Question 1

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. C

Question 2

Moving from the upper to the lower portion of a straight labor demand curve,the elasticity

Accepted Answer

A)  changes from elastic to inelastic. 
B)  changes from inelastic to elastic. 
C)  stays the same. 
D)  could change from inelastic to elastic, or from elastic to inelastic. 
A)  changes from elastic to inelastic. 
B)  changes from inelastic to elastic. 
C)  stays the same. 
D)  could change from inelastic to elastic, or from elastic to inelastic. A

Question 3

Other things equal,the labor demand curve of a monopolistic firm is likely to be less wage elastic than the labor demand curve of a perfectly competitive firm.Explain why using the relevant Hicks-Marshall Law of Derived Demand.

Accepted Answer

According to the first Hicks-Marshall Law of Derived Demand,the demand for a given category of labor will be more elastic when the price elasticity of demand for the product is high.The product demand curve of a competitive firm is perfectly elastic at the level of the market determined product price.A monopolist,on the other hand,faces the downward sloping market demand curve and sets product price.Because the monopolist faces a less elastic product demand curve,its demand for labor will be less elastic than that of a competitive firm by virtue of the first Hicks-Marshall Law.

Question 4

What does the own-wage elasticity of labor demand measure? What do empirical estimates suggest the elasticity of labor demand is in the short run? In the long run? Explain what accounts for the difference.

Accepted Answer

The own-wage elasticity of demand measur

Question 5

If the quantity of steel workers demanded falls from 30,000 to 20,000 when the equilibrium wage increases from $9.00 per hour to $11.00 per hour,then the own-wage elasticity of demand for these workers is

Accepted Answer

A)  -2.0. 
B)  -0.5. 
C)  -0.4. 
D)  -0.2. 
A)  -2.0. 
B)  -0.5. 
C)  -0.4. 
D)  -0.2.

Question 6

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 7

Technological progress implies that

Accepted Answer

A)  everyone could be better off if gainers compensate losers. 
B)  everyone will be better off. 
C)  there must be losers. 
D)  losers lose more than gainers gain. 
A)  everyone could be better off if gainers compensate losers. 
B)  everyone will be better off. 
C)  there must be losers. 
D)  losers lose more than gainers gain.

Question 8

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 9

The own-wage elasticity of demand measures

Accepted Answer

A)  change in wages divided by change in quantity of labor demanded. 
B)  change in quantity of labor demanded divided by change in wages. 
C)  percentage change in wages divided by percentage change in quantity of labor demanded. 
D)  percentage change in quantity of labor demanded divided by percentage change in wages. 
A)  change in wages divided by change in quantity of labor demanded. 
B)  change in quantity of labor demanded divided by change in wages. 
C)  percentage change in wages divided by percentage change in quantity of labor demanded. 
D)  percentage change in quantity of labor demanded divided by percentage change in wages.

Question 10

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 11

Own-wage elasticities of demand are

Accepted Answer

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

Question 12

According to empirical estimates,when wages are increased by 10%,the quantity of labor demanded typically falls by about

Accepted Answer

A)  3% in the short run, but 6% in the long run. 
B)  5% in the short run, but 10% in the long run. 
C)  10% in the short run, but 20% in the long run. 
D)  more in the short run than in the long run. 
A)  3% in the short run, but 6% in the long run. 
B)  5% in the short run, but 10% in the long run. 
C)  10% in the short run, but 20% in the long run. 
D)  more in the short run than in the long run.

Question 13

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 use more labor per unit of output produced. 
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 use more labor per unit of output produced. 
D)  None of the above will result when the price of capital goes up.

Question 14

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 15

An increase in the minimum wage will decrease employment more when

Accepted Answer

A)  the supply of labor is more elastic. 
B)  the uncovered sector is small. 
C)  the demand for labor is inelastic. 
D)  All of the above will cause the minimum wage to decrease employment more. 
A)  the supply of labor is more elastic. 
B)  the uncovered sector is small. 
C)  the demand for labor is inelastic. 
D)  All of the above will cause the minimum wage to decrease employment more.

Question 16

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 17

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 18

Empirical estimates of cross-wage elasticities show that

Accepted Answer

A)  well-educated labor is more likely to be complementary with capital than is unskilled labor. 
B)  the extent of substitution in production between immigrant and native workers is very high. 
C)  labor and energy are complements in production. 
D)  labor and raw materials are complements in production. 
A)  well-educated labor is more likely to be complementary with capital than is unskilled labor. 
B)  the extent of substitution in production between immigrant and native workers is very high. 
C)  labor and energy are complements in production. 
D)  labor and raw materials are complements in production.

Question 19

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 20

In a simple economy,there are 100 workers.50 workers produce clothing: one worker produces one unit of clothing.The other 50 workers produce food: one worker produces one unit of food.By trading goods,each person consumes 0.5 unit of clothing and 0.5 unit of food.A technological improvement enables one worker to produce two units of clothing.The results are that 40 workers will be producing 80 units of clothing and 60 workers will be producing food and that each person consumes 0.8 units of clothing and 0.6 units of food.Which of the following is true?

Accepted Answer

A)  Workers in the sewing industry are worse off. 
B)  Workers in the clothing industry are worse off. 
C)  The increase in the productivity of clothing workers shifted the demand for clothing workers rightward. 
D)  The increase in the productivity of clothing workers had a net negative effect on the demand for clothing workers. 
A)  Workers in the sewing industry are worse off. 
B)  Workers in the clothing industry are worse off. 
C)  The increase in the productivity of clothing workers shifted the demand for clothing workers rightward. 
D)  The increase in the productivity of clothing workers had a net negative effect on the demand for clothing workers.

Along a straight-line demand curve for labor

Moving from the upper to the lower portion of a straight labor demand curve,the elasticity

Other things equal,the labor demand curve of a monopolistic firm is likely to be less wage elastic than the labor demand curve of a perfectly competitive firm.Explain why using the relevant Hicks-Marshall Law of Derived Demand.

What does the own-wage elasticity of labor demand measure? What do empirical estimates suggest the elasticity of labor demand is in the short run? In the long run? Explain what accounts for the difference.

If the quantity of steel workers demanded falls from 30,000 to 20,000 when the equilibrium wage increases from $9.00 per hour to $11.00 per hour,then the own-wage elasticity of demand for these workers is

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

Technological progress implies that

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

The own-wage elasticity of demand measures

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

Own-wage elasticities of demand are

According to empirical estimates,when wages are increased by 10%,the quantity of labor demanded typically falls by about

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

Own-wage elasticity of labor demand tends to

An increase in the minimum wage will decrease employment more when

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

Cross wage elasticities of demand are

Empirical estimates of cross-wage elasticities show that

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

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

Along a straight-line demand curve for labor

Moving from the upper to the lower portion of a straight labor demand curve,the elasticity

Other things equal,the labor demand curve of a monopolistic firm is likely to be less wage elastic than the labor demand curve of a perfectly competitive firm.Explain why using the relevant Hicks-Marshall Law of Derived Demand.

What does the own-wage elasticity of labor demand measure? What do empirical estimates suggest the elasticity of labor demand is in the short run? In the long run? Explain what accounts for the difference.

If the quantity of steel workers demanded falls from 30,000 to 20,000 when the equilibrium wage increases from $9.00 per hour to $11.00 per hour,then the own-wage elasticity of demand for these workers is

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

Technological progress implies that

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

The own-wage elasticity of demand measures

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

Own-wage elasticities of demand are

According to empirical estimates,when wages are increased by 10%,the quantity of labor demanded typically falls by about

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

Own-wage elasticity of labor demand tends to

An increase in the minimum wage will decrease employment more when

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

Cross wage elasticities of demand are

Empirical estimates of cross-wage elasticities show that

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

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