Question 1

Increased international trade results in greater incomes for low-skilled workers.

Accepted Answer

A) True 
 B)False  False

Question 2

Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market.What does this imply about the relative sizes of the substitution effect and the income effect? Explain.

Accepted Answer

This must mean that the substitution effect outweighs the income effect.The substitution effect of a wage increase implies that leisure is more expensive and the individual will work more.The income effect suggests that since the worker is better off (and leisure is a normal good),the worker will work less.Since Tyler chooses to work more,the substitution effect must be larger.

Question 3

Explain why long-run labor demand curves slope downward using the concepts of the input-substitution effect and the output effect.

Accepted Answer

When the price of labor increases,the firm will substitute away from it toward other types of inputs.This is the input-substitution effect.Since the input is more expensive,the firm's costs will rise.Therefore,the firm will lower its level of production in the short run.This means that the firm will need to employ fewer units of all of the inputs it uses.This is the output effect.Both of these effects suggest that if the price of labor rises,the quantity of labor demanded will fall.This inverse relationship between the price of labor and its quantity demanded is represented by a downward sloping curve.

Question 4

A firm's short-run demand curve for labor would shift to the left if:

Accepted Answer

A) there is a decrease in the price of the output. 
B) there is an increase in the marginal product of labor. 
C) there is a decrease in the wage rate. 
D) all of the above 
A) there is a decrease in the price of the output. 
B) there is an increase in the marginal product of labor. 
C) there is a decrease in the wage rate. 
D) all of the above

Question 5

The demand for labor is dependent on the demand for the outputs the labor is used to produce.

Accepted Answer

A) True 
 B)False

Question 6

The presence of a fixed input means that the marginal product of labor eventually declines.This concept is known as:

Accepted Answer

A) decreasing marginal cost. 
B) diminishing returns. 
C) derived demand. 
D) downward-sloping output curve. 
A) decreasing marginal cost. 
B) diminishing returns. 
C) derived demand. 
D) downward-sloping output curve.

Question 7

A profit maximizing firm should hire more labor as long as:

Accepted Answer

A) the marginal product of the worker is positive. 
B) the marginal revenue product of the worker is positive. 
C) the marginal revenue product of the worker is greater than or equal to the wage rate. 
D) the marginal revenue product of the worker is greater than or equal to the price of the output. 
A) the marginal product of the worker is positive. 
B) the marginal revenue product of the worker is positive. 
C) the marginal revenue product of the worker is greater than or equal to the wage rate. 
D) the marginal revenue product of the worker is greater than or equal to the price of the output.

Question 8

Increased international trade results in less imports to the U.S.

Accepted Answer

A) True 
 B)False

Question 9

Table 17.4
-Refer to Table 17.4.If the wage rate is $12 and the output sells for $3 per unit,how many workers will the firm hire?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 10

Explain the output effect of an increase in the wage rate.

Accepted Answer

An increase in the wage rate leads to an

Question 11

Table 17.6
-A soft pretzel shop can sell as many pretzels as it wishes at a price of $2.The production information is shown in Table 17.6.Complete the marginal product and marginal revenue product columns of Table 17.6.

Accepted Answer

The answer of   Table 17.6
-A soft pretzel shop...

Question 12

If the wage rate is less than the marginal revenue product of labor,the firm should ________ to maximize profits.

Accepted Answer

A) hire less labor and produce less output 
B) hire less labor and produce more output 
C) hire more labor and produce less output 
D) hire more labor and produce more output 
A) hire less labor and produce less output 
B) hire less labor and produce more output 
C) hire more labor and produce less output 
D) hire more labor and produce more output

Question 13

Explain the input-substitution effect and provide an example.

Accepted Answer

Firms will substitute a factor of produc

Question 14

Poverty rates for Hispanics are more than the poverty rates for ________.

Accepted Answer

A) Asians. 
B) Whites. 
C) female-headed households. 
D) A and B are correct. 
A) Asians. 
B) Whites. 
C) female-headed households. 
D) A and B are correct.

Question 15

We cannot easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure.

Accepted Answer

A) True 
 B)False

Question 16

In the U.S. ,income has become less equally distributed in the past two decades due technology.

Accepted Answer

A) True 
 B)False

Question 17

Increased international trade has brought about:

Accepted Answer

A) less U.S.imports. 
B) an increase in demand for low-skilled workers. 
C) less U.S.exports. 
D) an increase in demand for high-skilled workers. 
A) less U.S.imports. 
B) an increase in demand for low-skilled workers. 
C) less U.S.exports. 
D) an increase in demand for high-skilled workers.

Question 18

If the marginal product of the third worker employed by a computer manufacturer is 50 computers,and the price of a computer is $500,the third worker's marginal revenue product is:

Accepted Answer

A) $50. 
B) $500. 
C) $25,000. 
D) It cannot be determined;more information is needed. 
A) $50. 
B) $500. 
C) $25,000. 
D) It cannot be determined;more information is needed.

Question 19

Recall the application about positive and negative effects from immigration of low-skilled workers.Which of the following is NOT a result of immigrant labor in the U.S.?

Accepted Answer

A) lower prices of products 
B) lower costs of production 
C) increased wages for low-skill workers 
D) increased benefits to consumers 
A) lower prices of products 
B) lower costs of production 
C) increased wages for low-skill workers 
D) increased benefits to consumers

Question 20

If a firm uses the marginal principle,then the firm picks the quantity of workers:

Accepted Answer

A) at which the marginal benefit equals the marginal cost. 
B) at a point where the firms earns an additional profit by employing one additional unit of labor. 
C) equal the total product of labor times the price of labor. 
D) is the same as the marginal product of labor. 
A) at which the marginal benefit equals the marginal cost. 
B) at a point where the firms earns an additional profit by employing one additional unit of labor. 
C) equal the total product of labor times the price of labor. 
D) is the same as the marginal product of labor.

Increased international trade results in greater incomes for low-skilled workers.

Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market.What does this imply about the relative sizes of the substitution effect and the income effect? Explain.

Explain why long-run labor demand curves slope downward using the concepts of the input-substitution effect and the output effect.

A firm's short-run demand curve for labor would shift to the left if:

The demand for labor is dependent on the demand for the outputs the labor is used to produce.

The presence of a fixed input means that the marginal product of labor eventually declines.This concept is known as:

A profit maximizing firm should hire more labor as long as:

Increased international trade results in less imports to the U.S.

Table 17.4 -Refer to Table 17.4.If the wage rate is $12 and the output sells for $3 per unit,how many workers will the firm hire?

Explain the output effect of an increase in the wage rate.

Table 17.6 -A soft pretzel shop can sell as many pretzels as it wishes at a price of $2.The production information is shown in Table 17.6.Complete the marginal product and marginal revenue product columns of Table 17.6.

If the wage rate is less than the marginal revenue product of labor,the firm should ________ to maximize profits.

Explain the input-substitution effect and provide an example.

Poverty rates for Hispanics are more than the poverty rates for ________.

We cannot easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure.

In the U.S. ,income has become less equally distributed in the past two decades due technology.

Increased international trade has brought about:

If the marginal product of the third worker employed by a computer manufacturer is 50 computers,and the price of a computer is $500,the third worker's marginal revenue product is:

Recall the application about positive and negative effects from immigration of low-skilled workers.Which of the following is NOT a result of immigrant labor in the U.S.?

If a firm uses the marginal principle,then the firm picks the quantity of workers:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

International Trade and Public Policy

Filters

Exam 17: The Labor Market and the Distribution of Income

Increased international trade results in greater incomes for low-skilled workers.

Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market.What does this imply about the relative sizes of the substitution effect and the income effect? Explain.

Explain why long-run labor demand curves slope downward using the concepts of the input-substitution effect and the output effect.

A firm's short-run demand curve for labor would shift to the left if:

The demand for labor is dependent on the demand for the outputs the labor is used to produce.

The presence of a fixed input means that the marginal product of labor eventually declines.This concept is known as:

A profit maximizing firm should hire more labor as long as:

Increased international trade results in less imports to the U.S.

Table 17.4 -Refer to Table 17.4.If the wage rate is $12 and the output sells for $3 per unit,how many workers will the firm hire?

Explain the output effect of an increase in the wage rate.

Table 17.6 -A soft pretzel shop can sell as many pretzels as it wishes at a price of $2.The production information is shown in Table 17.6.Complete the marginal product and marginal revenue product columns of Table 17.6.

If the wage rate is less than the marginal revenue product of labor,the firm should ________ to maximize profits.

Explain the input-substitution effect and provide an example.

Poverty rates for Hispanics are more than the poverty rates for ________.

We cannot easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure.

In the U.S. ,income has become less equally distributed in the past two decades due technology.

Increased international trade has brought about:

If the marginal product of the third worker employed by a computer manufacturer is 50 computers,and the price of a computer is $500,the third worker's marginal revenue product is:

Recall the application about positive and negative effects from immigration of low-skilled workers.Which of the following is NOT a result of immigrant labor in the U.S.?

If a firm uses the marginal principle,then the firm picks the quantity of workers:

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Elasticity: a Measure of Responsiveness

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

International Trade and Public Policy

Filters