Deck 12: Labor Markets, Poverty, and Income Distribution

Question 1

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

A) $2.
B) $4.
C) $12.
D) $32.

Answer 1

D

Question 2

Pat works for a landscape contractor,generating gross revenues of $50 per hour.Non-labor variable costs total $10 per hour.Pat loves to garden,and would be willing to work for $15 per hour.Assume that the labor market is perfectly competitive.
Pat's reservation price for an hour of work is _______ per hour.

A) $10
B) $15
C) $50
D) $40

Answer 2

B

Question 3

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}\begin{array}{c}\text { Labor } \\ \underline {\text { Input }}\end{array} & \begin{array}{c}\text { Cups of } \\ \underline {\text { espresso }}\end{array} \\ 0 & \text { 0 } \\1 & 25 \\2 & 45 \\3 & 60 \\4 & 70 \\5 & 75\end{array}$
The value of marginal product for the first worker is _______.

A) 25 cups of espresso
B) $31.25
C) $25
D) $20

Answer 3

$31.25

Question 4

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}\begin{array}{c}\text { Labor } \\ \underline {\text { Input }}\end{array} & \begin{array}{c}\text { Cups of } \\ \underline {\text { espresso }}\end{array} \\ 0 & \text { 0 } \\1 & 25 \\2 & 45 \\3 & 60 \\4 & 70 \\5 & 75\end{array}$
The most the coffee shop would pay the third worker is _______.

A) $75
B) $60
C) $18.75
D) $15

Question 5

In competitive labor markets,____ demand labor and ____ supply labor.

A) firms;labor unions
B) labor unions;firms
C) workers;firms
D) firms,workers

Question 6

Pat works for a landscape contractor,generating gross revenues of $50 per hour.Non-labor variable costs total $10 per hour.Pat loves to garden,and would be willing to work for $15 per hour.Assume that the labor market is perfectly competitive.
For each hour that Pat works,the landscape company's net benefits are

A) equal to Pat's reservation price.
B) $50 minus Pat's wage.
C) $40 minus Pat's wage.
D) zero,because non-labor variable costs and Pat's wage completely consume revenues.

Question 7

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}\begin{array}{c}\text { Labor } \\ \underline {\text { Input }}\end{array} & \begin{array}{c}\text { Cups of } \\ \underline {\text { espresso }}\end{array} \\ 0 & \text { 0 } \\1 & 25 \\2 & 45 \\3 & 60 \\4 & 70 \\5 & 75\end{array}$
The benefit to the coffee shop of hiring the fifth worker is

A) 70 cups of espresso.
B) 75 cups of espresso.
C) $93.75.
D) $6.25.

Question 8

Pat works for a landscape contractor,generating gross revenues of $50 per hour.Non-labor variable costs total $10 per hour.Pat loves to garden,and would be willing to work for $15 per hour.Assume that the labor market is perfectly competitive.
The difference between the net revenue generated by Pat and Pat's reservation price will eventually

A) be captured by Pat in the form of rent.
B) be captured by Pat's employer in the form of profit.
C) cause wages in the landscape market to fall to $15.
D) be split evenly between Pat and the landscape company.

Question 9

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}\begin{array}{c}\text { Labor } \\ \underline {\text { Input }}\end{array} & \begin{array}{c}\text { Cups of } \\ \underline {\text { espresso }}\end{array} \\ 0 & \text { 0 } \\1 & 25 \\2 & 45 \\3 & 60 \\4 & 70 \\5 & 75\end{array}$
The marginal product of the third worker is __________ than the marginal product of the second worker which means __________.

A) greater;diminishing returns are absent
B) less;diminishing returns are present
C) neither greater nor less;the third worker will be hired
D) less;the third worker will never be hired

Question 10

Sam owns a candy factory and hires workers in a competitive labor market to pack cases of candy.The company's weekly output of cases of candy varies with the number of workers hired,as shown in the table: $\begin{array}{cc}\text { Number of workers } & \text { Cases/week } \\0 & 0 \\1 & 160 \\2 & 310 \\3 & 450 \\4 & 580 \\5 & 700 \\6 & 810\end{array}$
If each case sells for $5 more than the cost of the materials used in producing it,then the value of marginal product for the 2^nd worker is _______.

A) $150
B) $310
C) $315
D) $750

Question 11

Gino's Pizza shop hires cooks in a competitive market.The raw material required to make each pizza costs $5.Daily output at Gino's Pizza varies with the number of workers hired,as shown in the table below: $\begin{array}{cc}\text { Number of workers } & \text { Pizzas/ Day } \\0 & 0 \\1 & 16 \\2 & 36 \\3 & 54 \\4 & 70 \\5 & 84 \\6 & 96\end{array}$
The marginal product of the 3^rd worker is _______.

A) 12
B) 14
C) 16
D) 18

Question 12

Sam owns a candy factory and hires workers in a competitive labor market to pack cases of candy.The company's weekly output of cases of candy varies with the number of workers hired,as shown in the table: $\begin{array}{cc}\text { Number of workers } & \text { Cases/week } \\0 & 0 \\1 & 160 \\2 & 310 \\3 & 450 \\4 & 580 \\5 & 700 \\6 & 810\end{array}$
The marginal product of the fourth worker is _______.

A) 110
B) 130
C) 140
D) 145

Question 13

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

A) Total product divided by Wage
B) Wage times Marginal Product
C) Marginal product
D) Average product

Question 14

Gino's Pizza shop hires cooks in a competitive market.The raw material required to make each pizza costs $5.Daily output at Gino's Pizza varies with the number of workers hired,as shown in the table below: $\begin{array}{cc}\text { Number of workers } & \text { Pizzas/ Day } \\0 & 0 \\1 & 16 \\2 & 36 \\3 & 54 \\4 & 70 \\5 & 84 \\6 & 96\end{array}$
If the pizzas sell for $8 per pie and the ingredients cost $5 per pie,what is the value marginal product for the 4^th worker?

A) $96
B) $112
C) $48
D) $128

Question 15

In a competitive labor market,if a firm pays a worker less than that worker's VMP,then in the long run

A) the firm will earn positive economic profits.
B) competing firms will be able to hire the worker away,driving wages up to VMP.
C) the worker will have no incentive to work hard.
D) the supply of workers will fall.

Question 16

Gino's Pizza shop hires cooks in a competitive market.The raw material required to make each pizza costs $5.Daily output at Gino's Pizza varies with the number of workers hired,as shown in the table below: $\begin{array}{cc}\text { Number of workers } & \text { Pizzas/ Day } \\0 & 0 \\1 & 16 \\2 & 36 \\3 & 54 \\4 & 70 \\5 & 84 \\6 & 96\end{array}$
If the pizzas sell for $10/pie,and the competitive market wage is $80 per day,Gino will hire ____ workers and produce ____ pizzas per day.

A) 5;84
B) 2;36
C) 3;54
D) 4;70

Question 17

The value of marginal product

A) equals marginal product times net price.
B) equals total product divided by net price.
C) equals marginal product divided by net price.
D) equals average product times the wage rate.

Question 18

Sam owns a candy factory and hires workers in a competitive labor market to pack cases of candy.The company's weekly output of cases of candy varies with the number of workers hired,as shown in the table: $\begin{array}{cc}\text { Number of workers } & \text { Cases/week } \\0 & 0 \\1 & 160 \\2 & 310 \\3 & 450 \\4 & 580 \\5 & 700 \\6 & 810\end{array}$
If each case sells for $5 more than the cost of the materials used in producing it and the competitive market wage is $650/week,how many workers should Sam hire?

A) 5
B) 4
C) 3
D) 2

Question 19

Sam owns a candy factory and hires workers in a competitive labor market to pack cases of candy.The company's weekly output of cases of candy varies with the number of workers hired,as shown in the table: $\begin{array}{cc}\text { Number of workers } & \text { Cases/week } \\0 & 0 \\1 & 160 \\2 & 310 \\3 & 450 \\4 & 580 \\5 & 700 \\6 & 810\end{array}$
If each case sells for $3 more than the cost of the materials used in producing it,then the most Sam would pay the 5^th worker is _______.

A) $330
B) $360
C) $390
D) $120

Question 20

The relationship between labor usage and output at the local coffee shop is summarized in the table below.The price of a cup of espresso is $1.25 and no other inputs are required. $\begin{array}{cc}\begin{array}{c}\text { Labor } \\ \underline {\text { Input }}\end{array} & \begin{array}{c}\text { Cups of } \\ \underline {\text { espresso }}\end{array} \\ 0 & \text { 0 } \\1 & 25 \\2 & 45 \\3 & 60 \\4 & 70 \\5 & 75\end{array}$
The marginal product of the fourth worker is _______.

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

Question 21

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

A) Kyle's marginal product is at least $15.
B) the price of the firm's output is at least $15.
C) Kyle's reservation wage is exactly $15.
D) Kyle's value of marginal product is at least $15.

Question 22

The chart below describes the short run productivity of workers at Paper Pushers Inc. ,an office support firm that has no variable costs other than labor. $\begin{array}{|l|l|}\hline \text { Workers } & \text { Pages per Hour } \\\hline 1 & 40 \\\hline 2 & 75 \\\hline 3 & 105 \\\hline 4 & 125 \\\hline 5 & 140 \\\hline 6 & 150 \\\hline 7 & 155 \\\hline\end{array}$
If the market price is $5 per page,the first worker's VMP is ____ and the third worker's VMP is ____.

A) $20;$525
B) $200;$150
C) $200;$525
D) $20;$15

Question 23

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

A) should reduce its labor usage.
B) should increase its labor usage.
C) should keep the last worker it hired.
D) is cost minimizing.

Question 24

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

A) total labor costs equal total revenues.
B) diminishing marginal productivity is first experienced.
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.

Question 25

The chart below describes the short run productivity of workers at Paper Pushers Inc. ,an office support firm that has no variable costs other than labor. $\begin{array}{|l|l|}\hline \text { Workers } & \text { Pages per Hour } \\\hline 1 & 40 \\\hline 2 & 75 \\\hline 3 & 105 \\\hline 4 & 125 \\\hline 5 & 140 \\\hline 6 & 150 \\\hline 7 & 155 \\\hline\end{array}$
If the workers are producing a product that sells for $2.00 per page this firm will

A) hire all seven workers if wages are $20.
B) hire all seven workers if wages are $10.
C) hire all seven workers only if wages are $5 or less.
D) always hire the seventh worker.

Question 26

A firm is unlikely to hire a worker if

A) the worker's contribution to the firm's revenue is less than his or her wage.
B) the worker's contribution to the firm's profit is less than his or her wage.
C) by hiring that last worker the firm begins to experience diminishing marginal productivity of labor.
D) the minimum wage set by law is less than the equilibrium wage in the market.

Question 27

The demand function curve for workers

A) is dependent on the demand for the product that they make.
B) is stable as there is no substitute for human labor.
C) shifts to the right when the population decreases.
D) shifts to the right when technology allows a firm to replace human labor with machines.

Question 28

If a labor market does not meet the conditions of a perfectly competitive market

A) wages will be higher than in a competitive labor market.
B) the invisible hand will force the labor market to behave as if it were perfectly competitive.
C) workers will unionize to force competition.
D) wages may be either higher or lower than they would be in a competitive market.

Question 29

In a model of competitive labor markets in the United States,the supply curve would shift to the right if

A) the United States relaxed its immigration laws.
B) a cultural or social change occurred such that fewer mothers returned to work after their children were born.
C) firms replaced human workers with robots.
D) firms opened more plants overseas.

Question 30

The chart below describes the short run productivity of workers at Paper Pushers Inc. ,an office support firm that has no variable costs other than labor. $\begin{array}{|l|l|}\hline \text { Workers } & \text { Pages per Hour } \\\hline 1 & 40 \\\hline 2 & 75 \\\hline 3 & 105 \\\hline 4 & 125 \\\hline 5 & 140 \\\hline 6 & 150 \\\hline 7 & 155 \\\hline\end{array}$
Because productivity at Paper Pushers displays ______ the firm should ______

A) diminishing marginal productivity;hire as few workers as possible.
B) constant marginal productivity;hire as many workers as it can.
C) diminishing marginal productivity;hire workers only if VMP is greater than or equal to the product price.
D) diminishing marginal productivity;hire workers only if VMP is greater than or equal to the workers' wage.

Question 31

Technological advances shift the demand for labor

A) to the left.
B) to the right.
C) to the left if technology is a complement of labor,but to the right if it is a substitute.
D) to the right if technology is a complement of labor,but to the left if it is a substitute.

Question 32

The labor market model that predicts an equilibrium wage equal to VMP applies

A) only to markets for unskilled labor.
B) only to competitive labor markets.
C) to all labor markets.
D) to labor markets that are exempt from minimum wage laws.

Question 33

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

A) adds up the value of marginal product curves at all labor 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) adds up the available workers at the various wage rates.

Question 34

In order to maximize profits or minimize losses,a firm facing a perfectly competitive labor market 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) the marginal wage rate equals marginal product.
D) the marginal product of workers begin to decline.

Question 35

The chart below describes the short run productivity of workers at Paper Pushers Inc. ,an office support firm that has no variable costs other than labor. $\begin{array}{|l|l|}\hline \text { Workers } & \text { Pages per Hour } \\\hline 1 & 40 \\\hline 2 & 75 \\\hline 3 & 105 \\\hline 4 & 125 \\\hline 5 & 140 \\\hline 6 & 150 \\\hline 7 & 155 \\\hline\end{array}$
The VMP of the sixth worker is _____ than the VMP of the fourth worker because

A) less;the firm experiences economies of scale.
B) less;the sixth worker is less skilled than the fourth worker.
C) less;the firm experiences diminishing returns to inputs.
D) more;the workers can specialize and exploit comparative advantages.

Question 36

If demand for the product you make were to suddenly decline you would expect the equilibrium price of the product to fall,

A) causing an increase in the VMP of each worker.
B) causing a decrease in the VMP of each worker.
C) but no change in the VMP of each worker because product prices don't affect worker productivity.
D) causing the marginal productivity of each worker to fall.

Question 37

In the market for labor,the demand function describes

A) the number of workers who are willing to work at each wage.
B) the output of workers who are paid a given wage.
C) the number of workers a firm is willing to hire at each wage.
D) the demand for the firm's output.

Question 38

The general rule governing the hiring of workers is to

A) minimize average labor costs.
B) equate marginal labor costs to marginal labor benefits.
C) equate total labor costs to total labor benefits.
D) maximize marginal product.

Question 39

The chart below describes the short run productivity of workers at Paper Pushers Inc. ,an office support firm that has no variable costs other than labor. $\begin{array}{|l|l|}\hline \text { Workers } & \text { Pages per Hour } \\\hline 1 & 40 \\\hline 2 & 75 \\\hline 3 & 105 \\\hline 4 & 125 \\\hline 5 & 140 \\\hline 6 & 150 \\\hline 7 & 155 \\\hline\end{array}$
If the price of pages increases,the demand for workers will

A) remain the same,as the workers are hired in the labor market and the product is sold in the paper processing market.
B) increase because the workers will be motivated to produce more.
C) increase because the value of what the workers make has increased.
D) decrease because at a higher sales price the firm will not have to produce as much output.

Question 40

The value of marginal product 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.

Question 41

Demographers predict that the average age of the population of the U.S.will increase.One result will be an increase in the demand for nurses.Assume that the graph below describes the current nursing labor market in a mid-sized city,and that the market is a competitive one.
Suppose that several years ago the supply of nurses in this city was as shown as Supply A.What might explain the change from Supply A to Supply,current?

A) an increase in nurses' wages.
B) a decrease in nurses' wages.
C) increased immigration of people trained as nurses in other countries.
D) increased employment opportunities for people who would have once chosen nursing as a career.

Question 42

Assume that this graph illustrates a perfectly competitive labor market.
If the supply of worker hours in this market shifted to the right

A) the equilibrium wage would fall and the number of worker hours would increase.
B) the equilibrium wage and the number of worker hours would increase.
C) the equilibrium wage would stay the same,but the number of worker hours would increase.
D) the equilibrium wage would fall and the number of worker hours would decrease.

Question 43

If a perfectly competitive firm finds that the productivity of its workers has increased,then

A) labor supply increases.
B) labor demand decreases.
C) the wage rate decreases.
D) labor demand increases.

Question 44

Assume that this graph illustrates a perfectly competitive labor market.
Equilibrium in this labor market is at a wage of _______ and employment of approximately __________ worker hours.

A) $30;100
B) $30;150
C) $20;175
D) $20;100

Question 45

Suppose that this graph describes the current labor market for high school teachers:
Given the wage equal to W*,immediately following a shift of the supply curve to the left

A) there will be a shortage of certified teachers.
B) there will be an excess supply of certified teachers.
C) the reservation wage of each remaining teacher will fall.
D) the market will be in equilibrium.

Question 46

In a competitive labor market,it is observed that the equilibrium wage rate and employment level have both risen.One can infer that

A) the supply of labor has increased.
B) the demand for labor has fallen.
C) the demand for labor has increased.
D) the supply of labor has decreased.

Question 47

Firms and individuals do not technically buy and sell the labor input;renting is a more accurate description.Therefore,

A) the supply and demand model does not apply.
B) the basic model of supply and demand can be applied to competitive labor markets.
C) equilibrium will never occur.
D) firms will always underpay workers.

Question 48

Suppose that this graph describes the current labor market for high school teachers:
Suppose the market were to re-equilibrate following a shift of the supply curve to the left.At the new equilibrium,wages would be

A) higher,and more teachers would be hired.
B) higher,and fewer teachers would be hired.
C) the same,but fewer teachers would be hired.
D) the same,and more teachers would be hired.

Question 49

Acme Market increased wages for their cashiers from $7/hr to $9/hr.Pat,a cashier at Acme,now works 30hrs/week instead of the 25hrs/week hours Pat used to work before the wage increase.On the other hand Chris,also a cashier at Acme decreased his work time by 5hrs/week after the wage increase and started to spend more time watching TV.
Pat's behavior can be best explained as the ________ of high wage rates.

A) demand effect
B) supply effect
C) income effect
D) substitution effect

Question 50

In models of labor supply,the opportunity cost of spending an hour enjoying leisure activities is

A) the price paid to engage in those activities.
B) the hourly wage that could have been earned during that hour.
C) zero.
D) one-and-a-half times a person's regular wage.

Question 51

Suppose that this graph describes the current labor market for high school teachers:
If wages are currently W*,

A) there will be a shortage of certified teachers.
B) there will be a surplus of certified teachers.
C) the market is in equilibrium: neither a shortage nor a surplus exists.
D) teachers are underpaid.

Question 52

In a competitive labor market,the equilibrium wage rate is determined by

A) government regulation.
B) employers.
C) the intersection of labor demand and labor supply.
D) employees.

Question 53

A decrease in demand for a firm's output results in a(n)

A) increase in labor supply.
B) decrease in labor demand.
C) decrease in labor supply.
D) increase in labor demand.

Question 54

Demographers predict that the average age of the population of the U.S.will increase.One result will be an increase in the demand for nurses.Assume that the graph below describes the current nursing labor market in a mid-sized city,and that the market is a competitive one.
Suppose that several years ago the supply of nurses in this city was as shown as Supply A.Suppose further that the nursing market had been in equilibrium at that time and that wages did not change when supply changed to Supply,current.(Assume that demand has remained stable at Demand,current. )The result is that nurses earn _____ and

A) $40;more than 100 nurses work per hour.
B) $40;there is a nursing shortage.
C) $50;there are many nurses willing to work for $40 who are unable to find a job.
D) $50;other labor markets adjust to restore equilibrium in all markets.

Question 55

Acme Market increased wages for their cashiers from $7/hr to $9/hr.Pat,a cashier at Acme,now works 30hrs/week instead of the 25hrs/week hours Pat used to work before the wage increase.On the other hand Chris,also a cashier at Acme decreased his work time by 5hrs/week after the wage increase and started to spend more time watching TV.
Chris's behavior can be best explained as the _______ of high wage rates.

A) demand effect
B) supply effect
C) income effect
D) substitution effect

Question 56

Assume that this graph illustrates a perfectly competitive labor market.
According to this graph,____ worker hours would be performed on a volunteer (unpaid)basis.

A) 0
B) 50
C) 100
D) 250

Question 57

Suppose that this graph describes the current labor market for high school teachers:
Suppose supply were to shift to the left.Why might that happen?

A) Distance learning and computer technology replace human teachers.
B) Women enter the workforce in greater numbers.
C) Immigration by families with children increase the need for more teachers.
D) More attractive employment opportunities become available in health careers.

Question 58

Assume that this graph illustrates a perfectly competitive labor market.
In this market,at a wage of $40,

A) the market would be in equilibrium.
B) there would be more people wanting to work than there would be job openings at firms.
C) firms would not be able to find enough workers to satisfy the firms' demand for workers.
D) approximately 175 worker hours would be hired.

Question 59

Assume that this graph illustrates a perfectly competitive labor market.
Suppose a minimum wage law required the wage to be at least $20 in this market.If that happened,

A) there would be an excess supply of worker hours.
B) there would be excess demand for worker hours.
C) demand for worker hours would shift to the right.
D) there would be no change in the hourly wage paid or the number of worker hours hired.

Question 60

A reduction in the workers' marginal productivity would result in

A) an increase in labor supply.
B) an increase in equilibrium employment level.
C) a reduction in the equilibrium wage rate.
D) a decrease in labor supply.

Question 61

Which of the following factors is not part of one's stock of human capital?

A) I.Q.
B) Years of education.
C) The current level of unemployment.
D) Ability to concentrate.

Question 62

Which of the following is not a reason why union firms can successfully compete with nonunion firms?

A) Employee morale may be higher at union firms.
B) Communication between management and workers is more formal and hence improved at union firms.
C) Labor turnover is lower at union firms.
D) Union firms are legally protected from price competition from nonunion firms.

Question 63

According to the textbook,union membership has

A) remained constant since the 1950's.
B) expanded into white collar professions.
C) declined by approximately 50% since the 1950's.
D) become common in the South.

Question 64

The union wage premium refers to

A) the dues one must pay in order to join a union.
B) the union wage rate minus union membership dues.
C) the deduction for union insurance.
D) the amount by which union wages exceed nonunion wages.

Question 65

Ben and Ashley are identical in every way except for one: Ashley has an IQ score 10 points higher than Ben.All else equal,human capital theory would predict Ashley

A) and Ben will earn the same.
B) will earn exactly 10% more than Ben.
C) will earn less than Ben.
D) will earn more than Ben.

Question 66

Josie has an undergraduate degree in economics and has been working as a utility rate analyst at the local electricity utility.If she continues on her present career path,the present value of her lifetime earnings is $250,000.If she takes two years off and gets an MS degree in economics,the present value of her lifetime earnings is $275,000.The annual cost of an MS degree in economics is $15,000 and the interest rate is 8%.
Josie should

A) get the MS degree because her lifetime earnings will increase $25,000.
B) get the MS degree because more education is always better than less education.
C) not get the MS degree because $30,000 is greater than $25,000.
D) not get the MS degree if the present value of cost exceeds the present value of benefit.

Question 67

Individuals have ____ control over the human capital that they bring to the labor market because

A) no;human capital is innate.
B) complete;human capital formation is the result of hard work.
C) partial;some human capital is innate and some is the result of hard work.
D) no;human capital is largely a matter of luck.

Question 68

Josie has an undergraduate degree in economics and has been working as a utility rate analyst at the local electricity utility.If she continues on her present career path,the present value of her lifetime earnings is $250,000.If she takes two years off and gets an MS degree in economics,the present value of her lifetime earnings is $275,000.The annual cost of an MS degree in economics is $15,000 and the interest rate is 8%.
The discounted (present value)benefit of Josie's benefits to getting a graduate degree is _______.

A) $275,000
B) $250,000
C) $25,000
D) -$5,000

Question 69

When calculating the worthiness of a college education,one must use __________ values because the costs and benefits __________.

A) nominal;are estimated
B) discounted;accumulate over time
C) real;cannot keep pace with inflation
D) non-monetary;are largely non-monetary

Question 70

Demographers predict that the average age of the population of the U.S.will increase.One result will be an increase in the demand for nurses.Assume that the graph below describes the current nursing labor market in a mid-sized city,and that the market is a competitive one.
The shift in supply from Supply A to the current Supply means that if demand increases as predicted (to Demand,predicted)

A) wages will have to rise to $60 to avoid a nursing shortage.
B) wages will have to rise to $50 to avoid a nursing shortage.
C) a wage of $40 will be sufficient to achieve equilibrium.
D) a wage of $50 will yield an excess supply of nurses.

Question 71

The reason nonunion firms do not always drive the union firms out of business is

A) markets are not competitive.
B) consumers look for the union label.
C) union firms hire more selectively,employing workers with greater human capital.
D) union firms cut corners in other areas.

Question 72

Taken together,factors like education,training,experience,intelligence,and work habits are known as

A) statistical discrimination factors.
B) human capital.
C) productivity factors.
D) learned behaviors.

Question 73

According to the textbook,after adjusting for differences in human capital stocks between union and nonunion workers,the union wage premium is approximately

A) 40%.
B) 30%.
C) 20%.
D) 10%.

Question 74

Demographers predict that the average age of the population of the U.S.will increase.One result will be an increase in the demand for nurses.Assume that the graph below describes the current nursing labor market in a mid-sized city,and that the market is a competitive one.
Suppose the market started out in equilibrium,with Supply A and the current demand in effect.Relative to that situation,the shift in supply from Supply A to Current Supply together with an increase in demand to Demand,predicted

A) cancel each other out,so that neither wages nor number of nurses changes.
B) cause the number of nurses to increase,but the wages will change minimally if at all.
C) cause wages to increase,but the number of nurses will change minimally if at all.
D) cause both wages and the number of nurses to increase.

Question 75

Josie has an undergraduate degree in economics and has been working as a utility rate analyst at the local electricity utility.If she continues on her present career path,the present value of her lifetime earnings is $250,000.If she takes two years off and gets an MS degree in economics,the present value of her lifetime earnings is $275,000.The annual cost of an MS degree in economics is $15,000 and the interest rate is 8%.
The discounted (present value)cost of Josie's graduate degree in economics is _______.

A) $30,000
B) more than $30,000
C) more than $15,000 but less than $30,000
D) $15,000

Question 76

A group of workers who collectively bargain with employers for higher wages and better working conditions is called a

A) labor monopsony.
B) labor union.
C) labor collective.
D) closed shop.

Question 77

A labor union in the labor market is analogous to a(n)__________ in the output market.

A) monopsony
B) oligopoly
C) cartel
D) perfect competitor

Question 78

Differences in wage rates associated with differences in working conditions are called

A) compensating income differentials.
B) equalizing wage ratios.
C) conditional differentials.
D) compensating wage differentials.

Question 79

Demographers predict that the average age of the population of the U.S.will increase.One result will be an increase in the demand for nurses.Assume that the graph below describes the current nursing labor market in a mid-sized city,and that the market is a competitive one.
In the long run,if the nursing market is perfectly competitive,the demographic shift that increases the demand for nurses is likely to

A) cause nurses' wages to increase,providing a greater incentive to choose nursing as a career.
B) cause the working conditions of nurses to worsen,providing a disincentive to choose nursing as a career.
C) cause a persistent shortage of nurses because the market undervalues nurses.
D) shift back to the original demand as needs are unmet.

Question 80

Which of the following is not true of labor unions?

A) They seek to increase members' wages.
B) They seek to increase medical benefits paid to members.
C) They bargain for safer working conditions.
D) They encourage management to take steps to maximize profits.