Question 1

Use the following figure to answer the question : Figure 18-2 : 
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 2

Employers sometimes reduce the fringe benefits provided to workers when the government sets a minimum wage in the labor market.Due to this:

Accepted Answer

A) the real wage that employers pay increases by more than the money wage. 
B) the real wage that employers pay declines and is at times zero. 
C) the real wage that employers pay increases at the same rate as the money wage. 
D) the real wage that employers pay increases by less than the money wage.

Question 3

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

Question 4

Provide a self-interested explanation for why labor unions spend a lot of time and money lobbying for increases in minimum wage mandates and for legislated "living wage" ordinances even though their members earn far more than the proposed wages.

Accepted Answer

The answer of Provide a self-interested explanation for why labor...

Question 5

Use the following figure to answer the question : Figure 18-3 : 
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 6

Use the following figure to answer the question : Figure 18-2 : 
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. 
-According to Figure 18-2,the proportion of the per-unit tax paid by the employers is:

Accepted Answer

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

Question 7

What is the long run effect of a pay-as-you-go Social Security program on the gross domestic product [GDP] of a country?

Accepted Answer

The answer of What is the long run effect of...

Question 8

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 9

An employer's cartel will seek to:

Accepted Answer

A) restrict the employment of the input and lower its price below its marginal revenue product. 
B) restrict the employment of the input and raise its price to the marginal factor cost. 
C) decrease the price of the input by employing more units of the input. 
D) restrict the employment of the input and increase its productivity.

Question 10

Use the following figure to answer the question : Figure 18-2 : 
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 11

The real burden of a social security tax would be:

Accepted Answer

A) higher on workers if it is collected from employees rather than from employers. 
B) higher on workers if it is collected from employers rather than from employees. 
C) higher on workers if it is partly collected from employers rather than entirely collected from employees. 
D) the same regardless of whether it is collected from employers or employees.

Question 12

Which of the following is a true impact of a Social Security program on the labor market?

Accepted Answer

A) It shifts the demand curve for labor to the left. 
B) It shifts the demand curve for labor outward. 
C) It increases the before-tax wage rate. 
D) It increases the after-tax wage rate.

Question 13

The U.S.Social Security system:

Accepted Answer

A) invests the taxes paid by workers in interest-bearing assets. 
B) requires workers to pay a fixed lump sum tax every year. 
C) encourages people to save more. 
D) transfers funds from current workers to current retirees.

Question 14

Use the following figure to answer the question : Figure 18-3 : 
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.Post immigration the earnings of the native laborers in the country declines by the area:

Accepted Answer

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

Question 15

Use the following figure to answer the question : Figure 18-1 : 
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.The increase in the number of workers looking for work in this market due to the imposition of a $5.15 minimum wage is _____.

Accepted Answer

A) L1L3 
B) L2L3 
C) OL1 
D) L2L1

Question 16

The minimum wage law is not an effective instrument for fighting poverty because:

Accepted Answer

A) only skilled workers are covered under the minimum wage law. 
B) many workers whose wages are affected by the law do not live in poor families. 
C) only about half of employers comply with the law. 
D) increases in the minimum wage cause large increases in unemployment.

Question 17

Which of the following facts indicate that the official wage paid by the National Collegiate Athletic Association [NCAA] to the athletes is below the market-clearing level?

Accepted Answer

A) Athletes practicing for greater number of hours before the seasonal tournaments 
B) Schools awarding more athletic scholarships to the students 
C) Athletes receiving cars,apartments,and cash payments 
D) Athletes receiving offers for promotional advertisement campaigns

Question 18

Which of the following is not a consequence of the minimum wage law?

Accepted Answer

A) Reduced employment among low-skilled workers 
B) Increased numbers of workers seeking jobs at the minimum wage 
C) Higher incomes for some low-income workers 
D) A large redistribution of income favoring low-income workers

Question 19

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 20

Which of the following is true of an efficiency wage?

Accepted Answer

A) It refers to the markup of the actual wage over the minimum wage. 
B) It refers to the wage paid to workers above their opportunity cost,which compels them to work harder. 
C) It refers to the wage paid to workers that minimizes total expenditure on labor costs. 
D) It measures the markup of wages paid to workers and their actual output.

Exam 18: Using Input Market Analysis

Use the following figure to answer the question : Figure 18-2 : 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: