answer

A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) pure monopsony. 
A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) pure monopsony. C

Question 3

College graduates now earn nearly five times as much as their high school-educated peers but the gap is falling.

Accepted Answer

A) True 
 B)False  False

Question 4

If the income effect of a change in the wage dominates the substitution effect,then workers will want to work more when the wage increases.

Accepted Answer

A) True 
 B)False

Question 5

Figure 20-4
  
-In Figure 20-4,which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Accepted Answer

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

Question 6

Evidence indicates that the average economic profits of invention are

Accepted Answer

A) well above zero. 
B) slightly above zero. 
C) equal to zero. 
D) less than zero. 
A) well above zero. 
B) slightly above zero. 
C) equal to zero. 
D) less than zero.

Question 7

The shortened work week coupled with rising hourly wages in the U.S.economy shows that

Accepted Answer

A) the income effect has been dominant. 
B) the substitution effect does not exist at all. 
C) the U.S. worker is no longer productive. 
D) workers have become increasingly lazy. 
A) the income effect has been dominant. 
B) the substitution effect does not exist at all. 
C) the U.S. worker is no longer productive. 
D) workers have become increasingly lazy.

Question 8

A firm's demand curve for labor shifts when the

Accepted Answer

A) price of its output changes. 
B) wage rate changes. 
C) number of available workers changes. 
D) All of the above are correct. 
A) price of its output changes. 
B) wage rate changes. 
C) number of available workers changes. 
D) All of the above are correct.

Question 9

What are the two characteristics that are essential to economic analysis of invention?

Accepted Answer

A) fixed-costs and public goods 
B) fixed-costs and private goods 
C) variable-costs and public goods 
D) variable-costs and private goods 
A) fixed-costs and public goods 
B) fixed-costs and private goods 
C) variable-costs and public goods 
D) variable-costs and private goods

Question 10

Suppose a study showed that as the income of doctors increased,doctors spent more time on the golf course and less in the office.What would such a conclusion say about the relative sizes of substitution and income effects?

Accepted Answer

The supply curve for doctor labor hours

Question 11

To the extent that high incomes can be attributed to very high demand for very scarce abilities,the labor supply effects of a substantial increase in the tax rate

Accepted Answer

A) will be zero as long as the labor supply curve is vertical. 
B) will be significant because the demand curve is fixed. 
C) cannot be predicted because the substitution and income effects offset each other. 
D) will be zero as long as there is no economic rent in the income. 
A) will be zero as long as the labor supply curve is vertical. 
B) will be significant because the demand curve is fixed. 
C) cannot be predicted because the substitution and income effects offset each other. 
D) will be zero as long as there is no economic rent in the income.

Question 12

A person's decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain amount of leisure per week.

Accepted Answer

A) True 
 B)False

Question 13

The wages of professional athletes

Accepted Answer

A) are related to demand for their services. 
B) include substantial economic rents. 
C) are high because of scarcity. 
D) All of the above are true. 
A) are related to demand for their services. 
B) include substantial economic rents. 
C) are high because of scarcity. 
D) All of the above are true.

Question 14

For which of the following workers would the income effect be more likely to outweigh the substitution effect of an increase in wage?

Accepted Answer

A) gardener 
B) teacher 
C) professional athlete 
D) plumber 
A) gardener 
B) teacher 
C) professional athlete 
D) plumber

Question 15

Recent studies suggest that a rise in the minimum wage results in a substantial cut in the demand for teen labor.

Accepted Answer

A) True 
 B)False

Question 16

The demand curve for labor slopes downward because

Accepted Answer

A) few workers work at low wages. 
B) capital has been substituted for labor in most industries. 
C) of the diminishing marginal product of labor. 
D) All of the above are true. 
A) few workers work at low wages. 
B) capital has been substituted for labor in most industries. 
C) of the diminishing marginal product of labor. 
D) All of the above are true.

Question 17

An individual's supply curve is backward bending.

Accepted Answer

A) True 
 B)False

Question 18

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Accepted Answer

A) True 
 B)False

Question 19

Theoretically,the price of a field hand on the New Orleans slave market would have

Accepted Answer

A) varied directly with the price of cotton. 
B) risen as interest rates fell. 
C) risen when the importation of slaves became illegal. 
D) All of the above are true. 
A) varied directly with the price of cotton. 
B) risen as interest rates fell. 
C) risen when the importation of slaves became illegal. 
D) All of the above are true.

Question 20

Which of the following observations concerning labor cost patterns over the last century is true?

Accepted Answer

A) Average real wages started rising after 1973. 
B) Hourly compensation rates have fallen dramatically. 
C) Compensation growth slowed markedly. 
D) Average hours worked per week have increased by almost 50 percent. 
A) Average real wages started rising after 1973. 
B) Hourly compensation rates have fallen dramatically. 
C) Compensation growth slowed markedly. 
D) Average hours worked per week have increased by almost 50 percent.

Exam 20: Labor and Entrepreneurship: The Human Inputs

Labor markets are generally perfectly competitive markets.

Economists would describe a labor union as a

College graduates now earn nearly five times as much as their high school-educated peers but the gap is falling.

If the income effect of a change in the wage dominates the substitution effect,then workers will want to work more when the wage increases.

Figure 20-4 -In Figure 20-4,which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Evidence indicates that the average economic profits of invention are

The shortened work week coupled with rising hourly wages in the U.S.economy shows that

A firm's demand curve for labor shifts when the

What are the two characteristics that are essential to economic analysis of invention?

Suppose a study showed that as the income of doctors increased,doctors spent more time on the golf course and less in the office.What would such a conclusion say about the relative sizes of substitution and income effects?

To the extent that high incomes can be attributed to very high demand for very scarce abilities,the labor supply effects of a substantial increase in the tax rate

A person's decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain amount of leisure per week.

The wages of professional athletes

For which of the following workers would the income effect be more likely to outweigh the substitution effect of an increase in wage?

Recent studies suggest that a rise in the minimum wage results in a substantial cut in the demand for teen labor.

The demand curve for labor slopes downward because

An individual's supply curve is backward bending.

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Theoretically,the price of a field hand on the New Orleans slave market would have

Which of the following observations concerning labor cost patterns over the last century is true?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production,Inputs,and Cost: Building Blocks for Supply Analysis

Output,Price,and Profit: The Importance of Marginal Analysis

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

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