Question 1

In Figure 30.1,the labor supply could shift from S1 to S2 due to all of the following except

Accepted Answer

A) Fewer workers preferring to work in this labor market. 
B) An increase in the number of workers willing to work in this labor market. 
C) A decrease in the payroll tax on workers. 
D) A decrease in the attraction of leisure activities. 
A) Fewer workers preferring to work in this labor market. 
B) An increase in the number of workers willing to work in this labor market. 
C) A decrease in the payroll tax on workers. 
D) A decrease in the attraction of leisure activities.

Question 2

Ceteris paribus,all of the following result when the minimum wage is raised and is above the equilibrium in a competitive market,except

Accepted Answer

A) Some workers lose their jobs. 
B) There are fewer workers available to work. 
C) Workers with a marginal revenue product below the minimum wage are worse off. 
D) There are fewer jobs available. 
A) Some workers lose their jobs. 
B) There are fewer workers available to work. 
C) Workers with a marginal revenue product below the minimum wage are worse off. 
D) There are fewer jobs available.

Question 3

The substitution effect of wages states that a decreased wage rate

Accepted Answer

A) Encourages people to consume less leisure. 
B) Will shift the labor supply curve rightward. 
C) Will lead to a movement up along the existing supply curve. 
D) Encourages people to work less hours. 
A) Encourages people to consume less leisure. 
B) Will shift the labor supply curve rightward. 
C) Will lead to a movement up along the existing supply curve. 
D) Encourages people to work less hours.

Question 4

A decreasing marginal utility of income contributes to the upward slope of an individual's supply curve.

Accepted Answer

A) True 
 B)False

Question 5

Because of the law of diminishing returns,as additional workers are hired,total output

Accepted Answer

A) Rises at a constant rate at all output levels. 
B) Rises at a diminishing rate initially and eventually falls. 
C) Falls at a diminishing rate at all output levels. 
D) Falls at an increasing rate at all output levels. 
A) Rises at a constant rate at all output levels. 
B) Rises at a diminishing rate initially and eventually falls. 
C) Falls at a diminishing rate at all output levels. 
D) Falls at an increasing rate at all output levels.

Question 6

If the wage rate drops,an employer will be willing to hire more workers,ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 7

Why is the demand curve for labor downward-sloping? What causes the labor demand curve for a firm to shift?

Accepted Answer

The marginal revenue product curve is th

Question 8

The number of hours that a worker is willing to work is determined by the trade-off between the increasing

Accepted Answer

A) Total utility of income and the decreasing marginal utility of leisure. 
B) Value of leisure time and the decreasing marginal utility of income. 
C) Total utility of leisure and the decreasing total utility of income. 
D) Marginal utility of both income and leisure. 
A) Total utility of income and the decreasing marginal utility of leisure. 
B) Value of leisure time and the decreasing marginal utility of income. 
C) Total utility of leisure and the decreasing total utility of income. 
D) Marginal utility of both income and leisure.

Question 9

In Figure 30.1,the shift in the labor supply curve from S1 to S2 means that

Accepted Answer

A) The marginal utility of labor has decreased. 
B) Workers are being paid higher wage rates,given their taste for work. 
C) The marginal utility of labor relative to leisure has increased. 
D) The demand for labor has increased,and this encourages more labor force participation. 
A) The marginal utility of labor has decreased. 
B) Workers are being paid higher wage rates,given their taste for work. 
C) The marginal utility of labor relative to leisure has increased. 
D) The demand for labor has increased,and this encourages more labor force participation.

Question 10

If Lauren's substitution effects outweigh her income effects,her labor supply curve will

Accepted Answer

A) Appear horizontal. 
B) Slope upward. 
C) Bend backward. 
D) Appear vertical. 
A) Appear horizontal. 
B) Slope upward. 
C) Bend backward. 
D) Appear vertical.

Question 11

Republicans argue that labor demand is ________,so ________ jobs will be lost when the minimum wage is raised

Accepted Answer

A) inelastic;few 
B) inelastic;many 
C) elastic;few 
D) elastic;many 
A) inelastic;few 
B) inelastic;many 
C) elastic;few 
D) elastic;many

Question 12

Marginal physical product diminishes as additional workers are hired because

Accepted Answer

A) Each worker has an increasingly smaller amount of other factors with which to work. 
B) Each worker has an increasingly larger amount of other factors with which to work. 
C) Later hires are not as skilled as earlier hires. 
D) Later hires do not work as hard as earlier hires. 
A) Each worker has an increasingly smaller amount of other factors with which to work. 
B) Each worker has an increasingly larger amount of other factors with which to work. 
C) Later hires are not as skilled as earlier hires. 
D) Later hires do not work as hard as earlier hires.

Question 13

Explain the concept of a backward-bending labor supply curve.

Accepted Answer

As wage rates climb,the substi

Question 14

The cost efficiency of labor is equal to the

Accepted Answer

A) Marginal cost of output. 
B) MPP of labor times the wage rate. 
C) MPP of labor divided by the wage rate. 
D) MRP of labor divided by the unit price of labor. 
A) Marginal cost of output. 
B) MPP of labor times the wage rate. 
C) MPP of labor divided by the wage rate. 
D) MRP of labor divided by the unit price of labor.

Question 15

The labor supply curve starts to bend backward once the

Accepted Answer

A) Income effect exceeds the substitution effect. 
B) Substitution effect exceeds the income effect. 
C) Marginal revenue product of labor equals the marginal utility of leisure. 
D) Total utility of leisure outweighs the total utility of labor. 
A) Income effect exceeds the substitution effect. 
B) Substitution effect exceeds the income effect. 
C) Marginal revenue product of labor equals the marginal utility of leisure. 
D) Total utility of leisure outweighs the total utility of labor.

Question 16

If Janella increases her supply of labor by 6 percent in response to a 5 percent increase in the wage rate,her elasticity of labor supply must be

Accepted Answer

A) 5.0. 
B) 6.0. 
C) 1.2. 
D) 0.83. 
A) 5.0. 
B) 6.0. 
C) 1.2. 
D) 0.83.

Question 17

The market supply of labor represents the sum of all individual labor supply decisions.

Accepted Answer

A) True 
 B)False

Question 18

The substitution effect of wages explains shifts in the labor supply curve.

Accepted Answer

A) True 
 B)False

Question 19

If the MPP is declining,ceteris paribus,the MRP must decline.

Accepted Answer

A) True 
 B)False

Question 20

If Amber is willing to work additional hours if her wage rate increases,the substitution effect must outweigh the income effect.

Accepted Answer

A) True 
 B)False

Exam 30: The Labor Market

In Figure 30.1,the labor supply could shift from S1 to S2 due to all of the following except

Ceteris paribus,all of the following result when the minimum wage is raised and is above the equilibrium in a competitive market,except

The substitution effect of wages states that a decreased wage rate

A decreasing marginal utility of income contributes to the upward slope of an individual's supply curve.

Because of the law of diminishing returns,as additional workers are hired,total output

If the wage rate drops,an employer will be willing to hire more workers,ceteris paribus.

Why is the demand curve for labor downward-sloping? What causes the labor demand curve for a firm to shift?

The number of hours that a worker is willing to work is determined by the trade-off between the increasing

In Figure 30.1,the shift in the labor supply curve from S1 to S2 means that

If Lauren's substitution effects outweigh her income effects,her labor supply curve will

Republicans argue that labor demand is ________,so ________ jobs will be lost when the minimum wage is raised

Marginal physical product diminishes as additional workers are hired because

Explain the concept of a backward-bending labor supply curve.

The cost efficiency of labor is equal to the

The labor supply curve starts to bend backward once the

If Janella increases her supply of labor by 6 percent in response to a 5 percent increase in the wage rate,her elasticity of labor supply must be

The market supply of labor represents the sum of all individual labor supply decisions.

The substitution effect of wages explains shifts in the labor supply curve.

If the MPP is declining,ceteris paribus,the MRP must decline.

If Amber is willing to work additional hours if her wage rate increases,the substitution effect must outweigh the income effect.

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

Filters

In Figure 30.1,the labor supply could shift from S₁ to S₂ due to all of the following except

In Figure 30.1,the shift in the labor supply curve from S₁ to S₂ means that

Republicans argue that labor demand is ,so jobs will be lost when the minimum wage is raised