Question 1

The income effect means that at a high enough wage rate labor supply curve has a

Accepted Answer

A)  positive slope because an increase in the wage rate increases income. 
B)  positive slope because an increase in income increases the demand for leisure. 
C)  negative slope because an increase in income increases the demand for leisure. 
D)  negative slope because an increase in the wage rate increases hours worked to earn more income. 
A)  positive slope because an increase in the wage rate increases income. 
B)  positive slope because an increase in income increases the demand for leisure. 
C)  negative slope because an increase in income increases the demand for leisure. 
D)  negative slope because an increase in the wage rate increases hours worked to earn more income.

Question 2

-Anthony's Accountants is the only employer of accountants in the island of Fairisle. The table gives the demand and supply of accountants on Fairisle. The marginal cost of hiring a sixth accountant is ________ an hour.

Accepted Answer

A)  $20 
B)  $15 
C)  $25 
D)  $45 
A)  $20 
B)  $15 
C)  $25 
D)  $45

Question 3

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the wage rate rises from $100 per day to $200 per day, the firm's demand for labor curve

Accepted Answer

A)  shifts leftward. 
B)  shifts rightward. 
C)  does not shift at all, but the firm moves upward along the curve. 
D)  None of the above because this change shifts the supply of labor curve. 
A)  shifts leftward. 
B)  shifts rightward. 
C)  does not shift at all, but the firm moves upward along the curve. 
D)  None of the above because this change shifts the supply of labor curve.

Question 4

The demand for labor is a derived demand because it is derived from

Accepted Answer

A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law. 
A)  the supply of labor. 
B)  union pressure. 
C)  the demand for the output the labor produces. 
D)  natural law.

Question 5

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

Accepted Answer

A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800. 
A)  $21,589. 
B)  $9,259. 
C)  $4,632. 
D)  $10,800.

Question 6

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

Accepted Answer

A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase 
A)  rises; increases 
B)  falls; decreases 
C)  rises; decreases 
D)  falls; increase

Question 7

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers.

Accepted Answer

A)  increased; raised 
B)  decreased; raised 
C)  increased; lowered 
D)  decreased; lowered 
A)  increased; raised 
B)  decreased; raised 
C)  increased; lowered 
D)  decreased; lowered

Question 8

A perfectly competitive firm in a competitive labor market will hire more labor whenever

Accepted Answer

A)  its average revenue product of labor exceeds the wage rate. 
B)  the wage rate exceeds its average revenue product of labor. 
C)  its value of marginal product of labor exceeds the wage rate. 
D)  the wage rate exceeds its value of marginal product of labor. 
A)  its average revenue product of labor exceeds the wage rate. 
B)  the wage rate exceeds its average revenue product of labor. 
C)  its value of marginal product of labor exceeds the wage rate. 
D)  the wage rate exceeds its value of marginal product of labor.

Question 9

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year

Accepted Answer

A)  will rise. 
B)  will fall. 
C)  will not change. 
D)  could rise, fall, or stay the same. 
A)  will rise. 
B)  will fall. 
C)  will not change. 
D)  could rise, fall, or stay the same.

Question 10

A firm in a competitive labor market will hire labor until the value of marginal product of labor equals the

Accepted Answer

A)  firm's marginal revenue. 
B)  firm's marginal cost. 
C)  firm's average cost. 
D)  wage rate. 
A)  firm's marginal revenue. 
B)  firm's marginal cost. 
C)  firm's average cost. 
D)  wage rate.

Question 11

The demand for a good or service is called a derived demand because it is derived from the demand for the factors of production that produce this good or service.

Accepted Answer

A) True 
 B)False

Question 12

-The above figure shows the market for labor. The employer is a monopsony. If a minimum wage of $10 is imposed, the equilibrium level of employment is

Accepted Answer

A)  200 hours per day. 
B)  400 hours per day. 
C)  600 hours per day. 
D)  800 hours per day. 
A)  200 hours per day. 
B)  400 hours per day. 
C)  600 hours per day. 
D)  800 hours per day.

Question 13

-In the figure above, the segment of the curve showing where the income effect outweighs the substitution effect is

Accepted Answer

A)  0a. 
B)  bd. 
C)  0c. 
D)  cd. 
A)  0a. 
B)  bd. 
C)  0c. 
D)  cd.

Question 14

Joe manages a company that produces lawn mowers. Joe knows that the value of marginal product

Accepted Answer

A)  decreases as he hires more labor to produce lawn mowers. 
B)  does not change as he sells more lawn mowers. 
C)  increases as he hires more labor to produce lawn mowers. 
D)  increases as he sells more lawn mowers. 
A)  decreases as he hires more labor to produce lawn mowers. 
B)  does not change as he sells more lawn mowers. 
C)  increases as he hires more labor to produce lawn mowers. 
D)  increases as he sells more lawn mowers.

Question 15

The ________ effect means that, other things remaining the same, the higher the wage rate, the less time people will spend working and the more time people will spend at leisure.

Accepted Answer

A)  price 
B)  labor 
C)  income 
D)  substitution 
A)  price 
B)  labor 
C)  income 
D)  substitution

Question 16

-Hank's Propane Storage Company is a profit-maximizing monopsony in the local labor market for propane handling, delivery, and other associated services. The supply and marginal cost of labor curves are shown in the figure above. Hank's demand for labor curve is the curve labeled VMP = D. Hank will employ ________ hours of labor per week and pay a wage rate of ________ per hour.

Accepted Answer

A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8 
A)  100; $12 
B)  100; $8 
C)  100; $6 
D)  120; $8

Question 17

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 4 workers, the wage rate is

Accepted Answer

A)  $90 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day. 
A)  $90 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day.

Question 18

For a monopsony, the marginal cost of labor is ________ the wage rate.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  first greater than and later less than 
A)  greater than 
B)  less than 
C)  equal to 
D)  first greater than and later less than

Question 19

-In the table above, the value of marginal product of the third unit of labor is

Accepted Answer

A)  $3. 
B)  $4. 
C)  $12. 
D)  $16. 
A)  $3. 
B)  $4. 
C)  $12. 
D)  $16.

Question 20

What tools can unions use to increase the demand for union labor?

Accepted Answer

The main tools that unions use to increa

Exam 18: Markets for Factors of Production

The income effect means that at a high enough wage rate labor supply curve has a

-Anthony's Accountants is the only employer of accountants in the island of Fairisle. The table gives the demand and supply of accountants on Fairisle. The marginal cost of hiring a sixth accountant is ________ an hour.

-The figure above shows a local lawn cutting service's demand for labor curve when the price of cutting an acre of lawn is $50 per acre. If the wage rate rises from $100 per day to $200 per day, the firm's demand for labor curve

The demand for labor is a derived demand because it is derived from

If the interest rate is 8 percent, the present value of $10,000 to be received 10 years from today is about

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate ________ and employment ________.

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products ________ the demand for bakers and ________ the equilibrium wage rate paid to bakers.

A perfectly competitive firm in a competitive labor market will hire more labor whenever

Next year's expected price of oil is $90 per barrel. If the interest rate climbs from 5 percent to 20 percent per year and nothing else changes, then according to the Hotelling Principle the price of oil this year

A firm in a competitive labor market will hire labor until the value of marginal product of labor equals the

The demand for a good or service is called a derived demand because it is derived from the demand for the factors of production that produce this good or service.

-The above figure shows the market for labor. The employer is a monopsony. If a minimum wage of $10 is imposed, the equilibrium level of employment is

-In the figure above, the segment of the curve showing where the income effect outweighs the substitution effect is

Joe manages a company that produces lawn mowers. Joe knows that the value of marginal product

The ________ effect means that, other things remaining the same, the higher the wage rate, the less time people will spend working and the more time people will spend at leisure.

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 4 workers, the wage rate is

For a monopsony, the marginal cost of labor is ________ the wage rate.

-In the table above, the value of marginal product of the third unit of labor is

What tools can unions use to increase the demand for union labor?

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

If a labor market that was previously competitive becomes controlled by a monopsony, the wage rate and employment .

Due to a recession, Hostess Bakeries found that the demand for its products decreased. The demand for products the demand for bakers and the equilibrium wage rate paid to bakers.