Question 1

An increase in a perfectly competitive firm's demand for labour could be caused by

Accepted Answer

A) a decrease in the market wage rate. 
B) an increase in the amount of human capital among the labour force. 
C) an increase in the supply of labour. 
D) a decrease in the market price of the product the firm produces. 
A) a decrease in the market wage rate. 
B) an increase in the amount of human capital among the labour force. 
C) an increase in the supply of labour. 
D) a decrease in the market price of the product the firm produces.

Question 2

The substitution effect of a wage increase is observed when

Accepted Answer

A) the higher wage income causes workers to take more leisure and work less. 
B) leisure's higher opportunity cost causes workers to take less leisure and work more. 
C) the higher wage income causes workers to take more leisure and work more. 
D) leisure's higher opportunity cost causes workers to take more leisure and work less. 
A) the higher wage income causes workers to take more leisure and work less. 
B) leisure's higher opportunity cost causes workers to take less leisure and work more. 
C) the higher wage income causes workers to take more leisure and work more. 
D) leisure's higher opportunity cost causes workers to take more leisure and work less.

Question 3

The labour supply curve

Accepted Answer

A) shows the relationship between the wage rate and the quantity of labour supplied. 
B) shows the quantity of jobs supplied at various wage rates. 
C) is unit-elastic. 
D) is U-shaped. 
A) shows the relationship between the wage rate and the quantity of labour supplied. 
B) shows the quantity of jobs supplied at various wage rates. 
C) is unit-elastic. 
D) is U-shaped.

Question 4

If the labour demand curve shifts to the right and the labour supply curve remains unchanged,what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The equilibrium wage will rise

Question 5

What is the shape of the labour supply curve implied by the following statements?
a.'I'm sorry,kids,but now that I'm earning more,I just can't afford to come home early in the afternoon,so I won't be here when you get home from school.'
b.'They can pay me a lot or they can pay me a little.I'll still put in my 8 hours a day.'
c.'Now that I have received a salary increase,I am going to work 36 hours instead of 40 hours a week'

Accepted Answer

a.upward-s

Question 6

The demand for labour depends primarily on the additional output produced as a result of hiring an additional worker and

Accepted Answer

A) the additional revenue received from selling the output produced as a result of hiring an additional worker. 
B) the payment made to the worker for producing the additional output. 
C) the elasticity of demand for the output produced by the worker. 
D) the number of workers willing to produce the additional output. 
A) the additional revenue received from selling the output produced as a result of hiring an additional worker. 
B) the payment made to the worker for producing the additional output. 
C) the elasticity of demand for the output produced by the worker. 
D) the number of workers willing to produce the additional output.

Question 7

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

Accepted Answer

A) increases in human capital 
B) changes in technology 
C) change in the price of the product produced with labour 
D) the wage rate 
A) increases in human capital 
B) changes in technology 
C) change in the price of the product produced with labour 
D) the wage rate

Question 8

A reason why a perfectly competitive firm's demand for labour curve slopes downward is that

Accepted Answer

A) each additional unit of labour hired is less efficient than previously hired units. 
B) in the short run,as more labour is hired,labour's marginal product falls because of the law of diminishing returns. 
C) the extra cost of hiring additional units of labour increases as a firm hires more units of labour. 
D) the firm's demand curve for the product that uses labour is downward sloping. 
A) each additional unit of labour hired is less efficient than previously hired units. 
B) in the short run,as more labour is hired,labour's marginal product falls because of the law of diminishing returns. 
C) the extra cost of hiring additional units of labour increases as a firm hires more units of labour. 
D) the firm's demand curve for the product that uses labour is downward sloping.

Question 9

Figure 12-4  
-Refer to Figure 12-4.Which of the following is true if the wage rate increases from W0 to W1?

Accepted Answer

A) The income effect is larger than the substitution effect. 
B) The substitution effect is larger than the income effect. 
C) The income effect and the substitution effect are equal. 
D) The supply curve is unit-elastic. 
A) The income effect is larger than the substitution effect. 
B) The substitution effect is larger than the income effect. 
C) The income effect and the substitution effect are equal. 
D) The supply curve is unit-elastic.

Question 10

Marginal productivity theory implies that in a perfectly competitive market economy,a worker will receive income

Accepted Answer

A) equal to the value of her marginal contribution to the production process. 
B) that is greater than the value of her marginal contribution to production process. 
C) that is less than the value of her marginal contribution to the production process. 
D) greater than,less than,or equal to the value of her marginal contribution to the production process,depending on her ability to negotiate with employers. 
A) equal to the value of her marginal contribution to the production process. 
B) that is greater than the value of her marginal contribution to production process. 
C) that is less than the value of her marginal contribution to the production process. 
D) greater than,less than,or equal to the value of her marginal contribution to the production process,depending on her ability to negotiate with employers.

Question 11

The income effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to purchase goods and services.

Accepted Answer

A) True 
 B)False

Question 12

Technological advancements that increase labour's productivity shift the labour supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 13

In a study conducted by Marianne Bertrand and Sendhil Mullianthan,identical resumés were sent in response to help wanted ads in newspapers,with half of the resumés assigned an African-American-sounding name and half assigned a white-sounding name.The study found that

Accepted Answer

A) employers were equally likely to interview workers with white-sounding names and with African-American-sounding names. 
B) employers were 50 per cent more likely to interview workers with African-American-sounding names. 
C) employers were 50 per cent more likely to interview workers with white-sounding names. 
D) no employers chose to interview workers with African-American-sounding names. 
A) employers were equally likely to interview workers with white-sounding names and with African-American-sounding names. 
B) employers were 50 per cent more likely to interview workers with African-American-sounding names. 
C) employers were 50 per cent more likely to interview workers with white-sounding names. 
D) no employers chose to interview workers with African-American-sounding names.

Question 14

Table 12-2
  
-Refer to Table 12-2.What is the profit-maximising quantity of labour that the firm should hire?

Accepted Answer

A) 5 units 
B) 4 units 
C) 3 units 
D) 2 units 
A) 5 units 
B) 4 units 
C) 3 units 
D) 2 units

Question 15

Table 12-4
   Table 12-4 lists data for the production of Apple iPods.Apple is assumed to be a price maker,so to increase its sales of iPods the firm must lower its price.MPS1U1B1LS1U1B0 and MRPS1U1B1L S1U1B0refer to the marginal product of labour and the marginal revenue product of labour,respectively.
-Refer to Table 12-4.What are the price and quantity of workers that result in the maximum amount of profit Apple would earn from selling iPods?

Accepted Answer

A) $140;2 
B) $160;2 
C) $140;3 
D) $180;1 
A) $140;2 
B) $160;2 
C) $140;3 
D) $180;1

Question 16

If Molly Bee increases her work hours when her wage increases,then

Accepted Answer

A) the income effect of the wage increase outweighs the substitution effect. 
B) the substitution effect of the wage increase outweighs the income effect. 
C) leisure is an inferior good to Molly. 
D) Molly is spending beyond her means. 
A) the income effect of the wage increase outweighs the substitution effect. 
B) the substitution effect of the wage increase outweighs the income effect. 
C) leisure is an inferior good to Molly. 
D) Molly is spending beyond her means.

Question 17

If a firm is the sole employer of a factor of production,it is known as

Accepted Answer

A) a monopoly. 
B) a competitor. 
C) a monopsony. 
D) an economically discriminating firm. 
A) a monopoly. 
B) a competitor. 
C) a monopsony. 
D) an economically discriminating firm.

Question 18

Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labour market?

Accepted Answer

A) Employers who discriminate are likely to do so in overt ways such as awarding some workers with benefits-in-kind. 
B) Ultimately,employers who discriminate cannot remain profitable. 
C) Employers who discriminate pay an economic penalty. 
D) Differences in wages can be attributed to many other factors as well,such as differences in productivity and preferences. 
A) Employers who discriminate are likely to do so in overt ways such as awarding some workers with benefits-in-kind. 
B) Ultimately,employers who discriminate cannot remain profitable. 
C) Employers who discriminate pay an economic penalty. 
D) Differences in wages can be attributed to many other factors as well,such as differences in productivity and preferences.

Question 19

The marginal product of labour is

Accepted Answer

A) the payment made to workers for their contribution to the output they produce. 
B) equal to the demand for labour. 
C) the change in a firm's revenue as a result of hiring one more worker. 
D) the additional output a firm produces as a result of hiring one more worker. 
A) the payment made to workers for their contribution to the output they produce. 
B) equal to the demand for labour. 
C) the change in a firm's revenue as a result of hiring one more worker. 
D) the additional output a firm produces as a result of hiring one more worker.

Question 20

Which of the following is not held constant along a firm's demand curve for labour?

Accepted Answer

A) the quantity of other inputs used by the firm 
B) the wage rate 
C) changes in technology 
D) the price of the product produced by the firm 
A) the quantity of other inputs used by the firm 
B) the wage rate 
C) changes in technology 
D) the price of the product produced by the firm

An increase in a perfectly competitive firm's demand for labour could be caused by

The substitution effect of a wage increase is observed when

The labour supply curve

If the labour demand curve shifts to the right and the labour supply curve remains unchanged,what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

The demand for labour depends primarily on the additional output produced as a result of hiring an additional worker and

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

A reason why a perfectly competitive firm's demand for labour curve slopes downward is that

Figure 12-4 -Refer to Figure 12-4.Which of the following is true if the wage rate increases from W₀ to W₁?

Marginal productivity theory implies that in a perfectly competitive market economy,a worker will receive income

The income effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to purchase goods and services.

Technological advancements that increase labour's productivity shift the labour supply curve to the right.

In a study conducted by Marianne Bertrand and Sendhil Mullianthan,identical resumés were sent in response to help wanted ads in newspapers,with half of the resumés assigned an African-American-sounding name and half assigned a white-sounding name.The study found that

Table 12-2 -Refer to Table 12-2.What is the profit-maximising quantity of labour that the firm should hire?

If Molly Bee increases her work hours when her wage increases,then

If a firm is the sole employer of a factor of production,it is known as

Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labour market?

The marginal product of labour is

Which of the following is not held constant along a firm's demand curve for labour?

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

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

An increase in a perfectly competitive firm's demand for labour could be caused by

The substitution effect of a wage increase is observed when

The labour supply curve

If the labour demand curve shifts to the right and the labour supply curve remains unchanged,what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

The demand for labour depends primarily on the additional output produced as a result of hiring an additional worker and

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

A reason why a perfectly competitive firm's demand for labour curve slopes downward is that

Figure 12-4 -Refer to Figure 12-4.Which of the following is true if the wage rate increases from W0 to W1?

Marginal productivity theory implies that in a perfectly competitive market economy,a worker will receive income

The income effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to purchase goods and services.

Technological advancements that increase labour's productivity shift the labour supply curve to the right.

In a study conducted by Marianne Bertrand and Sendhil Mullianthan,identical resumés were sent in response to help wanted ads in newspapers,with half of the resumés assigned an African-American-sounding name and half assigned a white-sounding name.The study found that

Table 12-2 -Refer to Table 12-2.What is the profit-maximising quantity of labour that the firm should hire?

If Molly Bee increases her work hours when her wage increases,then

If a firm is the sole employer of a factor of production,it is known as

Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labour market?

The marginal product of labour is

Which of the following is not held constant along a firm's demand curve for labour?

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

Figure 12-4 -Refer to Figure 12-4.Which of the following is true if the wage rate increases from W₀ to W₁?