Question 1

The market demand curve for labor

Accepted Answer

A) slopes downward. 
B) slopes upward. 
C) is vertical at the existing supply of labor. 
D) is horizontal at the going wage rate. 
A) slopes downward. 
B) slopes upward. 
C) is vertical at the existing supply of labor. 
D) is horizontal at the going wage rate. A

Question 2

Marginal revenue product is

Accepted Answer

A) marginal physical product times marginal factor cost. 
B) marginal physical product times marginal revenue. 
C) average physical product times marginal revenue. 
D) marginal physical product times the wage rate. 
A) marginal physical product times marginal factor cost. 
B) marginal physical product times marginal revenue. 
C) average physical product times marginal revenue. 
D) marginal physical product times the wage rate. B

Question 3

When the supply of labor to a firm is perfectly elastic the marginal factor cost will equal the

Accepted Answer

A) market price of the product. 
B) wage rate. 
C) marginal physical product. 
D) wage rate times the number of workers. 
A) market price of the product. 
B) wage rate. 
C) marginal physical product. 
D) wage rate times the number of workers. B

Question 4

When firms in a U.S.industry outsource some of their production,

Accepted Answer

A) both U.S.labor demand and U.S.wages in the industry fall 
B) U.S.labor demand falls,but U.S.wages are not affected. 
C) U.S.labor demand remains unchanged,but U.S.wages fall. 
D) U.S.labor demand falls,but U.S.wages increase. 
A) both U.S.labor demand and U.S.wages in the industry fall 
B) U.S.labor demand falls,but U.S.wages are not affected. 
C) U.S.labor demand remains unchanged,but U.S.wages fall. 
D) U.S.labor demand falls,but U.S.wages increase.

Question 5

What are the short-run economic effects when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

Accepted Answer

A) The demand curve for labor in the U.S.decreases,and the demand curve in the foreign country will increase. 
B) The demand curve for labor in the U.S.increases,and the demand curve in the foreign country will decrease. 
C) The demand curve for labor in the U.S.decreases,and the demand curve in the foreign country will decrease. 
D) The demand curve for labor in the U.S.increases,and the demand curve in the foreign country will increase. 
A) The demand curve for labor in the U.S.decreases,and the demand curve in the foreign country will increase. 
B) The demand curve for labor in the U.S.increases,and the demand curve in the foreign country will decrease. 
C) The demand curve for labor in the U.S.decreases,and the demand curve in the foreign country will decrease. 
D) The demand curve for labor in the U.S.increases,and the demand curve in the foreign country will increase.

Question 6

A profit-maximizing firm will hire additional units of labor until

Accepted Answer

A) the additional cost of hiring the last worker equals the additional revenue generated by that worker. 
B) the additional cost of hiring the last worker equals the marginal factor cost of the worker. 
C) the extra revenue from hiring the last worker equals the marginal physical product of labor. 
D) the extra cost from hiring the last worker equals the cost of the product. 
A) the additional cost of hiring the last worker equals the additional revenue generated by that worker. 
B) the additional cost of hiring the last worker equals the marginal factor cost of the worker. 
C) the extra revenue from hiring the last worker equals the marginal physical product of labor. 
D) the extra cost from hiring the last worker equals the cost of the product.

Question 7

-Refer to the above figure.Which panel represents what happens in the foreign job market in the short-run when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

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 8

When the price of a product increases,the marginal revenue product curve in a perfectly competitive market

Accepted Answer

A) does not change. 
B) becomes flatter. 
C) shifts to the right. 
D) shifts to the left. 
A) does not change. 
B) becomes flatter. 
C) shifts to the right. 
D) shifts to the left.

Question 9

The practice of outsourcing has been given a boost by

Accepted Answer

A) advances in telecommunications and computer networking. 
B) support from organized labor. 
C) firms that are becoming more risk-averse. 
D) sharp increases in the cost of overseas labor. 
A) advances in telecommunications and computer networking. 
B) support from organized labor. 
C) firms that are becoming more risk-averse. 
D) sharp increases in the cost of overseas labor.

Question 10

The MRP of labor will shift to the left if

Accepted Answer

A) labor productivity increases. 
B) labor productivity decreases. 
C) wages increase. 
D) wages decrease. 
A) labor productivity increases. 
B) labor productivity decreases. 
C) wages increase. 
D) wages decrease.

Question 11

What are the short-run economic effects when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

Accepted Answer

A) The wage rate in the U.S.will remain the same,and the wage rate in the foreign country will decrease. 
B) The wage rate in the U.S.will increase,and the wage rate in the foreign country will decrease. 
C) The wage rate in the U.S.will decrease,and the wage rate in the foreign country will decrease. 
D) The wage rate in the U.S.will decrease,and the wage rate in the foreign country will increase. 
A) The wage rate in the U.S.will remain the same,and the wage rate in the foreign country will decrease. 
B) The wage rate in the U.S.will increase,and the wage rate in the foreign country will decrease. 
C) The wage rate in the U.S.will decrease,and the wage rate in the foreign country will decrease. 
D) The wage rate in the U.S.will decrease,and the wage rate in the foreign country will increase.

Question 12

The marginal revenue product of labor is

Accepted Answer

A) the marginal physical product multiplied by marginal revenue. 
B) the marginal revenue of output multiplied by the price of the input. 
C) total sales divided by total labor employed. 
D) total labor employed divided by total sales. 
A) the marginal physical product multiplied by marginal revenue. 
B) the marginal revenue of output multiplied by the price of the input. 
C) total sales divided by total labor employed. 
D) total labor employed divided by total sales.

Question 13

Suppose the market price of zinc doubles.Which of the following scenarios is most likely?

Accepted Answer

A) The demand for zinc miners will increase,raising the market wage rate. 
B) The demand for zinc miners will decrease,reducing the market wage rate. 
C) The demand for zinc will increase,raising the market price further. 
D) The demand for zinc miners will decrease,reducing the market price back to its original price. 
A) The demand for zinc miners will increase,raising the market wage rate. 
B) The demand for zinc miners will decrease,reducing the market wage rate. 
C) The demand for zinc will increase,raising the market price further. 
D) The demand for zinc miners will decrease,reducing the market price back to its original price.

Question 14

"Other things being equal,the monopolist hires fewer workers than would be hired than a perfectly competitive industry." Do you agree or disagree? Why?

Accepted Answer

Agree.For competitive firms,marginal rev

Question 15

An increase in labor productivity will shift

Accepted Answer

A) MRP curve to the left. 
B) MFC curve to the right. 
C) MRP curve to the right. 
D) MFC curve to the left. 
A) MRP curve to the left. 
B) MFC curve to the right. 
C) MRP curve to the right. 
D) MFC curve to the left.

Question 16

A decrease in the marginal factor cost of labor will

Accepted Answer

A) lead to an decrease in the quantity demanded of labor. 
B) induce a firm to hire fewer workers. 
C) induce a firm to hire more workers. 
D) cause the value of the marginal product of labor to decrease. 
A) lead to an decrease in the quantity demanded of labor. 
B) induce a firm to hire fewer workers. 
C) induce a firm to hire more workers. 
D) cause the value of the marginal product of labor to decrease.

Question 17

We would expect unions to have a more difficult time negotiating higher wages for their members when

Accepted Answer

A) labor represents a small portion of total costs. 
B) the product produced makes up a small portion of families' budgets. 
C) the product produced has several close substitutes. 
D) there are not good substitutes for labor in the production process. 
A) labor represents a small portion of total costs. 
B) the product produced makes up a small portion of families' budgets. 
C) the product produced has several close substitutes. 
D) there are not good substitutes for labor in the production process.

Question 18

An industry utilizes capital and two types of labor.Unskilled labor is a substitute for capital while the skilled labor is complementary to capital.An increase in the price of capital will

Accepted Answer

A) cause the demand for labor to increase,raising wages of both skilled and unskilled labor. 
B) cause the wage of unskilled labor to rise relative to the price of skilled labor. 
C) induce the firms in the industry to cut back on all levels-capital,unskilled and skilled labor. 
D) cause the demand for skilled labor to rise and the demand for unskilled labor to fall. 
A) cause the demand for labor to increase,raising wages of both skilled and unskilled labor. 
B) cause the wage of unskilled labor to rise relative to the price of skilled labor. 
C) induce the firms in the industry to cut back on all levels-capital,unskilled and skilled labor. 
D) cause the demand for skilled labor to rise and the demand for unskilled labor to fall.

Question 19

A decrease in the supply of labor could be caused by

Accepted Answer

A) wage rates falling in another industry. 
B) better working conditions. 
C) more job flexibility. 
D) increased wage rates in another industry. 
A) wage rates falling in another industry. 
B) better working conditions. 
C) more job flexibility. 
D) increased wage rates in another industry.

Question 20

If labor is 80 percent of total costs in industry A and 20 percent in industry B,then other things equal,we would expect the elasticity of demand for labor to be

Accepted Answer

A) greater in industry A than in industry B. 
B) greater in industry B than in industry A. 
C) the same in both industries. 
D) uncertain since no general relationship exists between cost shares and elasticities. 
A) greater in industry A than in industry B. 
B) greater in industry B than in industry A. 
C) the same in both industries. 
D) uncertain since no general relationship exists between cost shares and elasticities.

Exam 15: The Labor Market: Demand, supply and Outsourcing

The market demand curve for labor

Marginal revenue product is

When the supply of labor to a firm is perfectly elastic the marginal factor cost will equal the

When firms in a U.S.industry outsource some of their production,

What are the short-run economic effects when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

A profit-maximizing firm will hire additional units of labor until

-Refer to the above figure.Which panel represents what happens in the foreign job market in the short-run when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

When the price of a product increases,the marginal revenue product curve in a perfectly competitive market

The practice of outsourcing has been given a boost by

The MRP of labor will shift to the left if

What are the short-run economic effects when U.S.firms substitute labor outside of the U.S.for labor inside the U.S.?

The marginal revenue product of labor is

Suppose the market price of zinc doubles.Which of the following scenarios is most likely?

"Other things being equal,the monopolist hires fewer workers than would be hired than a perfectly competitive industry." Do you agree or disagree? Why?

An increase in labor productivity will shift

A decrease in the marginal factor cost of labor will

We would expect unions to have a more difficult time negotiating higher wages for their members when

An industry utilizes capital and two types of labor.Unskilled labor is a substitute for capital while the skilled labor is complementary to capital.An increase in the price of capital will

A decrease in the supply of labor could be caused by

If labor is 80 percent of total costs in industry A and 20 percent in industry B,then other things equal,we would expect the elasticity of demand for labor to be

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Demand and Supply Elasticity

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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