Question 1

In competitive markets,the marginal revenue product curve and marginal physical product curve have similar shapes because

Accepted Answer

A) The demand curve for the product slopes downward in accordance with the law of diminishing returns. 
B) MRP = P × MPP. 
C) The law of diminishing marginal utility and the law of diminishing returns imply a downward-sloping demand curve in the product market. 
D) The demand curve for labor is the same for both the individual firm and the market as a whole. 
A) The demand curve for the product slopes downward in accordance with the law of diminishing returns. 
B) MRP = P × MPP. 
C) The law of diminishing marginal utility and the law of diminishing returns imply a downward-sloping demand curve in the product market. 
D) The demand curve for labor is the same for both the individual firm and the market as a whole.

Question 2

If the cost efficiency of labor equals 2,then

Accepted Answer

A) Labor costs 100 percent more than the revenue it generates. 
B) The wage rate is 100 percent more than the product price. 
C) Each extra dollar spent on wages returns 2 units of additional output. 
D) The product price is 200 percent of the wage rate. 
A) Labor costs 100 percent more than the revenue it generates. 
B) The wage rate is 100 percent more than the product price. 
C) Each extra dollar spent on wages returns 2 units of additional output. 
D) The product price is 200 percent of the wage rate.

Question 3

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

Accepted Answer

A) The wage rate. 
B) The value of leisure time. 
C) Payroll taxes. 
D) The derived demand for labor. 
A) The wage rate. 
B) The value of leisure time. 
C) Payroll taxes. 
D) The derived demand for labor.

Question 4

Suppose that Silvia's Dance Studio uses both labor and capital to teach dance lessons.Given her current mix of labor and capital,the cost efficiency of labor is 1 dance lesson per dollar,and the cost efficiency of capital is 5 dance lessons per dollar.Silvia should

Accepted Answer

A) Hire less labor and use more capital. 
B) Use only capital to produce the lessons. 
C) Use less capital and hire more labor. 
D) Use only labor to produce the lessons. 
A) Hire less labor and use more capital. 
B) Use only capital to produce the lessons. 
C) Use less capital and hire more labor. 
D) Use only labor to produce the lessons.

Question 5

The labor supply curve will be positively sloped if the substitution effect of wages is

Accepted Answer

A) Equal to the income effect of wages. 
B) Stronger than the income effect of wages. 
C) Weaker than the income effect of wages. 
D) Negative. 
A) Equal to the income effect of wages. 
B) Stronger than the income effect of wages. 
C) Weaker than the income effect of wages. 
D) Negative.

Question 6

If the wage rate increases,there will be a

Accepted Answer

A) Leftward shift of the labor supply curve. 
B) Rightward shift of the labor supply curve. 
C) Movement up the labor supply curve to the right. 
D) Movement down the labor supply curve to the left. 
A) Leftward shift of the labor supply curve. 
B) Rightward shift of the labor supply curve. 
C) Movement up the labor supply curve to the right. 
D) Movement down the labor supply curve to the left.

Question 7

When the minimum wage is raised in a competitive market,ceteris paribus,

Accepted Answer

A) All workers are better off. 
B) All workers are worse off. 
C) Some workers are better off and some are worse off. 
D) Workers are not affected by a minimum wage increase,only by decreases. 
A) All workers are better off. 
B) All workers are worse off. 
C) Some workers are better off and some are worse off. 
D) Workers are not affected by a minimum wage increase,only by decreases.

Question 8

The marginal physical product of labor is equal to

Accepted Answer

A) Total output divided by the quantity of labor. 
B) The percentage change in total output divided by the percentage change in quantity of labor. 
C) The change in total output associated with one additional unit of labor. 
D) The change in total revenue associated with one additional unit of input. 
A) Total output divided by the quantity of labor. 
B) The percentage change in total output divided by the percentage change in quantity of labor. 
C) The change in total output associated with one additional unit of labor. 
D) The change in total revenue associated with one additional unit of input.

Question 9

As we work fewer hours and our leisure time increases,the opportunity cost of labor

Accepted Answer

A) Falls and the marginal utility of income falls. 
B) Rises and the marginal utility of income falls. 
C) Falls and the marginal utility of income rises. 
D) Rises and the marginal utility of income rises. 
A) Falls and the marginal utility of income falls. 
B) Rises and the marginal utility of income falls. 
C) Falls and the marginal utility of income rises. 
D) Rises and the marginal utility of income rises.

Question 10

Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

Accepted Answer

A) A labor surplus will result. 
B) Some workers will end up with higher wages. 
C) Some workers will end up unemployed. 
D) There will be no unemployment. 
A) A labor surplus will result. 
B) Some workers will end up with higher wages. 
C) Some workers will end up unemployed. 
D) There will be no unemployment.

Question 11

Institutional constraints,such as immigration policies,affect the shape and location of the labor supply curve.

Accepted Answer

A) True 
 B)False

Question 12

The demand for labor and other factors of production typically decline in a recession because those factors

Accepted Answer

A) Have become relatively scarcer than before the recession. 
B) Are no longer offered for sale in factor markets. 
C) Are derived from the demand for final output,which also declines in a recession. 
D) Have become more expensive than before the recession. 
A) Have become relatively scarcer than before the recession. 
B) Are no longer offered for sale in factor markets. 
C) Are derived from the demand for final output,which also declines in a recession. 
D) Have become more expensive than before the recession.

Question 13

As an individual earns additional income,the marginal utility of income tends to

Accepted Answer

A) Increase. 
B) Decrease. 
C) Remain constant. 
D) Shift toward the origin. 
A) Increase. 
B) Decrease. 
C) Remain constant. 
D) Shift toward the origin.

Question 14

In Figure 30.2,the equilibrium wage rate is

Accepted Answer

A) $24 per hour. 
B) $20 per hour. 
C) $16 per hour. 
D) $12 per hour. 
A) $24 per hour. 
B) $20 per hour. 
C) $16 per hour. 
D) $12 per hour.

Question 15

If the price for a box of kiwis is $40,the wage rate for kiwi laborers is $10 per hour,and a laborer can pick 3 boxes of kiwis per hour,the

Accepted Answer

A) MRP is $30 per hour. 
B) MPP is $30 per hour. 
C) Cost efficiency is 3/10 of a box per dollar. 
D) Wage rate will tend to fall. 
A) MRP is $30 per hour. 
B) MPP is $30 per hour. 
C) Cost efficiency is 3/10 of a box per dollar. 
D) Wage rate will tend to fall.

Question 16

As marginal physical product diminishes,marginal revenue product

Accepted Answer

A) Also diminishes. 
B) Is not affected. 
C) Rises at a diminishing rate and eventually falls. 
D) Rises. 
A) Also diminishes. 
B) Is not affected. 
C) Rises at a diminishing rate and eventually falls. 
D) Rises.

Question 17

When an individual's MRP is not measurable,his or her market wage is usually determined by

Accepted Answer

A) The individual's MPP. 
B) His or her opportunity wage. 
C) The selling price of his or her output. 
D) The individual's comparable worth. 
A) The individual's MPP. 
B) His or her opportunity wage. 
C) The selling price of his or her output. 
D) The individual's comparable worth.

Question 18

If the income effect dominates the substitution effect,the labor supply curve will be backward-bending.

Accepted Answer

A) True 
 B)False

Question 19

The demand for labor is derived from the demand for the goods and services labor can produce.

Accepted Answer

A) True 
 B)False

Question 20

An effective minimum wage creates a surplus of labor and increases the level of unemployment.

Accepted Answer

A) True 
 B)False

Exam 30: The Labor Market

In competitive markets,the marginal revenue product curve and marginal physical product curve have similar shapes because

If the cost efficiency of labor equals 2,then

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

Suppose that Silvia's Dance Studio uses both labor and capital to teach dance lessons.Given her current mix of labor and capital,the cost efficiency of labor is 1 dance lesson per dollar,and the cost efficiency of capital is 5 dance lessons per dollar.Silvia should

The labor supply curve will be positively sloped if the substitution effect of wages is

If the wage rate increases,there will be a

When the minimum wage is raised in a competitive market,ceteris paribus,

The marginal physical product of labor is equal to

As we work fewer hours and our leisure time increases,the opportunity cost of labor

Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

Institutional constraints,such as immigration policies,affect the shape and location of the labor supply curve.

The demand for labor and other factors of production typically decline in a recession because those factors

As an individual earns additional income,the marginal utility of income tends to

In Figure 30.2,the equilibrium wage rate is

If the price for a box of kiwis is $40,the wage rate for kiwi laborers is $10 per hour,and a laborer can pick 3 boxes of kiwis per hour,the

As marginal physical product diminishes,marginal revenue product

When an individual's MRP is not measurable,his or her market wage is usually determined by

If the income effect dominates the substitution effect,the labor supply curve will be backward-bending.

The demand for labor is derived from the demand for the goods and services labor can produce.

An effective minimum wage creates a surplus of labor and increases the level of unemployment.

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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