Question 1

What does the income effect indicate about the relationship between the wage rate and leisure on the quantity of labour supplied?

Accepted Answer

A)  At a higher wage rate, the quantity of labour supplied increases because leisure is considered an inferior good. 
B)  At a higher wage rate, the quantity of labour supplied decreases because leisure is considered an inferior good. 
C)  At a higher wage rate, the quantity of labour supplied decreases because leisure is considered a normal good 
D)  At a higher wage rate, the quantity of labour supplied increases because leisure is considered a normal good.

Question 2

At any moment in time, middle-age people tend to have higher incomes than both younger and older people do.

Accepted Answer

A) True 
 B)False

Question 3

Women in the workplace seem to be narrowing the wage gap with males. What might be the cause of this shift during the past 25 years?

Accepted Answer

The answer of Women in the workplace seem to be...

Question 4

How can poverty, as defined using relative income, be eliminated?

Accepted Answer

A)  increased consumer savings 
B)  economic growth 
C)  income redistribution 
D)  capital formation

Question 5

The marginal resource cost of input is the amount that an extra unit of that input adds to the firm's total costs.

Accepted Answer

A) True 
 B)False

Question 6

Because the poverty line is a relative standard, what can we conclude?

Accepted Answer

A)  The poverty rate will not decrease as an economy grows. 
B)  More families are pushed above the poverty line as economic growth moves the entire distribution of income upward. 
C)  An increase in the price of food will not have an effect on the poverty rate. 
D)  The poverty rate has been fairly stable over the last 50 years.

Question 7

Discrimination outside the labour market may contribute to male-female wage inequality.

Accepted Answer

A) True 
 B)False

Question 8

Many economists conclude that in-kind income programs have served to increase levels of inequality significantly from the levels suggested by aggregate income statistics.

Accepted Answer

A) True 
 B)False

Question 9

A decrease in the productivity of labour will shift the demand curve for labour to the left, other things being equal.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is likely to improve a person's income?

Accepted Answer

A)  an increased preference towards leisure 
B)  the ability to collect employment insurance in the event of a layoff 
C)  producing a service highly valued by society 
D)  an increased investment in human capital

Question 11

In order to provide for a more equal distribution of income, government programs benefit only those in the lowest quintile.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following government-subsidized programs have benefited the poor more than middle-income and upper-income quintiles?

Accepted Answer

A)  airport subsidies 
B)  higher education 
C)  art museum 
D)  school lunch programs

Question 13

The intersection of the market demand for labour and the market supply for labour determines the equilibrium wage rate.

Accepted Answer

A) True 
 B)False

Question 14

The demand for cake decorators has no relationship to the demand for cakes.

Accepted Answer

A) True 
 B)False

Question 15

If there is an increase in productivity or an increase in the demand for the final product, what is the impact in the labour market?

Accepted Answer

A)  The labour demand curve will shift left. 
B)  The labour supply curve will shift left. 
C)  The labour supply curve will shift right. 
D)  The labour demand curve will shift right.

Question 16

What is the major reason the market demand curve for labour slopes downward?

Accepted Answer

A)  because at lower wage rates, workers are more willing to supply labour to the market 
B)  because at lower wage rates, workers are less willing to supply labour to the market 
C)  because of the law of diminishing marginal product 
D)  because of the law of diminishing marginal resource cost

Question 17

The marginal resource cost is the amount by which an additional unit of input decreases the firm's variable costs.

Accepted Answer

A) True 
 B)False

Question 18

The firm represented in the table above participates in a perfectly competitive market for its product as well as for labour. Complete the chart and answer the following questions.
a.
If the firm represented in the table above is currently employing two units of labour, should it hire a third? Why or why not?
b.
If the firm represented in the table above is currently employing four units of labour, should it hire a fifth? Why or why not?
c.
If the firm represented in the table above is currently employing seven units of labour, should it hire an eighth? Why or why not?
d.
At what level of employment will the firm be maximizing profit? If it hires one additional unit of labour, what will be the cost?

Accepted Answer

The answer of The firm represented in the table above...

Question 19

Which of the following people are most likely to face a monopsony employer?

Accepted Answer

A)  an athlete drafted by a team in the NHL 
B)  a computer software engineer 
C)  an economics professor 
D)  a tax lawyer

Question 20

While unions represent only a fraction of the unskilled workers in the Canadian labour market; any wage increase won by unionized workers is most likely shared with nonunion, unskilled workers.

Accepted Answer

A) True 
 B)False

Exam 11: Labour Markets and the Distribution of Income

What does the income effect indicate about the relationship between the wage rate and leisure on the quantity of labour supplied?

At any moment in time, middle-age people tend to have higher incomes than both younger and older people do.

Women in the workplace seem to be narrowing the wage gap with males. What might be the cause of this shift during the past 25 years?

How can poverty, as defined using relative income, be eliminated?

The marginal resource cost of input is the amount that an extra unit of that input adds to the firm's total costs.

Because the poverty line is a relative standard, what can we conclude?

Discrimination outside the labour market may contribute to male-female wage inequality.

Many economists conclude that in-kind income programs have served to increase levels of inequality significantly from the levels suggested by aggregate income statistics.

A decrease in the productivity of labour will shift the demand curve for labour to the left, other things being equal.

Which of the following is likely to improve a person's income?

In order to provide for a more equal distribution of income, government programs benefit only those in the lowest quintile.

Which of the following government-subsidized programs have benefited the poor more than middle-income and upper-income quintiles?

The intersection of the market demand for labour and the market supply for labour determines the equilibrium wage rate.

The demand for cake decorators has no relationship to the demand for cakes.

If there is an increase in productivity or an increase in the demand for the final product, what is the impact in the labour market?

What is the major reason the market demand curve for labour slopes downward?

The marginal resource cost is the amount by which an additional unit of input decreases the firm's variable costs.

Which of the following people are most likely to face a monopsony employer?

While unions represent only a fraction of the unskilled workers in the Canadian labour market; any wage increase won by unionized workers is most likely shared with nonunion, unskilled workers.