Question 1

Explain why government tax policy might lead companies to rely more heavily on fringe benefits as a payment scheme.

Accepted Answer

The income tax, social security tax, and

Question 2

The growth rate of real wages has ____ in recent years.

Accepted Answer

A) doubled 
B) fallen 
C) stayed the same 
D) risen 
E) been negative 
A) doubled 
B) fallen 
C) stayed the same 
D) risen 
E) been negative

Question 3

Supply and demand analysis

Accepted Answer

A) has been thoroughly discredited as a basis for analyzing labor. 
B) explains all labor market phenomena. 
C) is one of the tools economists use to investigate labor markets. 
D) is used only in relation to commodities, not in relation to services such as labor. 
E) is the only tool used to explain all labor market issues. 
A) has been thoroughly discredited as a basis for analyzing labor. 
B) explains all labor market phenomena. 
C) is one of the tools economists use to investigate labor markets. 
D) is used only in relation to commodities, not in relation to services such as labor. 
E) is the only tool used to explain all labor market issues.

Question 4

A deferred-payment arrangement is illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 5

The typical shape of the marginal revenue product curve for labor is

Accepted Answer

A) upward-sloping. 
B) downward-sloping. 
C) horizontal. 
D) vertical. 
E) U-shaped. 
A) upward-sloping. 
B) downward-sloping. 
C) horizontal. 
D) vertical. 
E) U-shaped.

Question 6

Calculate the real wage when the nominal wage at a given time is $35 and the price index is 0.4.

Accepted Answer

$87.50
Real wage = N

Question 7

Marginal revenue product can be calculated for a competitive firm by

Accepted Answer

A) dividing marginal revenue by output price. 
B) multiplying marginal revenue by output price. 
C) multiplying marginal cost by output price. 
D) adding marginal product and output price. 
E) multiplying marginal product by output price. 
A) dividing marginal revenue by output price. 
B) multiplying marginal revenue by output price. 
C) multiplying marginal cost by output price. 
D) adding marginal product and output price. 
E) multiplying marginal product by output price.

Question 8

If marginal revenue product is greater than the wage, a firm should hire less input.

Accepted Answer

A) True 
 B)False

Question 9

Exhibit 13-5  
-In theory, minimum wage laws create shortages in the labor market.

Accepted Answer

A) True 
 B)False

Question 10

The wage is the

Accepted Answer

A) term used for the price of labor. 
B) amount of total earnings from all income sources over a period of time. 
C) amount of money paid directly to a worker for hours worked. 
D) amount of labor worked for a specific amount of money. 
E) amount of money that a worker loses from gambling. 
A) term used for the price of labor. 
B) amount of total earnings from all income sources over a period of time. 
C) amount of money paid directly to a worker for hours worked. 
D) amount of labor worked for a specific amount of money. 
E) amount of money that a worker loses from gambling.

Question 11

Fringe benefits are a growing proportion of worker pay in the United States.

Accepted Answer

A) True 
 B)False

Question 12

As defined by economists, the term leisure includes all of the following except

Accepted Answer

A) watching TV. 
B) painting the neighbor's house for $2000. 
C) going to a baseball game. 
D) attending a cultural event you do not enjoy because a friend asked you to attend. 
E) mowing the lawn. 
A) watching TV. 
B) painting the neighbor's house for $2000. 
C) going to a baseball game. 
D) attending a cultural event you do not enjoy because a friend asked you to attend. 
E) mowing the lawn.

Question 13

Compensating wage differentials are the differences in tax rates intended to compensate for income increases.

Accepted Answer

A) True 
 B)False

Question 14

The supply and demand model predicts that minimum wage laws cause

Accepted Answer

A) wages of skilled workers to fall. 
B) unemployment among low-skilled workers. 
C) a shortage in the low-skilled labor market. 
D) the status of minorities and women to improve. 
E) wages of all workers to increase with the minimum wage. 
A) wages of skilled workers to fall. 
B) unemployment among low-skilled workers. 
C) a shortage in the low-skilled labor market. 
D) the status of minorities and women to improve. 
E) wages of all workers to increase with the minimum wage.

Question 15

Suppose that over the course of a year, one's wage increases from $20 per hour to $22 per hour. If the inflation rate for the year is 12 percent, then the

Accepted Answer

A) real wage has increased by 10 percent. 
B) nominal wage has increased by 1 percent. 
C) real wage has increased by 2 percent. 
D) real wage has fallen by 2 percent. 
E) nominal wage has decreased by 10 percent. 
A) real wage has increased by 10 percent. 
B) nominal wage has increased by 1 percent. 
C) real wage has increased by 2 percent. 
D) real wage has fallen by 2 percent. 
E) nominal wage has decreased by 10 percent.

Question 16

For a competitive firm, marginal revenue product of labor is the market value of the output that results from adding one more unit of labor to the production line.

Accepted Answer

A) True 
 B)False

Question 17

To obtain human capital, an individual usually must

Accepted Answer

A) go to school. 
B) receive a diploma. 
C) pay someone for it. 
D) receive it from his or her parents. 
E) sacrifice some income in the present. 
A) go to school. 
B) receive a diploma. 
C) pay someone for it. 
D) receive it from his or her parents. 
E) sacrifice some income in the present.

Question 18

A backward-bending individual labor supply curve indicates that the

Accepted Answer

A) substitution effect is the only effect at work. 
B) substitution effect is stronger than the income effect. 
C) income and substitution effects are of roughly equal strength. 
D) income effect is stronger than the substitution effect. 
E) income effect is the only effect at work. 
A) substitution effect is the only effect at work. 
B) substitution effect is stronger than the income effect. 
C) income and substitution effects are of roughly equal strength. 
D) income effect is stronger than the substitution effect. 
E) income effect is the only effect at work.

Question 19

The average output per hour of work is called

Accepted Answer

A) labor productivity. 
B) output productivity. 
C) hourly work production. 
D) hourly production. 
E) marginal productivity. 
A) labor productivity. 
B) output productivity. 
C) hourly work production. 
D) hourly production. 
E) marginal productivity.

Exam 13: Labor Markets

Explain why government tax policy might lead companies to rely more heavily on fringe benefits as a payment scheme.

The growth rate of real wages has ____ in recent years.

Supply and demand analysis

A deferred-payment arrangement is illegal in the United States.

The typical shape of the marginal revenue product curve for labor is

Calculate the real wage when the nominal wage at a given time is $35 and the price index is 0.4.

Marginal revenue product can be calculated for a competitive firm by

If marginal revenue product is greater than the wage, a firm should hire less input.

Exhibit 13-5 -In theory, minimum wage laws create shortages in the labor market.

The wage is the

Fringe benefits are a growing proportion of worker pay in the United States.

As defined by economists, the term leisure includes all of the following except

Compensating wage differentials are the differences in tax rates intended to compensate for income increases.

The supply and demand model predicts that minimum wage laws cause

Suppose that over the course of a year, one's wage increases from $20 per hour to $22 per hour. If the inflation rate for the year is 12 percent, then the

For a competitive firm, marginal revenue product of labor is the market value of the output that results from adding one more unit of labor to the production line.

To obtain human capital, an individual usually must

A backward-bending individual labor supply curve indicates that the

The average output per hour of work is called

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

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