Question 1

If leisure is a normal good,then an increase in income will

Accepted Answer

A) decrease the time allocated to work but increase the time allocated to leisure. 
B) increase the time allocated to work but decrease the time allocated to leisure. 
C) not change the time allocated to work or leisure. 
D) increase the time allocated to both work and leisure. 
E) decrease the time allocated to both work and leisure. 
A) decrease the time allocated to work but increase the time allocated to leisure. 
B) increase the time allocated to work but decrease the time allocated to leisure. 
C) not change the time allocated to work or leisure. 
D) increase the time allocated to both work and leisure. 
E) decrease the time allocated to both work and leisure. A

Question 2

Wages are returns to individuals owning a firm.

Accepted Answer

A) True 
 B)False  False

Question 3

To obtain human capital,an individual usually must

Accepted Answer

A) go to school. 
B) receive a diploma. 
C) pay someone for it. 
D) receive it from his or her parents. 
E) sacrifice some income in the present. 
A) go to school. 
B) receive a diploma. 
C) pay someone for it. 
D) receive it from his or her parents. 
E) sacrifice some income in the present. E

Question 4

The claim that unions help improve productivity is the same as the claim that they

Accepted Answer

A) increase the demand for labor. 
B) decrease the demand for labor. 
C) increase the supply of labor. 
D) decrease the supply of labor. 
E) increase both the supply of and demand for labor. 
A) increase the demand for labor. 
B) decrease the demand for labor. 
C) increase the supply of labor. 
D) decrease the supply of labor. 
E) increase both the supply of and demand for labor.

Question 5

Briefly provide two explanations why union wages are higher than nonunion wages.

Accepted Answer

One explanation is that unions improve p

Question 6

Exhibit 13-3  
-Refer to Exhibit 13-3.Suppose the weekly wage is $500 and the output price is $40 per unit.Calculate the marginal revenue product of the fourth worker.(Hint: Assume this is a competitive firm.)

Accepted Answer

$640 
Marginal product of four

Question 7

The income and substitution effects of a change in the wage rate always works in opposite directions.

Accepted Answer

A) True 
 B)False

Question 8

Analyze the labor supply schedules for Mary and Anne based on the data given in the table below.   (A)Draw the labor supply schedules for the two individuals.
(B)Who probably has a higher level of education? Why?
(C)At what point does the income effect begin to outweigh the substitution effect for Anne? Explain.

Accepted Answer

(A) @#IMG-DLM& (B)Mary probably has a higher level

Question 9

Which of the following statements is true?

Accepted Answer

A) The gap between the wages of college-educated workers and the wages of workers with only high-school educations has been narrowing over the past 25 years. 
B) Since the 1980s,the average pay for women has risen as a percentage of the average pay for men. 
C) Until the 1980s,women's income as a percentage of men's had never been above 60 percent. 
D) Due to affirmative action rules,women now generally make more than men. 
E) The gap between the average pay of women and that of men has not changed much over the past 30 years. 
A) The gap between the wages of college-educated workers and the wages of workers with only high-school educations has been narrowing over the past 25 years. 
B) Since the 1980s,the average pay for women has risen as a percentage of the average pay for men. 
C) Until the 1980s,women's income as a percentage of men's had never been above 60 percent. 
D) Due to affirmative action rules,women now generally make more than men. 
E) The gap between the average pay of women and that of men has not changed much over the past 30 years.

Question 10

Use the definition of the demand for labor as the marginal revenue product of labor to show how the two statements below can explain why there has been a decline in unskilled workers' real wages.
(A)New methods of production are requiring more highly-skilled workers who are more flexible and better able to switch between different tasks.
(B)Global competition in industries that utilize unskilled labor has driven down the prices of the products sold by these industries.

Accepted Answer

The marginal revenue product of labor is

Question 11

A firm with market power in the output market

Accepted Answer

A) does not have a derived demand. 
B) adjusts labor to equate the wage and marginal revenue product. 
C) can set whatever wage it wishes to pay. 
D) finds it unnecessary to maximize profit. 
E) adjusts labor so that the wage is lower than the marginal revenue product. 
A) does not have a derived demand. 
B) adjusts labor to equate the wage and marginal revenue product. 
C) can set whatever wage it wishes to pay. 
D) finds it unnecessary to maximize profit. 
E) adjusts labor so that the wage is lower than the marginal revenue product.

Question 12

Which of the following is true of the supply and demand curves for the labor market?

Accepted Answer

A) The supply curve slopes downward and the demand curve slopes upward. 
B) The supply curve slopes upward and the demand curve slopes downward. 
C) Both the supply curve and the demand curve slope upward. 
D) Both the supply curve and the demand curve slope downward. 
E) Both the supply curve and the demand curve are horizontal. 
A) The supply curve slopes downward and the demand curve slopes upward. 
B) The supply curve slopes upward and the demand curve slopes downward. 
C) Both the supply curve and the demand curve slope upward. 
D) Both the supply curve and the demand curve slope downward. 
E) Both the supply curve and the demand curve are horizontal.

Question 13

Because of the substitution effect,labor supply

Accepted Answer

A) tends to be upward-sloping. 
B) tends to be downward-sloping. 
C) tends to be vertical. 
D) has no definable shape. 
E) tends to be horizontal. 
A) tends to be upward-sloping. 
B) tends to be downward-sloping. 
C) tends to be vertical. 
D) has no definable shape. 
E) tends to be horizontal.

Question 14

A deferred-payment contract

Accepted Answer

A) gives employers an incentive to keep workers. 
B) gives workers an incentive to stay with the employer. 
C) gives workers an incentive to leave the employer early. 
D) makes workers quit immediately. 
E) gives workers an incentive to work less. 
A) gives employers an incentive to keep workers. 
B) gives workers an incentive to stay with the employer. 
C) gives workers an incentive to leave the employer early. 
D) makes workers quit immediately. 
E) gives workers an incentive to work less.

Question 15

The main objective of labor unions is to maximize firm profits.

Accepted Answer

A) True 
 B)False

Question 16

Under what circumstances can wage differences between men and women or between whites and minorities be an indication of discrimination?

Accepted Answer

Wage differences between diffe

Question 17

If the income effect is stronger than the substitution effect,then the labor supply curve will be backward-bending.

Accepted Answer

A) True 
 B)False

Question 18

The market demand for labor relates the quantity of labor demand to price of goods and services that consumers pay.

Accepted Answer

A) True 
 B)False

Question 19

For a competitive firm to maximize profits,it must hire labor up to the point at which marginal revenue product is equal to the wage rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is true of a standard supply and demand diagram for the labor market?

Accepted Answer

A) Price is displayed on the vertical axis and labor quantity is displayed on the horizontal axis. 
B) Price is displayed on the horizontal axis and labor quantity is displayed on the vertical axis. 
C) Wage is displayed on the vertical axis and labor quantity is displayed on the horizontal axis. 
D) Wage is displayed on the horizontal axis and labor quantity is displayed on the vertical axis. 
E) Price is displayed on the vertical axis and wage is displayed on the horizontal axis. 
A) Price is displayed on the vertical axis and labor quantity is displayed on the horizontal axis. 
B) Price is displayed on the horizontal axis and labor quantity is displayed on the vertical axis. 
C) Wage is displayed on the vertical axis and labor quantity is displayed on the horizontal axis. 
D) Wage is displayed on the horizontal axis and labor quantity is displayed on the vertical axis. 
E) Price is displayed on the vertical axis and wage is displayed on the horizontal axis.

Exam 13: Labor Markets

If leisure is a normal good,then an increase in income will

Wages are returns to individuals owning a firm.

To obtain human capital,an individual usually must

The claim that unions help improve productivity is the same as the claim that they

Briefly provide two explanations why union wages are higher than nonunion wages.

Exhibit 13-3 -Refer to Exhibit 13-3.Suppose the weekly wage is $500 and the output price is $40 per unit.Calculate the marginal revenue product of the fourth worker.(Hint: Assume this is a competitive firm.)

The income and substitution effects of a change in the wage rate always works in opposite directions.

Which of the following statements is true?

A firm with market power in the output market

Which of the following is true of the supply and demand curves for the labor market?

Because of the substitution effect,labor supply

A deferred-payment contract

The main objective of labor unions is to maximize firm profits.

Under what circumstances can wage differences between men and women or between whites and minorities be an indication of discrimination?

If the income effect is stronger than the substitution effect,then the labor supply curve will be backward-bending.

The market demand for labor relates the quantity of labor demand to price of goods and services that consumers pay.

For a competitive firm to maximize profits,it must hire labor up to the point at which marginal revenue product is equal to the wage rate.

Which of the following is true of a standard supply and demand diagram for the labor market?

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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