Question 1

Students who major in computer science are paid a lot more when they graduate than those who major in philosophy because

Accepted Answer

A) The derived demand for computer science majors is less than the derived demand for philosophy majors. 
B) The marginal revenue product for computer science majors is less than the marginal revenue product for philosophy majors. 
C) The search for the meaning of life is a growth industry. 
D) Information technology is a growth industry. 
A) The derived demand for computer science majors is less than the derived demand for philosophy majors. 
B) The marginal revenue product for computer science majors is less than the marginal revenue product for philosophy majors. 
C) The search for the meaning of life is a growth industry. 
D) Information technology is a growth industry.

Question 2

If wages are relatively high,the individual labor supply curve may

Accepted Answer

A) Become horizontal. 
B) Bend backward. 
C) Bend outward. 
D) Become vertical. 
A) Become horizontal. 
B) Bend backward. 
C) Bend outward. 
D) Become vertical.

Question 3

Table 30.1 $$\begin{array} { | c | r | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { workers (per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Total output } \
\text { (per hour) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { physical } \
\text { product } \
\text { (output per } \
\text { worker) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { product (dollars } \
\text { per hour worker) }
\end{array} \
\hline 1 & 4 & \ldots & & \ldots \
\hline 2 & 19 & & \
\hline 3 & 15 & & \
\hline 4 & 19 & & \
\hline 5 & 22 & & \
\hline
\end{array}$$ Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.1,the contribution to total revenue of the fourth worker hired is

Accepted Answer

A) $76 per hour. 
B) $16 per hour. 
C) $4 per hour. 
D) $12 per hour. 
A) $76 per hour. 
B) $16 per hour. 
C) $4 per hour. 
D) $12 per hour.

Question 4

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

Accepted Answer

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

Question 5

Opportunity wage refers to the

Accepted Answer

A) Income an individual loses when he or she quits a job. 
B) Highest wage an individual would earn in his or her best alternative job. 
C) Value of goods and services that could be purchased with a certain individual's income. 
D) Income equivalent of a volunteer worker. 
A) Income an individual loses when he or she quits a job. 
B) Highest wage an individual would earn in his or her best alternative job. 
C) Value of goods and services that could be purchased with a certain individual's income. 
D) Income equivalent of a volunteer worker.

Question 6

A production process is a specific combination of resources used to produce a good or service.

Accepted Answer

A) True 
 B)False

Question 7

The law of diminishing returns means that marginal costs will eventually rise as a firm produces more.

Accepted Answer

A) True 
 B)False

Question 8

Table 30.5 $$\begin{array} { | r | c | c | c | } 
\hline \text { Output (urits) } & \text { Labor (urits) } & \text { Output (urits) } & \text { Capital (urits) } \
\hline 10 & 1 & 20 & 1 \
\hline 26 & 2 & 56 & 2 \
\hline 38 & 3 & 86 & 3 \
\hline
\end{array}$$ Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of labor?

Accepted Answer

A) 64 units per $1 of cost. 
B) 16 units per $1 of cost. 
C) 26 units per $1 of cost. 
D) 4 units per $1 of cost. 
A) 64 units per $1 of cost. 
B) 16 units per $1 of cost. 
C) 26 units per $1 of cost. 
D) 4 units per $1 of cost.

Question 9

If the cost efficiency of input A is 45 pounds per $1 of cost,and the cost efficiency of input B is 40 pounds per $1 of cost,then input A is more cost-efficient than input B.

Accepted Answer

A) True 
 B)False

Question 10

If we move to the right along the upward-sloping labor supply curve,we observe that the cost of labor

Accepted Answer

A) Increases due to the increasing opportunity cost. 
B) Increases due to the decreasing opportunity cost. 
C) Decreases due to the increasing opportunity cost. 
D) Decreases due to the decreasing opportunity cost. 
A) Increases due to the increasing opportunity cost. 
B) Increases due to the decreasing opportunity cost. 
C) Decreases due to the increasing opportunity cost. 
D) Decreases due to the decreasing opportunity cost.

Question 11

If the number of available workers of a particular type increases,which of the following shifts should occur in the labor market for the particular type of labor?

Accepted Answer

A) Demand for labor should shift to the left. 
B) Supply of labor should shift to the left. 
C) Demand for labor should shift to the right. 
D) Supply of labor should shift to the right. 
A) Demand for labor should shift to the left. 
B) Supply of labor should shift to the left. 
C) Demand for labor should shift to the right. 
D) Supply of labor should shift to the right.

Question 12

When there are more qualified applicants than job openings,this indicates that the

Accepted Answer

A) Economy must be in a recession. 
B) Labor supply curve must be backward-bending. 
C) Wages being offered are too high. 
D) Available jobs must be very desirable and pay high wages. 
A) Economy must be in a recession. 
B) Labor supply curve must be backward-bending. 
C) Wages being offered are too high. 
D) Available jobs must be very desirable and pay high wages.

Question 13

The market supply curve for labor curve is upward-sloping because

Accepted Answer

A) As the wage rises,most workers want to work fewer hours. 
B) As the wage falls,most workers want to work more hours. 
C) As the wage rises,most workers are willing to work more hours. 
D) For most workers,as the wage rises,the preference for leisure time increases. 
A) As the wage rises,most workers want to work fewer hours. 
B) As the wage falls,most workers want to work more hours. 
C) As the wage rises,most workers are willing to work more hours. 
D) For most workers,as the wage rises,the preference for leisure time increases.

Question 14

As more hours are worked,the marginal utility of leisure time tends to

Accepted Answer

A) Increase. 
B) Decrease. 
C) Stay the same. 
D) Decrease initially,but then increase. 
A) Increase. 
B) Decrease. 
C) Stay the same. 
D) Decrease initially,but then increase.

Question 15

Table 30.1 $$\begin{array} { | c | r | c | c | c | } 
\hline \begin{array} { c } 
\text { Number of } \
\text { workers (per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Total output } \
\text { (per hour) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { physical } \
\text { product } \
\text { (output per } \
\text { worker) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars per } \
\text { hour) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { product (dollars } \
\text { per hour worker) }
\end{array} \
\hline 1 & 4 & \ldots & & \ldots \
\hline 2 & 19 & & \
\hline 3 & 15 & & \
\hline 4 & 19 & & \
\hline 5 & 22 & & \
\hline
\end{array}$$ Assume that the product price is $4 per unit and that the hourly wage for workers is $12.Neither price nor wage changes with output.In Table 30.1,how many workers should be hired?

Accepted Answer

A) 2. 
B) 3. 
C) 4. 
D) 5. 
A) 2. 
B) 3. 
C) 4. 
D) 5.

Question 16

A competitive firm should continue to hire workers until the MRP is equal to

Accepted Answer

A) Demand. 
B) The number of workers hired. 
C) The market wage rate. 
D) Zero. 
A) Demand. 
B) The number of workers hired. 
C) The market wage rate. 
D) Zero.

Question 17

Table 30.2 $$\begin{array} { | c | c | c | c | c | } 
\hline \begin{array} { c } 
\text { Nurrber of } \
\text { stylists (per } \
\text { week) }
\end{array} & \begin{array} { c } 
\text { Total output } \
\text { (per week) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { physical } \
\text { product } \
\text { (output per } \
\text { stylist) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars per } \
\text { week) }
\end{array} & \begin{array} { c } 
\text { Marginal revenue } \
\text { product (dollars } \
\text { per stylist) }
\end{array} \
\hline 0 & \text { c } & \ldots & & \ldots \
\hline 1 & 6 t & & \
\hline 2 & 80 & & \
\hline 3 & 9 d & & \
\hline 4 & 94 & & \
\hline
\end{array}$$ Table 30.2 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists.In the spaces provided,compute the marginal physical product (MPP)of the hair stylists,total revenue,and marginal revenue product of the stylists,assuming that a hair stylist charges $60 per appointment.What is the marginal revenue product of the second hairstylist?

Accepted Answer

A) $80 per week. 
B) $1,200 per week. 
C) $20 per week. 
D) $4,800 per week. 
A) $80 per week. 
B) $1,200 per week. 
C) $20 per week. 
D) $4,800 per week.

Question 18

The intersection of the labor market supply and market demand curves establishes the minimum wage.

Accepted Answer

A) True 
 B)False

Question 19

The value of an hour of leisure can best be estimated as

Accepted Answer

A) Zero since no income is earned. 
B) The hourly wage that could have been earned. 
C) Total recreational expenditures divided by hours of leisure. 
D) The value of any productive work,although such a value is lower than what could have been earned. 
A) Zero since no income is earned. 
B) The hourly wage that could have been earned. 
C) Total recreational expenditures divided by hours of leisure. 
D) The value of any productive work,although such a value is lower than what could have been earned.

Question 20

The opportunity wage is often a better measure of executive pay than

Accepted Answer

A) MPP because executives do not have an MPP. 
B) MRP because of the difficulty in quantifying executive output. 
C) Derived demand because the elasticity of supply for an individual is greater than 1.0. 
D) Opportunity costs of executive leisure. 
A) MPP because executives do not have an MPP. 
B) MRP because of the difficulty in quantifying executive output. 
C) Derived demand because the elasticity of supply for an individual is greater than 1.0. 
D) Opportunity costs of executive leisure.

Exam 30: The Labor Market

Students who major in computer science are paid a lot more when they graduate than those who major in philosophy because

If wages are relatively high,the individual labor supply curve may

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

Opportunity wage refers to the

A production process is a specific combination of resources used to produce a good or service.

The law of diminishing returns means that marginal costs will eventually rise as a firm produces more.

Table 30.5 Output (urits) Labor (urits) Output (urits) Capital (urits) 10 1 20 1 26 2 56 2 38 3 86 3 Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of labor?

If the cost efficiency of input A is 45 pounds per $1 of cost,and the cost efficiency of input B is 40 pounds per $1 of cost,then input A is more cost-efficient than input B.

If we move to the right along the upward-sloping labor supply curve,we observe that the cost of labor

If the number of available workers of a particular type increases,which of the following shifts should occur in the labor market for the particular type of labor?

When there are more qualified applicants than job openings,this indicates that the

The market supply curve for labor curve is upward-sloping because

As more hours are worked,the marginal utility of leisure time tends to

A competitive firm should continue to hire workers until the MRP is equal to

The intersection of the labor market supply and market demand curves establishes the minimum wage.

The value of an hour of leisure can best be estimated as

The opportunity wage is often a better measure of executive pay than

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

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