Deck 12: Labour Markets

Question 1

The relationship between labour usage and output at the local Starducks is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required.
Refer to the information above.The most Starducks would pay the third worker is

A) $75.
B) $60.
C) $18.75.
D) $15.
E) the minimum wage.

Answer 1

$18.75.

Question 2

The benefit of hiring an extra worker is termed

A) the marginal product of labour.
B) the value of marginal product of labour.
C) the value of total product of labour.
D) the average product of labour.
E) output.

Answer 2

the value of marginal product of labour.

Question 3

The relationship between labour usage and output at the local Starducks is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required.
Refer to the information above.The marginal product of the third worker is __________ the marginal product of the second worker,which means that __________.

A) greater than;diminishing returns are absent
B) less than;diminishing returns are present
C) equal to;the third worker will be hired
D) less than;diminishing returns are absent
E) greater than;diminishing returns are present

Answer 3

less than;diminishing returns are present

Question 4

The optimal number of workers for a perfectly competitive firm to hire occurs when

A) total labour cost equals total revenue.
B) the lowest possible wage is accepted by workers.
C) the wage rate equals the marginal product of the last worker.
D) the wage rate equals the value of marginal product of the last worker.
E) the largest output is achieved.

Question 5

The value of marginal product

A) is equal to marginal product.
B) describes the cost of hiring an extra worker.
C) is equal to marginal product divided by price.
D) generally increases.
E) is equal to marginal product multiplied by price.

Question 6

One of the reasons why the majority of new graduates of a professional school from the same university get similar pay is that firms pay for what they consider to be

A) equal pay for equal work.
B) a cartel arrangement.
C) an implicit collusive arrangement.
D) observationally equivalent workers.
E) a natural monopoly in the labour market.

Question 7

Lou's marginal product is 12,the firm's output price is $5,and the wage rate is $40.The firm

A) will hire Lou.
B) may or may not hire Lou.
C) will not hire Lou.
D) does not have enough information to decide whether to hire Lou or not.
E) will hire Lou only if he accepts a wage of $35.

Question 8

Firms tend to assess wage compensation to new hires based on

A) what they expect a typical worker's level of productivity to be,given their observable characteristics.
B) what they expect a typical worker's level of productivity given their hidden characteristics.
C) the level of productivity of the general population.
D) the level of productivity of the labour force.
E) the level of productivity of their last hire.

Question 9

When a highly qualified individual is eliminated from the pool of applicants for a job because he does not appear to have the generally known personal characteristics of a typical qualified worker,he lacks the advantage of

A) the right work skills.
B) the right productivity.
C) observationally equivalent workers.
D) affirmative action.
E) employment equity.

Question 10

If Billy's value of marginal product is $6,one can infer that

A) the price per unit of output is $6.
B) Billy's marginal product is $6.
C) the price per unit of output multiplied by Billy's marginal product is $6.
D) the price per unit of output is at least $1.
E) Billy's marginal product is at most $6.

Question 11

A firm is interested in what other firms are paying for a typical worker with certain level of productivity because

A) this firm can then underpay their workers.
B) this firm understands the threat that other firms will likely hire away their good workers if their good workers are underpaid.
C) Canadian labour laws require that all workers must be paid equally in the same profession.
D) this firm is trying to hire the typical worker.
E) this is a new firm with very little experience in hiring new workers.

Question 12

The relationship between labour usage and output at the local Starducks is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required.
Refer to the information above.The benefit to Starducks of hiring the fifth worker is

A) 5 extra cups of espresso.
B) 75 total cups of espresso.
C) $93.75.
D) $6.25.
E) unknown.

Question 13

The relationship between labour usage and output at the local Starducks is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required.
Refer to the information above.The marginal product of the fourth worker is _________ cups of espresso.

A) 70
B) 60
C) 17.5
D) 10
E) 2.5

Question 14

If the value of marginal product of the last worker hired is $10 and the wage rate is $12,then the firm

A) is experiencing an economic loss.
B) can increase profit by reducing employment and output.
C) needs to lower the wage rate.
D) needs to expand production.
E) is earning an economic profit.

Question 15

What is the extra output received from the hiring of an extra worker?

A) The total product of labour.
B) The value of marginal product of labour.
C) The marginal product of labour.
D) The average product of labour.
E) The value of average product of labour.

Question 16

Kyle works for a perfectly competitive firm and he receives a wage rate of $15.One can infer that

A) Kyle's marginal product is greater than $15.
B) the firm's price is at least $3.
C) Kyle has the highest value of marginal product.
D) Kyle's value of marginal product is at least $15.
E) Kyle is underpaid.

Question 17

The relationship between labour usage and output at the local Starducks is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required.
Refer to the information above.The value of marginal product for the first worker is

A) 25 extra cups of espresso.
B) equal to total revenue at $31.25.
C) 25 total cups of espresso.
D) $1.25.
E) unknown.

Question 18

The general rule governing the hiring of workers is to

A) minimize labour cost.
B) minimize labour cost per unit.
C) equate total labour cost to total labour benefit.
D) maximize marginal product.
E) equate marginal labour cost to marginal labour benefit.

Question 19

In many cases,workers do not accurately report how much they personally add to total output because

A) information is imperfect and there are incentives to misrepresent productivity.
B) there are incentives to misrepresent productivity and some productivities are difficult to measure.
C) some productivities are difficult to measure and workers typically work as part of a large team.
D) workers typically work as part of a large team,some productivities are difficult to measure,and information is imperfect.
E) information is imperfect,there are incentives to misrepresent productivity,some productivities are difficult to measure,and workers typically work as part of a large team.

Question 20

In the marketplace,the marginal product of a worker is not easy to measure because

A) a worker's work performance is typically inconsistent.
B) there are incentives for both firms and workers to misrepresent that marginal product.
C) there is no known method to measure marginal product.
D) the market does not care about productivity.
E) the government keeps all productivity data secret to enhance national security.

Question 21

Susan is a labour market monopsonist.The labour supply curve she faces is given below.
Refer to the information above.The total labour cost of hiring three workers is

A) $5.
B) $11.
C) $18.
D) $26.
E) $35.

Question 22

In the labour market,a competitive firm must pay __________ wage to hire more workers,whereas a monopsonist must pay ________ wage.

A) the same;a higher
B) a lower;a higher
C) a higher;a lower
D) a higher;a higher
E) the same;the same

Question 23

If a firm hires workers up to the point where the extra revenue generated by the last worker equals the extra cost,then the firm is

A) maximizing output.
B) maximizing profit.
C) minimizing cost.
D) maximizing labour cost.
E) maximizing total revenue.

Question 24

At the Formby's Shoe Polish factory,management observes that with 105 workers,total output is 590 units and with 110 workers,it is 700 units.The marginal product of each of the five extra workers is _______ units.

A) 700
B) 110
C) 22
D) 11
E) 1

Question 25

For a monopsonist,the wage rate is

A) greater than marginal labour cost.
B) less than marginal labour cost.
C) equal to marginal labour cost.
D) the cost of hiring an extra worker.
E) a measure of the cost of hiring an extra worker.

Question 26

The amount by which labour cost rises when an additional worker is hired is termed

A) marginal product.
B) the value of marginal product.
C) the cost of marginal product.
D) marginal labour cost.
E) marginal cost.

Question 27

A market with a single buyer is called a(n)________ market.

A) monopoly
B) monopsonistically competitive
C) noncompetitive
D) monopsony
E) monopolistically competitive

Question 28

Susan is a labour market monopsonist.The labour supply curve she faces is given below.
Refer to the information above.The marginal labour cost of the fourth worker is

A) $11.
B) $8.
C) $7.
D) $6.
E) $5.

Question 29

The marginal product of the 14^th worker is 8 and the firm sells its output for $4 per unit.The value of the 14^th worker's marginal product is

A) $4.
B) $8.
C) $12.
D) $24.
E) $32.

Question 30

The last worker hired at a competitive firm has a value of marginal product of $17 and he is paid the market wage of $15.The firm could __________ by __________.

A) reduce losses;hiring fewer workers
B) increase profit;hiring more workers
C) reduce losses;hiring more workers
D) increase profit;hiring fewer workers
E) maximize profit;hiring more workers

Question 31

Marginal product is a measure of the __________ output associated with __________.

A) extra;the total employment level
B) average;the average worker
C) extra;hiring an extra worker
D) average;hiring an extra worker
E) extra;the average worker

Question 32

Monopsony is a

A) market structure with a single seller.
B) market structure with a single seller and a single buyer.
C) market structure with a single buyer.
D) market structure that exists only in labour markets.
E) common feature of contemporary labour markets.

Question 33

A monopsonist is able to

A) pay the same wage independent of the number of workers he hires.
B) pay whatever wage he wants.
C) hire more workers only if he pays them more.
D) pay each worker his reservation wage.
E) always make a profit because of low labour costs.

Question 34

Marginal labour cost is

A) identical to the wage rate.
B) labour cost divided by the number of workers.
C) the extra labour cost associated with hiring an extra worker.
D) less than the value of marginal product.
E) less than the wage rate.

Question 35

In many cases,labour represents 70% of all inputs in production.Firms will only hire the workers they need for their targeted level of production.Hence,a firm's demand for labour is a

A) targeted demand.
B) forecasted demand.
C) law of demand.
D) derived demand.
E) decisional demand.

Question 36

The value of marginal product for the last worker hired is $20 and the wage rate is $25.The firm

A) should hire another worker.
B) is maximizing profit.
C) should keep the last worker it hired.
D) is minimizing cost.
E) should hire fewer workers.

Question 37

In order to maximize its profit,or minimize its loss,the firm must hire workers until

A) the extra revenue from the last worker equals the extra profit.
B) the extra revenue from the last worker equals the extra cost.
C) total revenue and total labour cost are equal.
D) the marginal product of workers begin to decline.
E) the marginal product of workers becomes negative.

Question 38

To a perfectly competitive firm in the labour market,the labour supply curve is __________;to the monopsonist,it is __________.

A) upward-sloping;upward-sloping
B) horizontal;upward-sloping
C) upward-sloping;horizontal
D) horizontal;vertical
E) vertical;upward-sloping

Question 39

Monopsony and monopoly are similar in that

A) both can charge the price they wish.
B) both face market demand for their output.
C) both can pay workers whatever they wish.
D) both face the labour market supply curve.
E) to sell more,the monopolist must charge less;to hire more workers,the monopsonist must pay more.

Question 40

The value of marginal product of labour curve is downward sloping because

A) firms must lower price to sell more.
B) at lower wages,only less qualified workers are available.
C) of the law of diminishing marginal product.
D) profits decline as more workers are hired.
E) productivity rises as more workers are hired.

Question 41

Susan is a labour market monopsonist.The labour supply curve she faces is given below.
Refer to the information above.If Susan was magically transformed into a perfectly competitive firm in the labour market with an equilibrium wage rate of $6,then the marginal labour cost of the fifth worker would

A) fall from $9 to $6.
B) fall from $7 to $6.
C) remain unchanged at $7.
D) fall from $35 to $30.
E) rise from $5 to $6.

Question 42

If a firm faces an upward-sloping supply of labour curve,the firm must be a(n)

A) oligopolist.
B) perfect competitor.
C) monopolist.
D) monopsonist.
E) duopolist.

Question 43

A monopsonist finds that if he hires Zeke,he will pay Zeke a wage rate of $10 and see his labour cost rise by $15.One can predict that Zeke will be hired if his

A) value of marginal product is greater than $10.
B) marginal product is greater than $15.
C) value of marginal product is at least $10.
D) marginal product is greater than $10.
E) value of marginal product is greater than or equal to $15.

Question 44

When firm J hired its tenth worker,its labour cost rose by $20.For firm J to be classified as a monopsonist,it must be the case that hiring the eleventh worker will

A) increase labour cost by $20.
B) cause labour cost to rise.
C) increase labour cost by less than $20.
D) decrease average cost.
E) increase labour cost by more than $20.

Question 45

Given identical demand,a monopsonist will hire __________ workers than a competitive firm and produce __________ output.

A) fewer;less
B) more;the same
C) more;less
D) more;more
E) fewer;more

Question 46

Compared to a perfectly competitive firm,the monopsonist's marginal labour cost is __________,resulting in a __________ socially optimal level of output.

A) greater;less than
B) greater;greater than
C) smaller;less than
D) smaller;greater than
E) the same;less than

Question 47

The prevalence of monopsony has __________ over the last century because __________.

A) declined;it is no longer legal
B) declined;of greater mobility of individuals
C) increased;of greater specialized training for workers
D) increased;mergers
E) not changed;labour markets have not changed

Question 48

At firm M,labour costs increased from $158 to $170 when the last worker was hired.If the wage rate is __________ then firm M must be a(n)__________.

A) more than $12;monopsonist
B) less than $12;monopsonist
C) less than $12;perfect competitor
D) more than $12;perfect competitor
E) exactly $12;monopsonist

Question 49

In the labour market,the wage rate __________ marginal labour cost for a __________.

A) is less than;perfect competitor
B) is less than;monopsonist
C) equals;monopsonist
D) is greater than;monopsonist
E) equals;monopolist

Question 50

The loss of economic surplus that results from monopsony is that it

A) ignores the concerns of workers.
B) produces too much output.
C) frequently produces goods with negative externalities.
D) hires too few workers and therefore produces too little output.
E) hires too few workers but still produces the efficient level of output.

Question 51

Susan is a labour market monopsonist.The labour supply curve she faces is given below.
Refer to the information above.If Susan hires the fifth worker,the wage rate is __________ and her labour cost rises by __________.

A) $9;$7
B) $11;$11
C) $7;$7
D) $7;$8
E) $7;$9

Question 52

In the graph above,the distance 0W2 measures the

A) marginal labour cost of L2 workers.
B) value of marginal product of L2 workers.
C) perfectly competitive wage rate.
D) wage rate the monopsonist pays to the L2 workers.
E) wage rate necessary to ensure L3 workers will come to work.

Question 53

Two profit-maximizing firms,X and Y,are paying a wage rate of $15 but firm Y's marginal labour cost is higher than that for firm X.For this to happen,it must be the case that

A) both firms are monopsonists.
B) firm X is a monopsonist and firm Y is a perfect competitor.
C) both firms are perfect competitors.
D) firm X is a perfect competitor and firm Y is a monopsonist.
E) there has been an error in the calculations.

Question 54

Refer to the graph above.The reduced level of labour usage under monopsony,compared to perfect competition,is illustrated by the distance

A) 0L1.
B) (L3 - L2).
C) (L3 - L1).
D) (L1 - L2).
E) 0L2.

Question 55

For a profit-maximizing monopsonist,the correct relationship between the value of marginal product (VMP),marginal labour cost (MLC),and the wage rate (W)is

A) VMP > MLC = W.
B) VMP = MLC = W.
C) VMP < MLC < W.
D) VMP = MLC > W.
E) VMP > MLC > W.

Question 56

In the labour market,a perfectly competitive firm and a monopsonist are similar in that both

A) take the wage rate as their marginal labour cost.
B) hire the same number of workers.
C) hire up to the point where the extra revenue from,and the extra cost of,the last worker are the same.
D) face an upward-sloping labour supply curve.
E) determine the wage rate they pay.

Question 57

In a particular labour market,the equilibrium wage rate is $15.From this information,one can infer that

A) the value of marginal product is $15.
B) the marginal labour cost is $15.
C) the market is socially efficient.
D) the value of marginal product is greater than or equal to $15.
E) the market is perfectly competitive.

Question 58

In the above labour market,the equilibrium outcome for a monopsonist is wage rate ________ and number of workers ___________.

A) W3;L2
B) W1;L1
C) W2;L2
D) W2;L3
E) W3;L3

Question 59

The reason a monopsonist hires fewer workers than a perfectly competitive firm is that

A) he can.
B) he is not maximizing profits.
C) he works them harder.
D) his threats of being fired motivate workers.
E) each extra worker increases labour costs by more than the wage rate.

Question 60

Suppose that one knows that firm A is maximizing profit and is paying a wage rate of $10 to its workers.It must therefore be true that

A) the firm is a perfect competitor in the labour market.
B) the value of the marginal product of the last worker is greater than $10.
C) the firm is a monopsonist.
D) the value of marginal product of the last worker is less than $10.
E) the extra cost of hiring the last worker was greater than or equal to $10.

Question 61

Refer to the information above.A monopsonist finds that hiring the fourth worker causes his labour costs to rise by

A) $1.
B) $4.
C) $8.
D) $10.
E) $14.

Question 62

Refer to the information above.A monopsonist would maximize profit by hiring __________ workers and paying a wage of __________.

A) 3;$6
B) 3;$8
C) 4;$8
D) 2;$4
E) 3;$4

Question 63

Overall,the labour force participation rate in Canada has __________ because the ___________ in female labour supply has been greater than the _________ in male labour supply.

A) increased;decrease;increase
B) increased;increase;decrease
C) decreased;decrease;increase
D) decreased;increase;decrease
E) increased;increase;increase

Question 64

The labour market for teachers in a small,isolated community that has one school district would be best described as a(n)

A) natural monopoly.
B) bilateral monopoly.
C) monopsony.
D) oligopsony.
E) unilateral monopoly.

Question 65

Which of the following is a characteristic of monopsony?

A) The type of labour employed is relatively mobile.
B) The supply curve for labour lies above the marginal resource cost curve.
C) The wage rate it must pay workers varies directly with the number of workers it employs.
D) The firm's employment is a small portion of the total employment of that type of labour.
E) The wage rate it must pay workers is constant.

Question 66

The supply curve of labour shows the ____________ that workers ____________ at a given wage rate.

A) average number of hours;want to work
B) total number of hours;want to spend at home
C) average number of hours;want to spend at home
D) total number of hours;want to work
E) marginal number of hours

Question 67

If a person is working,it is the result of two decisions: the firm's decision to _________ and the worker's decision to ________________.

A) remain in business;accept the job
B) offer a job;look for a job
C) offer a job;accept the job
D) remain in business;look for a job
E) pay minimum wage;accept the job

Question 68

Canadian male workers are working _________ hours in their lifetimes because they _________ and ____________.

A) more;stay in school longer;retire earlier
B) fewer;stay in school longer;retire later
C) more;leave school earlier;retire later
D) fewer;leave school earlier;retire earlier
E) fewer;stay in school longer;retire earlier

Question 69

An individual employer's demand curve for labour is a downward-sloping function of the wage rate because of

A) the law of diminishing returns.
B) the law of demand.
C) the law of supply.
D) constant returns to scale.
E) utility maximization.

Question 70

An individual employer's demand curve for labour can be shown as a(n)___________ function of the wage rate.

A) horizontal
B) downward-sloping
C) vertical
D) upward-sloping
E) indeterminate

Question 71

A single buyer is called a(n)

A) monopolist.
B) monopsonist.
C) oligopolist.
D) labour union.
E) duopolist.

Question 72

The long-term trend in the Canadian economy is for female workers to work __________ hours in their lifetimes and for male workers to work ___________ hours in their lifetimes.

A) fewer;fewer
B) more;fewer
C) more;more
D) a constant number;a constant number
E) fewer;more

Question 73

The above graphs represent the demand for tea tasters for Firm A and Firm B.These firms are the only ones that employ labour in this particular occupation.
Refer to the graphs above.If the wage rate in this labour market is $3 per hour,then the total quantity of labour demanded is __________ person-hours per day.

A) 10
B) 20
C) 30
D) 40
E) 80

Question 74

The above graphs represent the demand for tea tasters for Firm A and Firm B.These firms are the only ones that employ labour in this particular occupation.
Refer to the graphs above.If the wage rate in this labour market is $8 per hour,then the total quantity of labour demanded is __________ person-hours per day.

A) 10
B) 20
C) 30
D) 40
E) 70

Question 75

To derive the labour demand curve for a particular market,one

A) adds up the value of marginal product curves at all labour usage levels.
B) adds up the marginal product curves at the various wage rates.
C) adds up the value of marginal product curves at the various wage rates.
D) multiplies the marginal product curves.
E) multiplies the value of marginal product curves.

Question 76

Refer to the information above.Comparing the monopsony and perfectly competitive outcomes,one finds that the firm hires __________ worker(s)and the wage rate is __________ in the monopsony.

A) one fewer;one dollar less
B) one fewer;two dollars less
C) the same number of;two dollars less
D) one fewer;the same
E) two fewer;the same

Question 77

Refer to the information above.The deadweight loss in the labour market due to monopsony is

A) $5.
B) $4.
C) $3.
D) $2.
E) $1.

Question 78

The time crunch that so many families feel is due to a combination of ____________ and ____________.

A) greater paid labour supply;continuing unpaid household labour
B) greater unpaid labour supply;continuing paid household labour
C) greater paid labour supply;continuing paid household labour
D) greater unpaid labour supply;continuing unpaid household labour
E) larger families;continuing unpaid household labour

Question 79

The growth of Internet sites devoted to employment search should

A) increase the influence of monopsonists.
B) result in less competitive labour markets.
C) increase the degree of competition in labour markets.
D) increase the cost of searching for a new job.
E) increase the cost of searching for a new employer.

Question 80

If there are several firms in a particular labour market,the total demand for labour will then be ___________ of the individual firms' demands.

A) the vertical sum
B) the horizontal sum
C) product
D) equal to the highest
E) equal to the lowest