Question 1

_____ is the additional output from an additional unit of labor, holding the amount of physical capital and other inputs fixed.

Accepted Answer

A)  Marginal revenue product 
B)  Total revenue 
C)  Marginal physical product 
D)  Total product

Question 2

The XYZ Union is negotiating with the ABC Manufacturing Company over wages for the employees. This is an example of:

Accepted Answer

A)  consensus. 
B)  collective bargaining. 
C)  detente. 
D)  compromise.

Question 3

A _____ is the additional income that is given to workers in a job that has less desirable characteristics.

Accepted Answer

A)  bonus 
B)  tax break 
C)  compensating differential 
D)  tax credit

Question 4

(Figure: Labor in a Competitive Market 0) In the figure, if the marginal revenue product of the fourth worker is $150, the firm should:

Accepted Answer

A)  hire the fifth worker. 
B)  reduce employment to three workers. 
C)  do nothing. 
D)  reduce employment to two workers.

Question 5

With only one buyer, the market type is:

Accepted Answer

A)  a monopoly. 
B)  a monopsony. 
C)  an oligopoly. 
D)  an oligopsony.

Question 6

Market labor supply curves generally have _____ slope.

Accepted Answer

A)  a horizontal 
B)  a vertical 
C)  an upward 
D)  a downward

Question 7

Unions can _____ wages by _____ the supply of labor.

Accepted Answer

A)  increase; increasing 
B)  decrease; increasing 
C)  increase; decreasing 
D)  decrease; decreasing

Question 8

The demand for labor is _____ demand.

Accepted Answer

A)  an economic 
B)  a market 
C)  a monopoly 
D)  a derived

Question 9

There is generally _____ relationship between the price of labor and the quantity of labor that is supplied in the market.

Accepted Answer

A)  a negative 
B)  a positive 
C)  no 
D)  an indirect

Question 10

_____ includes the wages paid to workers, the cost of any benefits the worker receives, and other expenses related to employing a worker.

Accepted Answer

A)  The price of labor 
B)  Marginal revenue product 
C)  The wage 
D)  Take-home pay

Question 11

Diminishing returns results in a labor demand curve that:

Accepted Answer

A)  slopes upward. 
B)  slopes downward. 
C)  shifts to the left. 
D)  shifts to the right.

Question 12

The _____ effect on labor supply occurs when workers supply more labor at higher wages because the opportunity cost of leisure increases.

Accepted Answer

A)  income 
B)  substitution 
C)  complementary 
D)  elasticity

Question 13

Changes in either the marginal physical product of labor (MPPL) or the _____ will shift the demand curve for labor.

Accepted Answer

A)  price of labor 
B)  marginal revenue (MR) 
C)  total revenue (TR) 
D)  total product (TP)

Question 14

The bargaining power of a firm depends on the degree of its _____ in hiring workers.

Accepted Answer

A)  ability to strike 
B)  monopsony power 
C)  cash flow 
D)  marginal revenue

Question 15

Increases in the market labor supply put _____ pressure on the price of labor.

Accepted Answer

A)  little 
B)  no 
C)  downward 
D)  upward

Question 16

Discuss three factors that contribute to differences in earnings.

Accepted Answer

The answer of Discuss three factors that contribute to differences...

Question 17

In terms of the substitution effect and the income effect, discuss the possible labor supply responses when an employee receives an increase in wages.

Accepted Answer

The answer of In terms of the substitution effect and...

Question 18

(Figure: Labor in a Competitive Market A) In the figure, if the price of labor is $150, the firm will hire:

Accepted Answer

A)  five worker. 
B)  two workers. 
C)  three workers. 
D)  four workers.

Question 19

(Figure: MPP and MRP) Unit Price = $5
In the table, in a competitive labor market, if the prevailing price of labor is $150, this firm should hire _____ workers.
 $\begin{array}{|l|l|l|l|l|}
 \hline\text { Labor } & \text { Total } & \mathrm{MPP}_{L} &\text { Total } & \mathrm{MRP}_{L}  \
& \text { Product } & & \text { Revenue } & \
& \text { (Q) } & & \text { (TR) } &\
 \hline & 35 & 35 & ? & \$ 175 \
\hline 2 & 75 & 40 & ? & \$ 200 \
\hline 3 & 105 & 30 & \$ 525 & ? \
\hline 4 & 130 & 25 & \$ 650 & ? \
\hline 5 & 150 & 20 & \$ 750 & ?\
\hline
\end{array}$

Accepted Answer

A)  two 
B)  three 
C)  four 
D)  five

Question 20

If Simone, who recently received an increase in wages, decides to work more hours, the _____ effect for leisure outweighs the _____ effect for her.

Accepted Answer

A)  income; complementary 
B)  substitution; income 
C)  complementary; elasticity 
D)  income; substitution

Exam 17: Labor and Other Resources