Deck 20: Labor and Entrepreneurship: The Human Inputs

Question 1

If the MRP of labor is below the wage rate, the firm should lay off workers.

Answer 1

False

Question 2

The marginal revenue product is the extra revenue the firm receives by selling one more unit of output.

Answer 2

False

Question 3

Innovation that improves machinery, power sources and other capital equipment will increase the demand for labor in the short run.

Answer 3

False

Question 4

Labor markets are generally perfectly competitive markets.

Question 5

History has shown that over the long run, labor-saving technology has actually not reduced employment.

Question 6

A worker's marginal revenue product depends upon his average product.

Question 7

Money spent on college tuition is considered human capital by economists.

Question 8

A person's decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain amount of leisure per week.

Question 9

Over the last 30 years, the income gap between the rich and the poor has declined.

Question 10

The relationship between the quantity of labor supplied and the wage is governed by an income effect and a substitution effect.

Question 11

Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in employment.

Question 12

Rising productivity usually reduces workers' standards of living.

Question 13

All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

Question 14

One of the most significant developments in labor supply in recent times is the increase in the labor force participation of married women.

Question 15

The demand for labor is a derived demand.

Question 16

The income effect of higher wages leads workers to want to work more.

Question 17

The majority of new jobs created in the service sector of the U.S.economy have been in the information sector.

Question 18

There is only a small difference in wages between college graduates and workers who did not attend college.

Question 19

Average real wages have not risen significantly since approximately 1973.

Question 20

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Question 21

Anything that influences a good's price or the marginal physical product of labor will influence wages.

Question 22

The salary of an athlete like Peyton Manning is in part a reward for his unique ability-something economists call economic rent.

Question 23

Since women earn less on average than men, we would expect that the substitution effect of a wage change would be more likely to dominate for women and the income effect would be more likely to dominate for men.

Question 24

If the income effect of a change in the wage dominates the substitution effect, then workers will want to work more when the wage increases.

Question 25

An individual's supply curve is backward bending.

Question 26

Wages will tend to be high in labor markets where supply is relatively high and demand is relatively weak.

Question 27

One implication of human capital theory is that college graduates should earn substantially less than high school graduates.

Question 28

An investment in yourself is an investment in what economists call human capital.

Question 29

The substitution effect makes workers want to work less when the wage increases.

Question 30

The monetary return on a college education is considered economic rent.

Question 31

Earnings of some highly skilled or highly specialized persons can be classified as economic rents.

Question 32

The income effect is thought to offset the substitution effect among very high wage earners.

Question 33

The supply of workers in an industry is influenced by the available working population and the nonmonetary attractiveness of the job.

Question 34

Economic rents can lead to large wage differentials.

Question 35

Some economists believe that education's primary function is to sort individuals by their ability rather than increase their productivity.

Question 36

Spending on an education is considered an investment because it involves a sacrifice of current income for higher expected future income.

Question 37

Wages are comparatively low in markets where demand for labor is low and supply is high.

Question 38

The substitution effect is thought to dominate the behavior of low-wage workers.

Question 39

Expenditures for attending college can be viewed as an investment in human capital.

Question 40

The quantity of labor supplied is dependent on the size of the working population and the wage rate.

Question 41

The government enacted minimum wage legislation to protect skilled workers.

Question 42

If education acts purely as a sorting mechanism, then students are as productive when they enter college as when they leave.

Question 43

The argument that the minimum wage law has significantly increased teenage unemployment is not supported by recent statistical analysis.

Question 44

Less than 13 percent of U.S.workers belong to unions.

Question 45

College graduates now earn nearly twice as much as their high school-educated peers and that gap is increasing.

Question 46

Teenagers generally have high marginal revenue products because they have not completed their educations and have little job experience.

Question 47

The primary reason unionization in the United States has been declining is the shift of the U.S.labor force into service industries and out of manufacturing.

Question 48

Recent studies suggest that a rise in the minimum wage results in a substantial cut in the demand for teen labor.

Question 49

Union membership in the United States has fallen compared to what it was in the 1950s.

Question 50

Teenage unemployment rates have consistently been much higher than the overall unemployment rate and black teenagers have fared worse than white teenagers.

Question 51

Over 50 percent of all U.S.workers now belong to unions.

Question 52

Teenage unemployment rates tend to be substantially higher than the overall unemployment rate.

Question 53

In the view of human capital theorists, educational institutions are factories that take less productive workers as their raw materials and create more productive workers as output.

Question 54

The real minimum wage has increased significantly over the last 40 years.

Question 55

Recent data and analysis confirms that minimum wage laws have significantly increased teenage unemployment.

Question 56

College graduates now earn nearly five times as much as their high school-educated peers but the gap is falling.

Question 57

Union membership was relatively low during the Great Depression.

Question 58

Wages in American industry are very high because of wage laws.

Question 59

A labor union is an organization representing workers in negotiations with employers over wages, benefits, and working conditions.

Question 60

Unionism is much more prevalent in the United States than in other industrialized countries.

Question 61

Firms use collective bargaining to set higher market prices for their products.

Question 62

One effect of having access to cheap foreign goods can be to raise workers' real wages.

Question 63

In comparison to the U.S., Germany has a relatively low percentage of union membership.

Question 64

The increasing share of women in the labor force may have contributed to the decrease in unionization.

Question 65

A monopsony is a market situation in which there is only one buyer.

Question 66

With a monopsony in the labor market, a union can often raise wages and the number of workers hired.

Question 67

Union leaders who focus on increasing the size of their union will generally accept a wage just above the competitive level.

Question 68

Unions often have the power to push wages above competitive levels.

Question 69

Collective bargaining is a process used by unions and management to settle upon the terms of a labor contract.

Question 70

A union acts like a monopoly seller of labor.

Question 71

Unions can only achieve wage gains by sacrificing employment.

Question 72

Union leaders who focus on increasing the size of their union will be aggressive in demanding higher wages.

Question 73

Since a union represents individuals rather than firms, it cannot be considered a monopoly.

Question 74

The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

Question 75

American unions came under increasing pressure in the 1950s because of stronger competition both at home and abroad.

Question 76

A monopsony is a market situation in which there is only one seller.

Question 77

In the U.S.the total amount of work time lost to strikes is less than the amount of work time lost for coffee breaks.

Question 78

The relationship between professional basketball players and the owners' association is an example of a bilateral monopoly.

Question 79

Union members earn about the same wage level as nonunion members in the same industry.

Question 80

A bilateral monopoly is a market situation in which there is only one buyer and only one seller.