Deck 8: The Labor Market

Question 1

Work may not seem appealing because of the opportunity cost it creates,which is the:

A) Leisure time that must be given up in order to work.
B) Wages that the worker must give up by not working.
C) Financial cost to the worker of driving to work,parking,buying lunch,etc.
D) Amount of utility the worker receives when working.

Answer 1

A

Question 2

People tend to give up watching TV in order to study for an exam when the:

A) Marginal utility of watching TV exceeds the marginal utility of studying.
B) Wage rate falls.
C) Marginal utility of studying exceeds the marginal utility of watching TV.
D) Total utility of studying exceeds the total utility of watching TV.

Answer 2

C

Question 3

The market supply of labor:

A) Is a horizontal line.
B) Refers to the amount of labor businesses hire at various wages.
C) Shifts to the right when more workers enter the labor market.
D) Shifts to the right when wages decrease.

Answer 3

C

Question 4

Ceteris paribus,the willingness and ability to work specific amounts of time at alternative wage rates in a given period of time is:

A) Product supply.
B) Product demand.
C) Labor supply.
D) Labor demanD.

Question 5

Which of the following is a reason why workers typically require higher wages in order to work additional hours?

A) The decreasing opportunity cost of labor.
B) The decreasing value of leisure time that is given up.
C) The diminishing marginal utility of additional income.
D) The diminishing marginal revenue product of labor.

Question 6

The quantity of labor supplied:

A) Is downward sloping.
B) Increases as the wage rate decreases.
C) Increases as the wage rate increases.
D) Is influenced by labor demanD.

Question 7

An upward-sloping supply curve of labor reflects the:

A) Increasing opportunity cost of labor.
B) Increasing marginal utility of income as a person works more hours.
C) Increasing quantity supplied of labor as prices fall.
D) Decreasing marginal cost of labor as a firm hires more workers.

Question 8

The opportunity cost of working is the:

A) Wage rate plus the value of fringe benefits earned in the process.
B) Wage rate earned in the process but not the fringe benefits.
C) Personal satisfaction gained from working.
D) Value of leisure time that is given up in the process.

Question 9

An individual's labor-supply curve reveals how he or she chooses to allocate:

A) Limited dollars between luxuries and necessities.
B) Scarce money between goods and services.
C) Scarce time between labor and leisure.
D) Limited time between work at one job and work at another.

Question 10

Ceteris paribus,for an upward-sloping labor supply curve,there is an increase in the quantity of labor supplied when the:

A) Demand for labor increases.
B) Amount of leisure time increases.
C) Tax rate increases.
D) Wage rate increases.

Question 11

Generally,as the number of hours worked increases,the marginal utility of leisure time tends to:

A) Increase.
B) Remain the same.
C) Decrease.
D) Become zero or less.

Question 12

An upward-sloping supply curve of labor illustrates that the:

A) Supply of labor and the wage rate are inversely related.
B) Quantity of labor supplied and the wage rate are directly related.
C) Quantity of labor supplied and the minimum wage are indirectly related.
D) Quantity of labor supplied and the hours of work per week are inversely relateD.

Question 13

According to the upward-sloping labor supply curve,at lower wages:

A) Workers are more willing to supply labor.
B) Workers are less willing to supply labor.
C) There is no opportunity cost of labor.
D) The labor supply curve shifts left.

Question 14

As a person works more hours and leisure time declines,the opportunity cost of labor _____ and the marginal utility of income _____.

A) Falls;falls
B) Falls;rises
C) Rises;falls
D) Rises;rises

Question 15

As a person works more,the number of additional hours that he is willing to work is determined by the trade-off between increasing:

A) Marginal utility for income and decreasing marginal utility for leisure.
B) Marginal utility for leisure and decreasing marginal utility for income.
C) Total utility for leisure and decreasing total utility for income.
D) Marginal utility for both income and leisure.

Question 16

The labor-supply curve depicts the quantity of _____ at alternative _____.

A) Labor supplied;wage rates
B) Labor demanded;wage rates
C) Business sales;price levels
D) Products supplied;price levels

Question 17

All else remaining constant,or "ceteris paribus," for an upward-sloping labor supply curve,the quantity of labor supplied varies directly with:

A) Payroll taxes.
B) The value of leisure time.
C) The derived demand for labor.
D) The wage rate.

Question 18

The supply curve for labor is upward sloping to the right because as wages _____,the quantity of _____ rises.

A) Rise;goods purchased
B) Fall;work required
C) Rise;labor supplied
D) Fall;labor demanded

Question 19

A higher wage rate causes:

A) A shift in an individual's labor supply curve.
B) A shift in the derived demand for labor.
C) A movement down the MRP curve.
D) The opportunity cost of leisure to increase.

Question 20

The opportunity cost of working is the:

A) Wage rate.
B) Value of leisure time that must be given up.
C) Expense of maintaining a household and maintaining a decent living.
D) Amount of consumption that is made possible.

Question 21

The marginal revenue product of labor curve is the firm's:

A) MPP of labor curve divided by the wage rate.
B) Labor demand curve.
C) Total revenue curve.
D) Labor supply curve.

Question 22

Ceteris paribus,if the cost of daycare increases causing some workers to leave the labor market and stay home with their children:

A) There is movement up the labor supply curve.
B) There is movement down the labor supply curve.
C) The labor supply curve shifts to the right.
D) The labor supply curve shifts to the left.

Question 23

If consumers want to increase the wages and the number of jobs for strawberry pickers they should:

A) Insist that the government establish a minimum wage for strawberry pickers.
B) Boycott strawberries until wages increase.
C) Insist that sellers raise the price of strawberries.
D) Buy more strawberries.

Question 24

The market supply of labor depends on the:

A) Number of employers.
B) Marginal revenue product of labor.
C) Price of the product being produced.
D) Number of available workers.

Question 25

The marginal revenue product curve and marginal physical product curve have similar shapes because:

A) MRP is equal to MPP times price,if the product price is constant.
B) MPP is equal to MRP times price,if the product price is constant.
C) MPP is equal to MRP times the wage rate.
D) MRP is equal to MPP plus product price.

Question 26

Which of the following does not affect labor demand?

A) The marginal revenue product of the last worker hired.
B) The productivity of workers.
C) The demand for the products that labor produces.
D) The supply of labor.

Question 27

Other things being equal,higher wage rates will:

A) Decrease the quantity supplied of labor.
B) Shift the labor supply curve to the right.
C) Increase the quantity demanded of labor.
D) Decrease the quantity demanded of labor.

Question 28

The labor demand curve slopes _____ to the right,which means that quantity of labor demanded will increase as the wage rate _____.

A) Upward;falls
B) Upward;increases
C) Downward;falls
D) Downward;increases

Question 29

A firm's demand for labor is referred to as a derived demand because it is derived from the:

A) Marginal physical product of labor.
B) Demand for the product that labor produces.
C) Wages labor receives from the firm.
D) Supply of labor.

Question 30

If the demand for labor is a derived demand,then the demand for airplane pilots depends on the:

A) Amount of training that pilots receive.
B) Cost of hiring a pilot.
C) Desire for airline travel.
D) How many pilots there are.

Question 31

Which of the following will decrease the market supply of labor,ceteris paribus?

A) An increase in immigration.
B) A decrease in labor productivity.
C) A decrease in the willingness of people to work.
D) An increase in the marginal revenue product of labor.

Question 32

Ceteris paribus,if additional immigrants come to the United States with marketable skills,and they decide to enter the labor market:

A) There is movement up the labor supply curve.
B) The labor supply curve shifts to the right.
C) There is movement down the labor supply curve.
D) The labor supply curve shifts to the left.

Question 33

If a firm can hire six workers at $12 per hour but in order to hire the 7^th worker it must pay all its workers $14 per hour then the additional cost of that worker is:

A) $14
B) $26
C) $84
D) $98

Question 34

The quantity demanded of labor depends on the:

A) Supply of labor.
B) Marginal cost of output.
C) Prevailing rate of interest.
D) Wage rate.

Question 35

Marginal _____ product sets _____ dollar limit on the wage rate an employer will pay.

A) Physical;an upper
B) Physical;a lower
C) Revenue;an upper
D) Revenue;a lower

Question 36

The quantities of labor employers are willing and able to hire at alternative wage rates is the:

A) Marginal physical product of labor.
B) Government employment minimum.
C) Supply of labor.
D) Demand for labor.

Question 37

Which of the following will not shift the labor supply curve to the right,ceteris paribus?

A) An increase in the wage rate.
B) An increase in immigration.
C) An improvement in working conditions.
D) A number of college students decide to leave school and start working.

Question 38

A firm's demand for labor is downward sloping because:

A) Total output decreases as more workers are hired.
B) The firm must raise wages to hire more workers.
C) The marginal physical product of labor decreases as more labor is hired.
D) The price of the product declines as the firm produces and sells more.

Question 39

MRP for a perfectly competitive firm is equal to:

A) MPP times the wage rate.
B) MPP divided by the wage rate.
C) MPP divided by marginal revenue.
D) MPP times the price of the product.

Question 40

The demand for labor is a derived demand because:

A) labor is hired based on when the MRP is equal to the wage rate.
B) we demand what labor produces and not labor itself.
C) all products must have some labor embodied in them.
D) labor is a variable input.

Question 41

When the law of diminishing returns applies,which of the following would rise with increased employment of labor,ceteris paribus?

A) Marginal cost
B) Fixed costs
C) The wage rate
D) Marginal revenue

Question 42

The labor demand curve is downward sloping because:

A) Each individual worker tends to be more valuable as more workers are hired.
B) Each individual worker tends to be less valuable as more workers are hired.
C) Marginal physical product increases as more workers are hired.
D) The amount of available labor declines as the wage rate declines.

Question 43

A firm should continue to hire workers until the:

A) MRP is equal to demand.
B) MPP is equal to the number of workers hired.
C) MRP is equal to the market wage rate.
D) MRP is equal to zero.

Question 44

Which of the following will decrease the market demand for labor,ceteris paribus?

A) A decrease in immigration.
B) An increase in labor productivity.
C) A decrease in the price of the product produced by labor.
D) A decrease in the wage rate.

Question 45

The market demand for labor depends on all of the following except:

A) the number of employers.
B) the marginal revenue product of labor in each firm and industry.
C) the marginal physical product of workers.
D) Each worker's willingness to work at alternative wage rates.

Question 46

Which of the following will increase the market demand for labor,ceteris paribus?

A) A decrease in the price of output produced by labor.
B) An increase in the productivity of labor.
C) An increase in the wage paid to labor.
D) A decrease in the number of available workers.

Question 47

According to the law of diminishing returns,as more workers are hired:

A) Marginal utility declines.
B) Opportunity cost increases.
C) Marginal revenue product increases.
D) Marginal physical product declines.

Question 48

The marginal product of additional units of labor eventually diminishes because,ceteris paribus:

A) Additional labor is usually less skilled and less experienced.
B) The law of diminishing marginal utility is a factor.
C) Additional labor has fewer fixed factors of production to work with.
D) Laborers are lazy.

Question 49

The law of diminishing returns states that,ceteris paribus,the MPP of labor declines as:

A) Additional land,raw materials,and other factors of production are employed.
B) The wage rate falls.
C) The product price declines.
D) More labor is employeD.

Question 50

Assume a university pays the football coach significantly more than the university's president.This makes good economic sense if the coach:

A) Is more popular.
B) Has a higher level of education.
C) Has been employed at the university longer than the president.
D) Brings more revenue to the university than the president.

Question 51

Which of the following is the correct formula for calculating the marginal revenue product of labor?

A) The change in total output divided by the change in the quantity of labor.
B) The change in the quantity of labor divided by the change in total revenue.
C) The change in total revenue divided by the change in the quantity of labor.
D) The percentage change in total revenue divided by the percentage change in the quantity of labor.

Question 52

The marginal revenue product of labor is:

A) The additional output from hiring one more worker.
B) The additional revenue a firm receives from hiring one more worker.
C) Equal to the marginal physical product of labor times the wage rate.
D) Equal to the price of the product times the wage rate.

Question 53

In order to calculate marginal revenue product,it is necessary to know the:

A) Price of the product and the marginal physical product.
B) Marginal physical product and the unit price of the factor.
C) Marginal revenue and the amount of the product produced.
D) Cost of the factor and the marginal revenue.

Question 54

The determinants of the market demand for labor include:

A) Marginal physical productivity.
B) Individual preferences.
C) Income and wealth.
D) The number of available workers.

Question 55

The demand for labor is downward sloping because of:

A) Diminishing marginal returns to labor.
B) Rising marginal physical product.
C) Falling marginal cost.
D) Rising price.

Question 56

If the MPP of an additional unit of labor is 4 units per hour,product price is constant at $9 per unit,and the wage rate is $35 per hour,then:

A) An additional unit of labor should not be employed because it costs more than it is worth.
B) An additional unit of labor should be employed.
C) The employer should raise wages and hire additional workers.
D) In order to earn a profit,the price of the product must decrease.

Question 57

If the MPP of the last worker hired is 3 units per hour,product price is constant at $5 per unit,and the wage rate is $18 per hour,then:

A) The last worker hired is profitable for the firm.
B) The employer should raise wages and hire more workers.
C) The last worker hired should not be employed because she costs more than she is worth.
D) In order to earn a profit,the price of the product must decrease.

Question 58

The law of diminishing returns states that,ceteris paribus,the MPP of labor declines as:

A) Additional land,raw materials,and other factors of production are employed.
B) The wage rate falls.
C) The product price declines.
D) More labor is employeD.

Question 59

When making the hiring decision,firms should compare the:

A) Wage rate to the MRP of the worker.
B) Wage rate to the price of the product.
C) MPP to the MRP.
D) Price of the product to the MPP of the worker.

Question 60

Tiger Woods is paid high endorsement fees by companies because:

A) His agent insists on it.
B) His marginal physical product is very low.
C) His marginal revenue product is very high.
D) He cannot live on the money made from playing golf because he has too many girlfriends.

Question 61

Labor unions are able to maintain _____ wages for union members by _____ the market.

A) Above-equilibrium;excluding some workers from
B) Above-equilibrium;including all workers in
C) Below-equilibrium;excluding some workers from
D) Below-equilibrium;including all workers in

Question 62

When the minimum wage is raised,ceteris paribus:

A) Additional workers are able to find jobs,but some are still unemployed.
B) All workers are better off.
C) Unemployment is reduced.
D) There are fewer jobs available.

Question 63

An increase in the labor productivity is best illustrated by:

A) An upward shift of the MRP curve.
B) A downward shift of the MPP curve.
C) A leftward shift of the labor-supply curve.
D) A rightward shift of the labor-supply curve.

Question 64

Which of the following would cause the equilibrium price of labor to increase?

A) A decrease in the price of the product that labor is helping to produce.
B) The use of a larger stock of capital with the labor force.
C) An increase in the desire for leisure.
D) A more efficient method of combining labor and capital in the production process.

Question 65

Both wages and employment can increase at the same time as long as the:

A) Marginal physical product of labor decreases.
B) Number of available workers increases.
C) The price of the product being produced decreases.
D) Marginal revenue product of labor increases.

Question 66

When people are standing in line for jobs and there are more applicants than jobs,then the job market is characterized by a:

A) Shortage of jobs from the point of view of the buyer in the labor market.
B) Surplus of jobs from the point of view of the seller in the labor market.
C) Shortage of labor.
D) Surplus of labor.

Question 67

Which of the following is true about the equilibrium market wage for a particular industry?

A) All workers in this industry are satisfied with the wage.
B) There is no unemployment in this industry at this wage.
C) There is a surplus of workers in this industry since the wage is high.
D) All employers in this industry are satisfied with the wage.

Question 68

A minimum wage:

A) Is set below the equilibrium wage.
B) Can create a surplus of workers.
C) Is established by the intersection of labor demand and labor supply.
D) Causes the quantity demanded of workers to be greater than the quantity supplieD.

Question 69

The impact on the labor market due to an increase in the minimum wage:

A) Is significant since it increases employment.
B) Cannot be measured unless the increase is more than $1.
C) Depends on factors such as the size of the increase and the state of the economy.
D) Is significant since it reduces unemployment.

Question 70

An increase in the equilibrium price in the product market results in:

A) A decrease in the quantity of labor hired.
B) An upward shift in the MPP curve.
C) An upward shift in the MRP curve.
D) A reduction in wages.

Question 71

The equilibrium wage will definitely rise if:

A) Demand for labor decreases and the supply of labor is constant.
B) Supply of labor increases and the demand for labor is constant.
C) Demand for labor increases and the supply of labor is constant.
D) Both the supply of labor and the demand for labor increase.

Question 72

A minimum wage impacts the labor market by causing:

A) An increase in the quantity of labor supplied and a decrease in the quantity of labor demanded.
B) A decrease in both the quantity of labor supplied and the quantity of labor demanded.
C) An increase in both the quantity of labor supplied and the quantity of labor demanded.
D) A decrease in the quantity of labor supplied and an increase in the quantity of labor demandeD.

Question 73

The equilibrium quantity of labor will definitely increase if:

A) Demand for labor decreases and the supply of labor is constant.
B) Supply of labor increases and the demand for labor is constant.
C) Supply of labor decreases and the demand for labor is constant.
D) Supply of labor decreases and the demand for labor increases.

Question 74

In a competitive labor market,at wages above equilibrium,the:

A) Quantity supplied of labor is greater than the quantity demanded.
B) Labor-supply curve will shift to the left.
C) Quantity demanded of labor is greater than the quantity supplied.
D) MRP of labor curve shifts to the right.

Question 75

The market equilibrium wage occurs where:

A) Demand intersects the marginal cost curve.
B) Marginal physical product equals marginal revenue product.
C) All workers and all employers are satisfied with the wage.
D) Market demand for labor intersects the market supply of labor.

Question 76

If the government eliminates a minimum wage,ceteris paribus,then:

A) Wages will rise,but employment will fall.
B) Wages will fall,but employment will rise.
C) Both wages and employment will fall.
D) Both wages and employment will rise.

Question 77

The equilibrium level of employment is determined by:

A) The market demand for labor and the market supply of labor.
B) The intersection of MPP and MRP.
C) Government regulations.
D) Collusion by the most powerful employers in a market.

Question 78

If the government decides to raise the minimum wage,ceteris paribus:

A) All workers are better off.
B) All workers are worse off.
C) Some workers are better off and some are worse off.
D) Workers are not affected by a minimum wage increase,only by a decrease.

Question 79

When the minimum wage is established above the equilibrium wage,then:

A) Shortages of jobs result,since sellers move down the labor-supply curve.
B) Surpluses of jobs result,since sellers move up the labor-supply curve.
C) Shortages of labor result,since buyers move down the labor-demand curve.
D) Surpluses of labor result,since buyers move up the labor-demand curve.

Question 80

If labor productivity rises,then wages:

A) Will decrease and the number of jobs will decrease.
B) Will decrease,but the number of jobs will not change.
C) Can increase without a decrease in the number of jobs.
D) Can increase,but only if the number of jobs decrease.