Question 1

If the number of employees who quit,are fired,or retire increases while the hiring of new employees declines,this indicates that the

Accepted Answer

A) labour demand curve is shifting to the right. 
B) labour supply curve is shifting to the right. 
C) labour demand curve is shifting to the left. 
D) labour supply curve and labour demand curve are both shifting to the right. 
A) labour demand curve is shifting to the right. 
B) labour supply curve is shifting to the right. 
C) labour demand curve is shifting to the left. 
D) labour supply curve and labour demand curve are both shifting to the right.

Question 2

Marginal revenue product can be calculated using the formula marginal product × output price

Accepted Answer

A) only if output price is constant. 
B) only if the marginal product of labour is constant. 
C) only if the both marginal product of labour and the output price are constant. 
D) only if the firm has market power in the labour market. 
A) only if output price is constant. 
B) only if the marginal product of labour is constant. 
C) only if the both marginal product of labour and the output price are constant. 
D) only if the firm has market power in the labour market.

Question 3

The demand for capital is similar to the demand for labour in that

Accepted Answer

A) the marginal product of labour is derived from the marginal product of capital. 
B) the marginal revenue product curve for labour is the same as the marginal revenue product curve for capital. 
C) both are derived demands. 
D) both are inelastic at high prices and elastic at low prices. 
A) the marginal product of labour is derived from the marginal product of capital. 
B) the marginal revenue product curve for labour is the same as the marginal revenue product curve for capital. 
C) both are derived demands. 
D) both are inelastic at high prices and elastic at low prices.

Question 4

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise.How can you convince your manager that you are worth more money than you are currently being paid?

Accepted Answer

A) by threatening to quit if he refuses to give you a raise 
B) by demonstrating to your manager the marginal revenue product your employment contributes to the sandwich shop 
C) by explaining to him how difficult it is for you to save enough money to go to university 
D) by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop 
A) by threatening to quit if he refuses to give you a raise 
B) by demonstrating to your manager the marginal revenue product your employment contributes to the sandwich shop 
C) by explaining to him how difficult it is for you to save enough money to go to university 
D) by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop

Question 5

Figure 12-2  
 Figure 12-2 shows the marginal revenue product for Becca's Baubles,a producer of hand-beaded bracelets.
-Refer to Figure 12-2.If Becca can sell her bracelets at $3 each,what is the marginal product of the 4th worker?

Accepted Answer

A) $36 
B) 12 bracelets 
C) 36 bracelets 
D) $144 
A) $36 
B) 12 bracelets 
C) 36 bracelets 
D) $144

Question 6

The combined effect (both income and substitution)of a wage increase is that

Accepted Answer

A) the substitution effect always dominates,leading to more work at a higher wage. 
B) the income effect always dominates,leading to less work at a higher wage. 
C) if the substitution effect outweighs the income effect,the labour supply curve slopes upward,but if the income effect outweighs the substitution effect,the labour supply curve is backward bending. 
D) if the substitution effect outweighs the income effect,the labour supply curve is backward bending,but if the income effect outweighs the substitution effect,the labour supply curve slopes upward. 
A) the substitution effect always dominates,leading to more work at a higher wage. 
B) the income effect always dominates,leading to less work at a higher wage. 
C) if the substitution effect outweighs the income effect,the labour supply curve slopes upward,but if the income effect outweighs the substitution effect,the labour supply curve is backward bending. 
D) if the substitution effect outweighs the income effect,the labour supply curve is backward bending,but if the income effect outweighs the substitution effect,the labour supply curve slopes upward.

Question 7

The marginal revenue product of capital is

Accepted Answer

A) the cost to the firm of renting an additional unit of capital. 
B) the change in the firm's revenue as a result of employing one more unit of capital,such as a machine. 
C) the economic rent received by hiring an additional unit of capital. 
D) the revenue generated by substituting capital for labour in the production process. 
A) the cost to the firm of renting an additional unit of capital. 
B) the change in the firm's revenue as a result of employing one more unit of capital,such as a machine. 
C) the economic rent received by hiring an additional unit of capital. 
D) the revenue generated by substituting capital for labour in the production process.

Question 8

What is a monopsony?

Accepted Answer

A monopsony is a mar

Question 9

How will an increase in labour productivity affect equilibrium in the labour market?

Accepted Answer

A) The supply of labour will increase and the equilibrium wage and quantity of labour will increase. 
B) The demand for jobs will increase and the equilibrium wage and quantity of labour will increase. 
C) The demand for labour will increase and the equilibrium wage and quantity of labour will increase. 
D) The demand for labour will decrease because fewer workers will be needed to produce the same output.The equilibrium wage and quantity of labour will decrease. 
A) The supply of labour will increase and the equilibrium wage and quantity of labour will increase. 
B) The demand for jobs will increase and the equilibrium wage and quantity of labour will increase. 
C) The demand for labour will increase and the equilibrium wage and quantity of labour will increase. 
D) The demand for labour will decrease because fewer workers will be needed to produce the same output.The equilibrium wage and quantity of labour will decrease.

Question 10

Consider the market for nurses in a given city.In each of the following cases,explain what happens to the equilibrium wage rate and the quantity of nurses hired.
a.One of the major hospitals in the city closes.
b.A record number of students graduate with bachelor's degrees in nursing.
c.Traditionally,nursing is a field that attracts women.However,changes in access to education and to the labour force participation rate by women have led to a greater demand for the services of women in a wide range of occupations.The demand for nurses,however,does not change.
d.Advances in medical technology reduce the amount of time physicians must spend with patients in intensive care and increase the time that nurses spend with patients.

Accepted Answer

a.The demand curve shifts to the left.Th

Question 11

What is a factor market?

Accepted Answer

A) It is a market where financial instruments are traded. 
B) It is a market where stocks and bonds are traded. 
C) It is a market where producers buy consumption and capital goods. 
D) It is a market where resources used to produce final goods are traded. 
A) It is a market where financial instruments are traded. 
B) It is a market where stocks and bonds are traded. 
C) It is a market where producers buy consumption and capital goods. 
D) It is a market where resources used to produce final goods are traded.

Question 12

If you own a $1000 face value bond with one year remaining to maturity and a 3 per cent coupon rate,and new bonds are paying 14 per cent,what is the most you can get for your old bond?

Accepted Answer

A) $903.51 
B) $997.19 
C) $1000 
D) $1140 
A) $903.51 
B) $997.19 
C) $1000 
D) $1140

Question 13

Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If the last worker hired increases output by three units per hour,then to maximise profits the firm should

Accepted Answer

A) not change the number of workers it currently hires. 
B) lay off some of its workers. 
C) hire additional workers. 
D) There is not enough information to answer the question. 
A) not change the number of workers it currently hires. 
B) lay off some of its workers. 
C) hire additional workers. 
D) There is not enough information to answer the question.

Question 14

A firm might prefer a commission system of compensation when the nature of the work is repetitive and monotonous and can be performed by an individual.

Accepted Answer

A) True 
 B)False

Question 15

Table 12-1
  
-Refer to Table 12-1.Suppose the output price is $3.If the firm represented in the table is maximising its profit by hiring six workers,what is the wage rate?

Accepted Answer

A) $120 
B) $65 
C) $40 
D) There is insufficient information to answer the question. 
A) $120 
B) $65 
C) $40 
D) There is insufficient information to answer the question.

Question 16

A firm's labour demand curve is also its marginal revenue product curve.For both the perfectly competitive firm and the output price maker,the labour demand curve slopes downwards.However,there is a difference in the reasons why the labour demand curve slopes downwards.What is this difference?

Accepted Answer

A perfectly competitive firm can sell al

Question 17

Figure 12-3  
-Refer to Figure 12-3.Which of the panels in the diagram best represents an individual's labour supply curve?

Accepted Answer

A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D 
A) Panel A 
B) Panel B 
C) Panel C 
D) Panel D

Question 18

Which of the following will not cause the labour demand curve to shift to the right?

Accepted Answer

A) an increase in the price of the firm's product 
B) a technological improvement that increases labour productivity 
C) an increase in human capital in the labour force 
D) an increase in the market wage rate 
A) an increase in the price of the firm's product 
B) a technological improvement that increases labour productivity 
C) an increase in human capital in the labour force 
D) an increase in the market wage rate

Question 19

An increase in the wage rate causes

Accepted Answer

A) a rightward shift of the firm's labour demand curve. 
B) a leftward shift of the firm's labour demand curve. 
C) a decrease in the quantity of labour demanded. 
D) an increase in labour's marginal productivity. 
A) a rightward shift of the firm's labour demand curve. 
B) a leftward shift of the firm's labour demand curve. 
C) a decrease in the quantity of labour demanded. 
D) an increase in labour's marginal productivity.

Question 20

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

Accepted Answer

A) $80 
B) $80 minus the firm's profit markup 
C) It depends on what the going wage rate is in the labour market. 
D) There is insufficient information to answer the question. 
A) $80 
B) $80 minus the firm's profit markup 
C) It depends on what the going wage rate is in the labour market. 
D) There is insufficient information to answer the question.

If the number of employees who quit,are fired,or retire increases while the hiring of new employees declines,this indicates that the

Marginal revenue product can be calculated using the formula marginal product × output price

The demand for capital is similar to the demand for labour in that

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise.How can you convince your manager that you are worth more money than you are currently being paid?

Figure 12-2 Figure 12-2 shows the marginal revenue product for Becca's Baubles,a producer of hand-beaded bracelets. -Refer to Figure 12-2.If Becca can sell her bracelets at $3 each,what is the marginal product of the 4th worker?

The combined effect (both income and substitution)of a wage increase is that

The marginal revenue product of capital is

What is a monopsony?

How will an increase in labour productivity affect equilibrium in the labour market?

What is a factor market?

If you own a $1000 face value bond with one year remaining to maturity and a 3 per cent coupon rate,and new bonds are paying 14 per cent,what is the most you can get for your old bond?

Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If the last worker hired increases output by three units per hour,then to maximise profits the firm should

A firm might prefer a commission system of compensation when the nature of the work is repetitive and monotonous and can be performed by an individual.

Table 12-1 -Refer to Table 12-1.Suppose the output price is $3.If the firm represented in the table is maximising its profit by hiring six workers,what is the wage rate?

A firm's labour demand curve is also its marginal revenue product curve.For both the perfectly competitive firm and the output price maker,the labour demand curve slopes downwards.However,there is a difference in the reasons why the labour demand curve slopes downwards.What is this difference?

Figure 12-3 -Refer to Figure 12-3.Which of the panels in the diagram best represents an individual's labour supply curve?

Which of the following will not cause the labour demand curve to shift to the right?

An increase in the wage rate causes

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

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Exam 12: The Markets for Labour and Other Factors of Production

If the number of employees who quit,are fired,or retire increases while the hiring of new employees declines,this indicates that the

Marginal revenue product can be calculated using the formula marginal product × output price

The demand for capital is similar to the demand for labour in that

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise.How can you convince your manager that you are worth more money than you are currently being paid?

Figure 12-2 Figure 12-2 shows the marginal revenue product for Becca's Baubles,a producer of hand-beaded bracelets. -Refer to Figure 12-2.If Becca can sell her bracelets at $3 each,what is the marginal product of the 4th worker?

The combined effect (both income and substitution)of a wage increase is that

The marginal revenue product of capital is

What is a monopsony?

How will an increase in labour productivity affect equilibrium in the labour market?

What is a factor market?

If you own a $1000 face value bond with one year remaining to maturity and a 3 per cent coupon rate,and new bonds are paying 14 per cent,what is the most you can get for your old bond?

Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If the last worker hired increases output by three units per hour,then to maximise profits the firm should

A firm might prefer a commission system of compensation when the nature of the work is repetitive and monotonous and can be performed by an individual.

Table 12-1 -Refer to Table 12-1.Suppose the output price is $3.If the firm represented in the table is maximising its profit by hiring six workers,what is the wage rate?

A firm's labour demand curve is also its marginal revenue product curve.For both the perfectly competitive firm and the output price maker,the labour demand curve slopes downwards.However,there is a difference in the reasons why the labour demand curve slopes downwards.What is this difference?

Figure 12-3 -Refer to Figure 12-3.Which of the panels in the diagram best represents an individual's labour supply curve?

Which of the following will not cause the labour demand curve to shift to the right?

An increase in the wage rate causes

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Elasticity: the Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters