Question 1

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. A

Question 2

If an individual is maximizing his or her utility,his or her marginal rate of substitution of leisure hours for consumption will be

Accepted Answer

A) equal to one divided by his or her wage rate. 
B) greater than one divided by his or her wage rate. 
C) equal to his or her wage rate. 
D) less than his or her wage rate. 
A) equal to one divided by his or her wage rate. 
B) greater than one divided by his or her wage rate. 
C) equal to his or her wage rate. 
D) less than his or her wage rate. C

Question 3

A monopolist union that desired to maximize its total wage bill (w F1F1F1S1F1F1F10 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. D

Question 4

If an individual's supply of labor curve is positively sloped throughout,then

Accepted Answer

A) the substitution effect always dominates the income effect. 
B) the income effect always dominates the substitution effect. 
C) the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. 
D) the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels. 
A) the substitution effect always dominates the income effect. 
B) the income effect always dominates the substitution effect. 
C) the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. 
D) the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.

Question 5

Which of the following strategies that a union might pursue would result in the lowest wage rate for its members?

Accepted Answer

A) Maximizing the total wage bill. 
B) Maximizing employment of its members. 
C) Restricting union membership severely. 
D) Maximizing the total economic rent obtained by its members. 
A) Maximizing the total wage bill. 
B) Maximizing employment of its members. 
C) Restricting union membership severely. 
D) Maximizing the total economic rent obtained by its members.

Question 6

Which of the following best explains why the elasticity of supply of labor for an individual with a Cobb-Douglas utility function (for consumption and leisure)is zero?

Accepted Answer

A) Income and substitution effects are precisely offsetting. 
B) The elasticity of substitution of leisure for consumption is zero. 
C) Leisure is an inferior good. 
D) Consumption is subject to diminishing marginal utility. 
A) Income and substitution effects are precisely offsetting. 
B) The elasticity of substitution of leisure for consumption is zero. 
C) Leisure is an inferior good. 
D) Consumption is subject to diminishing marginal utility.

Question 7

A monopsonist that faces a labor supply curve of the form l = 4w and has a constant marginal revenue product of 50 per unit of l,will opt for the following,w,l combination

Accepted Answer

A) w = 10 l = 40. 
B) w = 25 l = 100. 
C) w = 50 l = 200. 
D) w = 100 l = 400. 
A) w = 10 l = 40. 
B) w = 25 l = 100. 
C) w = 50 l = 200. 
D) w = 100 l = 400.

Question 8

For a monopsonistic hirer of labor the gap between labor's marginal revenue 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 9

Adoption of a guaranteed annual income with benefits (B)given by 
B = 20,000 -.5 (earnings)
Would be expected to reduce work effort by low wage workers because

Accepted Answer

A) the income effect would outweigh the substitution effect of the plan. 
B) the substitution effect would outweigh the income effect of the plan. 
C) both substitution and income effects would operate to reduce work effort. 
D) the plan would make working financially unattractive. 
A) the income effect would outweigh the substitution effect of the plan. 
B) the substitution effect would outweigh the income effect of the plan. 
C) both substitution and income effects would operate to reduce work effort. 
D) the plan would make working financially unattractive.

Question 10

"Compensating wage differentials" arise because

Accepted Answer

A) workers possess different skills. 
B) workers prefer some jobs to others. 
C) firms pay higher wages for workers with higher marginal productivities. 
D) firms discriminate in hiring. 
A) workers possess different skills. 
B) workers prefer some jobs to others. 
C) firms pay higher wages for workers with higher marginal productivities. 
D) firms discriminate in hiring.

Question 11

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 12

The slope of an individual's "consumption-leisure" budget constraint is

Accepted Answer

A) 24 hours minus the number of leisure hours. 
B) total consumption divided by the wage rate. 
C) the real wage rate. 
D) the negative of the real wage rate. 
A) 24 hours minus the number of leisure hours. 
B) total consumption divided by the wage rate. 
C) the real wage rate. 
D) the negative of the real wage rate.

Question 13

A price discriminating monopsonist could increase its profits by

Accepted Answer

A) paying the minimum wages possible. 
B) hiring as little capital as possible. 
C) paying lower wages to workers with inelastic supply of labor curves than to workers with elastic curves. 
D) paying lower wages to workers with elastic supply of labor curves than to workers with inelastic curves. 
A) paying the minimum wages possible. 
B) hiring as little capital as possible. 
C) paying lower wages to workers with inelastic supply of labor curves than to workers with elastic curves. 
D) paying lower wages to workers with elastic supply of labor curves than to workers with inelastic curves.

Question 14

If an individual's supply of labor curve is "backward bending," then

Accepted Answer

A) the substitution effect always dominates the income effect. 
B) the income effect always dominates the substitution effect. 
C) the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. 
D) the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels. 
A) the substitution effect always dominates the income effect. 
B) the income effect always dominates the substitution effect. 
C) the substitution effect dominates at low real wage levels and the income effect dominates at high real wage levels. 
D) the income effect dominates at low real wage levels and the substitution effect dominates at high real wage levels.

Question 15

The opportunity cost of leisure is approximated by

Accepted Answer

A) the price of leisure activities (such as theater tickets). 
B) an individual's hourly real wage rate. 
C) commuting expense. 
D) an individual's total income. 
A) the price of leisure activities (such as theater tickets). 
B) an individual's hourly real wage rate. 
C) commuting expense. 
D) an individual's total income.

Question 16

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 17

The fact that more women have chosen to work as real wages rise is evidence that,for them

Accepted Answer

A) leisure is an inferior good. 
B) income and substitution effects of higher real wages work in the same direction. 
C) income and substitution effects of higher real wages may work in opposite directions. 
D) income and substitution effects may work in opposite directions but that the substitution effect is stronger. 
A) leisure is an inferior good. 
B) income and substitution effects of higher real wages work in the same direction. 
C) income and substitution effects of higher real wages may work in opposite directions. 
D) income and substitution effects may work in opposite directions but that the substitution effect is stronger.

Question 18

Consider two situations: In situation A the production of widgets is monopolized by a single firm.In situation B the production of widgets is perfectly competitive.In both situations the supply of labor to widget makers is infinitely elastic at a wage of w.In this case,the product $p \cdot M _ { l }$

Accepted Answer

A) will be the same in the two cases. 
B) will be higher in case B than in case A. 
C) will be higher in case A than in case B. 
D) From the information given it is not possible to make a definite statement about the marginal value product of labor. 
A) will be the same in the two cases. 
B) will be higher in case B than in case A. 
C) will be higher in case A than in case B. 
D) From the information given it is not possible to make a definite statement about the marginal value product of labor.

If a firm is a monopsonistic hirer of labor

If an individual is maximizing his or her utility,his or her marginal rate of substitution of leisure hours for consumption will be

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

If an individual's supply of labor curve is positively sloped throughout,then

Which of the following strategies that a union might pursue would result in the lowest wage rate for its members?

Which of the following best explains why the elasticity of supply of labor for an individual with a Cobb-Douglas utility function (for consumption and leisure)is zero?

A monopsonist that faces a labor supply curve of the form l = 4w and has a constant marginal revenue product of 50 per unit of l,will opt for the following,w,l combination

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

Adoption of a guaranteed annual income with benefits (B)given by B = 20,000 -.5 (earnings) Would be expected to reduce work effort by low wage workers because

"Compensating wage differentials" arise because

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

The slope of an individual's "consumption-leisure" budget constraint is

A price discriminating monopsonist could increase its profits by

If an individual's supply of labor curve is "backward bending," then

The opportunity cost of leisure is approximated by

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

The fact that more women have chosen to work as real wages rise is evidence that,for them

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters

Exam 14: Labor Markets

If a firm is a monopsonistic hirer of labor

If an individual is maximizing his or her utility,his or her marginal rate of substitution of leisure hours for consumption will be

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

If an individual's supply of labor curve is positively sloped throughout,then

Which of the following strategies that a union might pursue would result in the lowest wage rate for its members?

Which of the following best explains why the elasticity of supply of labor for an individual with a Cobb-Douglas utility function (for consumption and leisure)is zero?

A monopsonist that faces a labor supply curve of the form l = 4w and has a constant marginal revenue product of 50 per unit of l,will opt for the following,w,l combination

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

Adoption of a guaranteed annual income with benefits (B)given by B = 20,000 -.5 (earnings) Would be expected to reduce work effort by low wage workers because

"Compensating wage differentials" arise because

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

The slope of an individual's "consumption-leisure" budget constraint is

A price discriminating monopsonist could increase its profits by

If an individual's supply of labor curve is "backward bending," then

The opportunity cost of leisure is approximated by

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

The fact that more women have chosen to work as real wages rise is evidence that,for them

Preferences and Utility

Utility Maximization and Choice

Income and Substitution Effects

Demand Relationships Among Goods

Uncertainty and Information

Strategy and Game Theory

Production Functions

Cost Functions

Profit Maximization

The Partial Equilibrium Competitive Model

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Capital and Time

Asymmetric Information

Externalities and Public Goods

Filters