Question 1

Specific training is paid for by

Accepted Answer

A)   the employer.
B)   the employee.
C)   both the employer and the employee.
D)   neither the employer nor the employee. C

Question 2

Employment protection policies adopted in many European countries tend to

Accepted Answer

A)   increase job creation.
B)   increase layoffs and increase job creation.
C)   reduce layoffs and increase job creation.
D)   reduce layoffs and reduce job creation. D

Question 3

General training is usually paid for by

Accepted Answer

A)   the employer.
B)   the employee.
C)   both the employer and the employee.
D)   neither the employer nor the employee. B

Question 4

Which of the following events will likely lead a firm to use overtime rather than hire new workers?

Accepted Answer

A)   The firm gets rid of its pension plan.
B)   The firm starts to pay for health insurance.
C)   The marginal productivity of all workers, new and current, increases 20%.
D)   Both overtime and base pay increase 20%.

Question 5

Suppose that mobility costs incurred by workers are low.In this circumstance,the best way to provide incentives for on-the-job training is for

Accepted Answer

A)   employees to bear all of the costs of the investment.
B)   employers and employees to share the costs of the investment.
C)   employers to force workers to accept a below market wage during the training period.
D)   employers to bear all of the costs of the investment.

Question 6

A profit-maximizing firm which wants to provide firm-specific training to its workers will pay ________ in the training period and ________ after training is completed.

Accepted Answer

A)   the market wage for single period jobs; the market wage for single period jobs
B)   more than the market wage for single period jobs; more than the market wage for single period jobs
C)   less than the market wage for single period jobs; less than the post-training marginal revenue product
D)   more than the worker's marginal revenue product in other jobs; more than the worker's marginal revenue product in other jobs

Question 7

Under what conditions would an employer invest in training its employees? Explain.

Accepted Answer

The answer of Under what conditions would an employer invest...

Question 8

Initially,when a firm hires a fourth worker,its wage rate goes from $80 a worker to $90.The marginal revenue product of the fourth worker is $100.Then the government imposes a minimum wage of $90 a worker.If the firm now hires the fourth worker,its profits

Accepted Answer

A)   will increase by $10.
B)   will increase by $20.
C)   will decrease by $10.
D)   will decrease by $20.

Question 9

Explain what is meant by the term quasi-fixed cost of employment.Give some examples of quasi-fixed costs of employment.

Accepted Answer

The answer of Explain what is meant by the term...

Question 10

A quasi-fixed cost of labor is a cost that

Accepted Answer

A)   is expected to change over time.
B)   is proportional to the number of hours worked.
C)   is proportional to the number of workers hired.
D)   is proportional to the amount of capital used.

Question 11

A mandated increase in overtime pay is likely to

Accepted Answer

A)   raise the average costs of labor, even if all overtime hours were eliminated.
B)   cause an increase in labor hours due to the scale effect.
C)   cause employers to increase straight-time hourly wages to compensate (because of the "package" agreed upon) .
D)   cause an increase in labor hours due to the substitution effect.

Question 12

A monopsony's marginal worker has a marginal revenue product of $12 an hour and a wage of $8.A minimum wage of $10 will have which of these effects?

Accepted Answer

A)   decrease the average hourly cost of a worker
B)   decrease the marginal hourly cost of a worker
C)   increase the marginal revenue product of the marginal worker
D)   increase the firm's average profit per worker

Question 13

An increase in quasi-fixed costs would probably lead to a(n)________ in the number of employees hired and a(n)________ in the number of overtime hours worked.

Accepted Answer

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

Question 14

If a worker incurs the entire cost of general training,and if mobility costs are low,then we would expect that the employee's wage will be

Accepted Answer

A)   equal to his or her marginal revenue product of labor.
B)   greater than his or her marginal revenue product of labor, due to the training received.
C)   less than his or her marginal revenue product of labor, to pay for the cost of the training received.
D)   either greater or less than his or her marginal revenue product of labor.

Question 15

A firm employs M workers per week and the length of the workweek at the firm is H hours.Let MP_M be the added output from an additional employee and let MP_H be the added output from a one hour increase in the workweek at the firm.MEM and ME_H are,respectively,the marginal expense of an added worker and of an added hour of work.At present,the cost of an added unit of output produced by hiring more workers is $5 while the cost of an added unit of output produced by employing existing workers for more hours is $3.Is the firm maximizing profits given its current employment level and workweek? If your answer is yes,explain why.If your answer is no,explain why not and discuss what adjustments the firm should make.

Accepted Answer

The answer of A firm employs M workers per week...

Question 16

Policies that protect workers against "unjust dismissal" have been shown to cause

Accepted Answer

A)   decreased employment levels and increased hour fluctuations.
B)   increased employment levels and decreased hour fluctuations.
C)   increased employment levels and increased hour fluctuations.
D)   decreased employment levels and decreased hour fluctuations.

Question 17

Suppose that a monopsonist employs 100 workers at a wage of $15 per hour.Assume that the monopsonist has maximized profit and that the marginal revenue product is $20 per hour at the current employment level.Explain how imposition of a minimum wage in this setting could increase employment at the firm.Illustrate your discussion with an appropriate graph.What is the highest minimum wage that could be imposed without loss of employment? Explain and illustrate graphically.

Accepted Answer

The answer of Suppose that a monopsonist employs 100 workers...

Question 18

The marginal product of a new worker is 80 units and the marginal expense of a new worker is $800.The marginal product of hiring current workers another hour is 10 units and the marginal expense of hiring current workers another hour is $12.If the firm needs extra hours of work (assuming the work could be done by either the new or current workers),it should

Accepted Answer

A)   hire new workers.
B)   hire current workers more hours.
C)   be indifferent between hiring new workers or hiring current workers more hours.
D)   not hire anyone for the added hours of work.

Question 19

Which of the following is definitely NOT a quasi-fixed cost of labor?

Accepted Answer

A)   unemployment insurance
B)   health insurance
C)   overtime pay
D)   vacation pay

Question 20

If workers share in the cost of training but also share in the productivity payoff from the training,then we expect that

Accepted Answer

A)   quit rates will be lower.
B)   quit rates will be higher.
C)   layoff rates will be higher.
D)   employers would have no incentive to hire such workers in the first place.

Exam 5: Frictions in the Labor Market

Specific training is paid for by

Employment protection policies adopted in many European countries tend to

General training is usually paid for by

Which of the following events will likely lead a firm to use overtime rather than hire new workers?

Suppose that mobility costs incurred by workers are low.In this circumstance,the best way to provide incentives for on-the-job training is for

A profit-maximizing firm which wants to provide firm-specific training to its workers will pay in the training period and after training is completed.

Under what conditions would an employer invest in training its employees? Explain.

Initially,when a firm hires a fourth worker,its wage rate goes from $80 a worker to $90.The marginal revenue product of the fourth worker is $100.Then the government imposes a minimum wage of $90 a worker.If the firm now hires the fourth worker,its profits

Explain what is meant by the term quasi-fixed cost of employment.Give some examples of quasi-fixed costs of employment.

A quasi-fixed cost of labor is a cost that

A mandated increase in overtime pay is likely to

A monopsony's marginal worker has a marginal revenue product of $12 an hour and a wage of $8.A minimum wage of $10 will have which of these effects?

An increase in quasi-fixed costs would probably lead to a(n) in the number of employees hired and a(n) in the number of overtime hours worked.

If a worker incurs the entire cost of general training,and if mobility costs are low,then we would expect that the employee's wage will be

Policies that protect workers against "unjust dismissal" have been shown to cause

Which of the following is definitely NOT a quasi-fixed cost of labor?

If workers share in the cost of training but also share in the productivity payoff from the training,then we expect that

Exam 5: Frictions in the Labor Market

Specific training is paid for by

Employment protection policies adopted in many European countries tend to

General training is usually paid for by

Which of the following events will likely lead a firm to use overtime rather than hire new workers?

Suppose that mobility costs incurred by workers are low.In this circumstance,the best way to provide incentives for on-the-job training is for

A profit-maximizing firm which wants to provide firm-specific training to its workers will pay ________ in the training period and ________ after training is completed.

Under what conditions would an employer invest in training its employees? Explain.

Initially,when a firm hires a fourth worker,its wage rate goes from $80 a worker to $90.The marginal revenue product of the fourth worker is $100.Then the government imposes a minimum wage of $90 a worker.If the firm now hires the fourth worker,its profits

Explain what is meant by the term quasi-fixed cost of employment.Give some examples of quasi-fixed costs of employment.

A quasi-fixed cost of labor is a cost that

A mandated increase in overtime pay is likely to

A monopsony's marginal worker has a marginal revenue product of $12 an hour and a wage of $8.A minimum wage of $10 will have which of these effects?

An increase in quasi-fixed costs would probably lead to a(n) ________ in the number of employees hired and a(n) ________ in the number of overtime hours worked.

If a worker incurs the entire cost of general training,and if mobility costs are low,then we would expect that the employee's wage will be

Policies that protect workers against "unjust dismissal" have been shown to cause

Which of the following is definitely NOT a quasi-fixed cost of labor?

If workers share in the cost of training but also share in the productivity payoff from the training,then we expect that

A profit-maximizing firm which wants to provide firm-specific training to its workers will pay in the training period and after training is completed.

An increase in quasi-fixed costs would probably lead to a(n) in the number of employees hired and a(n) in the number of overtime hours worked.