Question 1

If Anh's elasticity of labor supply is 1.5 and she increases her supply of labor by 5 percent,then the wage rate must have

Accepted Answer

A) Increased by 3.3 percent. 
B) Increased by 3.0 percent. 
C) Increased by 7.5 percent. 
D) Decreased by 7.5 percent. 
A) Increased by 3.3 percent. 
B) Increased by 3.0 percent. 
C) Increased by 7.5 percent. 
D) Decreased by 7.5 percent.

Question 2

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 marginal revenue product of the second worker hired is

Accepted Answer

A) $4 per hour. 
B) $6 per hour. 
C) $24 per hour. 
D) $40 per hour. 
A) $4 per hour. 
B) $6 per hour. 
C) $24 per hour. 
D) $40 per hour.

Question 3

Which of the following would not shift the market demand for labor,ceteris paribus?

Accepted Answer

A) The wage paid to labor. 
B) The demand for final products. 
C) The productivity of labor. 
D) The number of employers. 
A) The wage paid to labor. 
B) The demand for final products. 
C) The productivity of labor. 
D) The number of employers.

Question 4

The argument is sometimes made that the United States should not trade with low-wage countries.The reasoning is that more highly paid U.S.workers cannot compete,and U.S.jobs are lost.What is wrong with this argument?

Accepted Answer

The argument is based on the false premi

Question 5

President Obama wanted to increase the federal minimum wage.

Accepted Answer

A) True 
 B)False

Question 6

For a minimum wage to have any impact on a labor market,it must be set at a level

Accepted Answer

A) Higher than the equilibrium wage. 
B) Higher than MPP. 
C) Higher than MRP. 
D) Consistent with economic growth. 
A) Higher than the equilibrium wage. 
B) Higher than MPP. 
C) Higher than MRP. 
D) Consistent with economic growth.

Question 7

The marginal revenue product of labor is equal to

Accepted Answer

A) The marginal physical product multiplied by the price. 
B) The change in the quantity of labor divided by the change in total revenue. 
C) The change in total output divided by the change in the quantity of labor. 
D) The percentage change in total revenue divided by the percentage change in the quantity of labor. 
A) The marginal physical product multiplied by the price. 
B) The change in the quantity of labor divided by the change in total revenue. 
C) The change in total output divided by the change in the quantity of labor. 
D) The percentage change in total revenue divided by the percentage change in the quantity of labor.

Question 8

A profit-maximizing firm should continue to hire workers until the MRP has declined to the level of the market wage rate in a competitive labor market.

Accepted Answer

A) True 
 B)False

Question 9

If the marginal revenue product of labor improves,which of the following shifts in the labor market should occur?

Accepted Answer

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

Question 10

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.In Table 30.2,suppose a hairstylist is paid $600 per week.How many hairstylists should a profit-maximizing salon hire?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
A) 1. 
B) 2. 
C) 3. 
D) 4.

Question 11

If the MPP of an additional unit of labor is 3 units per hour,product price is constant at $8 per unit,and the wage rate is $26 per hour,then

Accepted Answer

A) The additional unit of labor should be employed. 
B) The additional unit of labor should not be employed because it costs more than it is worth. 
C) The employer should lower wages and accept less employment of labor. 
D) Product price must be reduced if profits are to be made. 
A) The additional unit of labor should be employed. 
B) The additional unit of labor should not be employed because it costs more than it is worth. 
C) The employer should lower wages and accept less employment of labor. 
D) Product price must be reduced if profits are to be made.

Question 12

When the minimum wage is set below the market equilibrium wage,it does not affect the market.

Accepted Answer

A) True 
 B)False

Question 13

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.In Table 30.2,as more stylists are hired,

Accepted Answer

A) There are diminishing returns. 
B) There are economies of scale. 
C) There are diseconomies of scale. 
D) MRP increases. 
A) There are diminishing returns. 
B) There are economies of scale. 
C) There are diseconomies of scale. 
D) MRP increases.

Question 14

Workers typically require higher wages in order to work additional hours because of the

Accepted Answer

A) Increasing opportunity cost of labor. 
B) Increasing marginal utility of income. 
C) Decreasing value of leisure time forgone. 
D) Constant marginal utility of income. 
A) Increasing opportunity cost of labor. 
B) Increasing marginal utility of income. 
C) Decreasing value of leisure time forgone. 
D) Constant marginal utility of income.

Question 15

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 capital?

Accepted Answer

A) 6 units per $1 of cost. 
B) 36 units per $1 of cost. 
C) 56 units per $1 of cost. 
D) 9.33 units per $1 of cost. 
A) 6 units per $1 of cost. 
B) 36 units per $1 of cost. 
C) 56 units per $1 of cost. 
D) 9.33 units per $1 of cost.

Question 16

The elasticity of labor supply measures the

Accepted Answer

A) Opportunity cost of labor. 
B) Magnitude of the substitution effect of labor. 
C) Responsiveness of the wage rate to changes in the labor supplied. 
D) Responsiveness of labor supplied to changes in the wage rate. 
A) Opportunity cost of labor. 
B) Magnitude of the substitution effect of labor. 
C) Responsiveness of the wage rate to changes in the labor supplied. 
D) Responsiveness of labor supplied to changes in the wage rate.

Question 17

If consumers decide to buy fewer strawberries,then the

Accepted Answer

A) Demand for strawberry pickers will fall. 
B) Demand for strawberry pickers will rise. 
C) Quantity demanded of strawberry pickers will fall. 
D) Quantity demanded of strawberry pickers will rise. 
A) Demand for strawberry pickers will fall. 
B) Demand for strawberry pickers will rise. 
C) Quantity demanded of strawberry pickers will fall. 
D) Quantity demanded of strawberry pickers will rise.

Question 18

The efficiency decision involves choosing the input combination or process that

Accepted Answer

A) Produces the greatest output. 
B) Results in the lowest output per dollar of input. 
C) Results in the least cost for a given output. 
D) Has the lowest ratio of MPP to input. 
A) Produces the greatest output. 
B) Results in the lowest output per dollar of input. 
C) Results in the least cost for a given output. 
D) Has the lowest ratio of MPP to input.

Question 19

In Figure 30.2,a minimum wage of $20 will result in a

Accepted Answer

A) Shortage of 160 workers. 
B) Shortage of 180 hours. 
C) Surplus of 32 workers. 
D) Surplus of 20 workers. 
A) Shortage of 160 workers. 
B) Shortage of 180 hours. 
C) Surplus of 32 workers. 
D) Surplus of 20 workers.

Question 20

Cost efficiency is achieved when the MPP of a worker relative to the worker's wage is the same for all workers.

Accepted Answer

A) True 
 B)False

Exam 30: The Labor Market

If Anh's elasticity of labor supply is 1.5 and she increases her supply of labor by 5 percent,then the wage rate must have

Which of the following would not shift the market demand for labor,ceteris paribus?

The argument is sometimes made that the United States should not trade with low-wage countries.The reasoning is that more highly paid U.S.workers cannot compete,and U.S.jobs are lost.What is wrong with this argument?

President Obama wanted to increase the federal minimum wage.

For a minimum wage to have any impact on a labor market,it must be set at a level

The marginal revenue product of labor is equal to

A profit-maximizing firm should continue to hire workers until the MRP has declined to the level of the market wage rate in a competitive labor market.

If the marginal revenue product of labor improves,which of the following shifts in the labor market should occur?

If the MPP of an additional unit of labor is 3 units per hour,product price is constant at $8 per unit,and the wage rate is $26 per hour,then

When the minimum wage is set below the market equilibrium wage,it does not affect the market.

Workers typically require higher wages in order to work additional hours because of the

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 capital?

The elasticity of labor supply measures the

If consumers decide to buy fewer strawberries,then the

The efficiency decision involves choosing the input combination or process that

In Figure 30.2,a minimum wage of $20 will result in a

Cost efficiency is achieved when the MPP of a worker relative to the worker's wage is the same for all workers.

Economics: the Core Issues

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