Question 1

The figure given below shows the impact of immigration on the labor market of a country.Immigration in shifts the labor supply curve from S to S'. 
-Refer to Figure 18-3.The total income of the residents of the country increases by the area _____ post immigration.

Accepted Answer

A) ABC. 
B) wACw'. 
C) ABCE. 
D) wABw'.

Question 2

A cartel agreement between input buyers would try to:

Accepted Answer

A) make the supply curve of their product more elastic. 
B) shift their demand curve for labor to the right. 
C) replicate monopsony and reduce input prices. 
D) replicate monopoly and increase prices.

Question 3

The figure given below shows the demand and supply curves of labor.A per-unit tax imposed on the wage income of the employees shifts the supply curve of labor upward. 
-In Figure 18-2,as a result of a per-unit tax:

Accepted Answer

A) the total wage paid by employers rises,while the net-wage received by employees declines. 
B) the total wage paid by employers declines,while the net-wage received by the employees rises. 
C) the total wage paid by employers declines. 
D) the total wage received by employees decline.

Question 4

If the current Social Security system in a country is a "pay-as-you-go" system,it means that:

Accepted Answer

A) employers and employees must pay taxes once in a month. 
B) employers pay the bulk of employees' retirement costs. 
C) individual retirement accounts are set up for each work as they go. 
D) taxes from current workers are transferred to current retirees.

Question 5

The figure given below shows the demand and supply curves of labor.A per-unit tax imposed on the wage income of the employees shifts the supply curve of labor upward. 
-Refer to Figure 18-2.The per-unit tax is this figure is being represented by the distance:

Accepted Answer

A) OB. 
B) OA. 
C) AB. 
D) AC.

Question 6

The figure given below shows the demand and supply of unskilled labor that determines the equilibrium wage rate in the labor market.The minimum wage rate at $5.15 is higher than the equilibrium wage rate at $4. 
-Refer to Figure 18-1.Which of the following distances represents the complete unemployment created by the minimum wage legislation?

Accepted Answer

A) OL3 
B) L2L3 
C) L2 L1 
D) OL2

Question 7

Minimum wage laws are promoted as the means of increasing the standard of living of the working poor.Which of the following is the most likely adverse consequence of minimum wage laws that makes the working poor worse off?

Accepted Answer

A) The least skilled workers are priced out of the labor market. 
B) Firms respond by increasing other forms of non-wage compensation such as training and holiday pay. 
C) The average price level declines,increasing the spending power of the people. 
D) The skilled workers end up receiving a below average wage rate.

Question 8

Which of the following best describes wage discrimination?

Accepted Answer

A) Workers in one firm are paid more than the workers in another firm 
B) Workers in different industries are hired for different jobs 
C) Workers are paid according to their productive capabilities 
D) Workers having equal expected productive talents are paid differently

Question 9

A recent study investigating discrimination in hiring found that 20 percent of the employers in the sample discriminated against African Americans and 7 percent discriminated against whites.If the sample of firms is representative of the population as a whole,it can be predicted that:

Accepted Answer

A) African Americans will earn more on average than whites even when they are equally qualified. 
B) African Americans will earn more than whites in 20 percent of the firms and whites will earn more than African Americans in 7 percent of the firms. 
C) equally qualified African Americans and whites will earn the same on average,but the proportion of African Americans to whites will vary across firms. 
D) 20 percent of the African Americans and 7 percent of the whites will earn more than the average wage.

Question 10

Which of the following will result from a social security tax if the labor supply curve is vertical,but the labor demand curve is downward-sloping?

Accepted Answer

A) Lower after-tax wages 
B) Unchanged levels of employment 
C) Higher labor costs to firms 
D) A fall in output prices

Question 11

The disemployment effect of a minimum wage is greater the:

Accepted Answer

A) more elastic the supply curve of unskilled workers,for a given demand curve. 
B) more inelastic the supply curve of unskilled workers,for a given demand curve. 
C) the more inelastic the demand curve for unskilled workers,for a given supply curve. 
D) the more elastic the demand curve for unskilled workers,for a given supply curve.

Question 12

An increase in the minimum wage imposed by the government causes an increase in unemployment because:

Accepted Answer

A) the labor supply curves are backward-bending. 
B) the demand curves for labor are downward-sloping. 
C) leisure is a normal good. 
D) the increase in the wage rate reduces the price of leisure.

Question 13

The cost of the minimum wage is most likely borne by:

Accepted Answer

A) consumers who buy goods produced in the covered industry. 
B) producers who produce goods in the covered industry. 
C) producers in both the covered and uncovered industries. 
D) consumers who have a perfectly elastic demand for goods produced by the covered industry.

Question 14

One adverse effect of the pay-as-you-go system of funding Social Security is that:

Accepted Answer

A) it builds up a surplus of savings,which increases interest rates. 
B) it reduces private capital formation,thus reducing future incomes. 
C) it reduces the wealth of the elderly who spend most of their income on consumption rather than on investment goods. 
D) it creates an income disparity between the working age population and the elderly.

Question 15

Which of the following acts passed by the Congress in 1938 established a minimum wage for workers in the U.S.?

Accepted Answer

A) The Right to Employment Act 
B) The Fair Labor Standards Act 
C) The Employment Act 
D) The American Jobs Act

Question 16

Using a graph,explain the employment effects of a binding minimum wage.Who benefits,who loses,and how large are these effects?

Accepted Answer

The answer of Using a graph,explain the employment effects of...

Question 17

Empirical evidence suggests that a large majority of the poor,in the U.S. ,are not directly affected by the minimum wage.This is because most poor workers:

Accepted Answer

A) do not have a job. 
B) earn a below subsistence wage. 
C) do not receive any government aid. 
D) live in households with income above the poverty line.

Question 18

Which of the following explains why immigration has led to an increase in income inequality in the U.S.?

Accepted Answer

A) Immigration has increased the supply of experienced and skilled laborers who effectively earn more than the U.S.workers. 
B) Immigration has lowered the wage earnings of the U.S.residents and increased the income of the capital owners. 
C) The proportion of immigrants in the working-age population has far exceeded the proportion of U.S.workers 
D) The immigrants are more educated than the domestic residents

Question 19

Which of the following factors hinders the success of a cartel agreement between input buyers?

Accepted Answer

A) Government intervention in the input market 
B) Presence of a small number of firms in different input industries 
C) The use of a variety of inputs in the production of a good by firms 
D) The low demand for the final product in the output market

Question 20

Which of the following factors determines the extent of the fall in the net-of-tax wage rate after the imposition of a payroll tax?

Accepted Answer

A) The productivity of the employees 
B) The efficiency wage in the labor market 
C) The elasticities of supply and demand 
D) The minimum wage imposed by the government

Exam 18: Using Input Market Analysis

The figure given below shows the impact of immigration on the labor market of a country.Immigration in shifts the labor supply curve from S to S'. -Refer to Figure 18-3.The total income of the residents of the country increases by the area _____ post immigration.