Question 1

The standard cobweb model makes which two assumptions?

Accepted Answer

A)  Workers are forward looking, and job adjustments take time. 
B)  Workers are myopic, and job adjustments take time. 
C)  Workers are forward looking, and job adjustments are instantaneous. 
D)  Workers are myopic, and job adjustments are instantaneous. 
E)  Workers are myopic, and retraining of one's skills happens instantaneously. 
A)  Workers are forward looking, and job adjustments take time. 
B)  Workers are myopic, and job adjustments take time. 
C)  Workers are forward looking, and job adjustments are instantaneous. 
D)  Workers are myopic, and job adjustments are instantaneous. 
E)  Workers are myopic, and retraining of one's skills happens instantaneously.

Question 2

The assumption that a firm operates in a competitive labor market means that the firm

Accepted Answer

A)  offers a real wage rate that is indexed for inflation. 
B)  faces an upward-sloped marginal cost of labor curve. 
C)  faces a downward-sloped marginal cost of labor curve. 
D)  faces a constant wage regardless of how much labor it employs. 
E)  does not use capital in the production process. 
A)  offers a real wage rate that is indexed for inflation. 
B)  faces an upward-sloped marginal cost of labor curve. 
C)  faces a downward-sloped marginal cost of labor curve. 
D)  faces a constant wage regardless of how much labor it employs. 
E)  does not use capital in the production process.

Question 3

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Accepted Answer

A)  the marginal cost of labor curve is above the labor supply curve. 
B)  the labor supply curve is above the marginal cost of labor curve. 
C)  labor is supplied inelastically. 
D)  the firm's labor demand curve is downward sloping. 
E)  the firm's objective is to minimize the wage rather than to maximize profits. 
A)  the marginal cost of labor curve is above the labor supply curve. 
B)  the labor supply curve is above the marginal cost of labor curve. 
C)  labor is supplied inelastically. 
D)  the firm's labor demand curve is downward sloping. 
E)  the firm's objective is to minimize the wage rather than to maximize profits.

Question 4

Which of the following would prevent a single equilibrium wage existing across all labor markets?

Accepted Answer

A)  a competitive labor market 
B)  workers having various skills and preferences 
C)  firms being free to enter any of the labor markets 
D)  potential workers being able to freely enter any of the labor markets 
E)  a payroll tax paid equally by workers and firms 
A)  a competitive labor market 
B)  workers having various skills and preferences 
C)  firms being free to enter any of the labor markets 
D)  potential workers being able to freely enter any of the labor markets 
E)  a payroll tax paid equally by workers and firms

Question 5

A profit-maximizing monopsonist

Accepted Answer

A)  pays the same wage to all types of labor. 
B)  hires an equal number of male and female workers and pays them the same wage. 
C)  hires more minority workers than nonminority workers, but pays the minority workers less than the nonminorities. 
D)  hires fewer workers and pays its workers less than it would if it were operating in a competitive labor market. 
E)  substitutes low-skilled labor for high-skilled labor in the long run. 
A)  pays the same wage to all types of labor. 
B)  hires an equal number of male and female workers and pays them the same wage. 
C)  hires more minority workers than nonminority workers, but pays the minority workers less than the nonminorities. 
D)  hires fewer workers and pays its workers less than it would if it were operating in a competitive labor market. 
E)  substitutes low-skilled labor for high-skilled labor in the long run.

Question 6

Standard economic theory suggests which of the following in terms of labor migration across states in the United States?

Accepted Answer

A)  Workers migrate randomly. 
B)  Workers migrate at most twice per lifetime. 
C)  Workers are likely to migrate from low-wage states to high-wage states. 
D)  Workers are likely to migrate from high-wage states to low-wage states. 
E)  Older workers are more likely to migrate than are younger workers. 
A)  Workers migrate randomly. 
B)  Workers migrate at most twice per lifetime. 
C)  Workers are likely to migrate from low-wage states to high-wage states. 
D)  Workers are likely to migrate from high-wage states to low-wage states. 
E)  Older workers are more likely to migrate than are younger workers.

Question 7

If labor supply is perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except

Accepted Answer

A)  reduce the wage rate by exactly the amount of the tax. 
B)  leave employment levels unchanged. 
C)  leave firm profits unchanged. 
D)  reduce total output. 
E)  generate tax revenue paid to the government. 
A)  reduce the wage rate by exactly the amount of the tax. 
B)  leave employment levels unchanged. 
C)  leave firm profits unchanged. 
D)  reduce total output. 
E)  generate tax revenue paid to the government.

Question 8

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

Accepted Answer

A)  the firm receiving zero profit. 
B)  the firm substituting capital for labor. 
C)  the firm receiving all of the surplus. 
D)  the firm avoiding payroll taxes. 
E)  workers being unwilling to work at the offered wage. 
A)  the firm receiving zero profit. 
B)  the firm substituting capital for labor. 
C)  the firm receiving all of the surplus. 
D)  the firm avoiding payroll taxes. 
E)  workers being unwilling to work at the offered wage.

Question 9

A perfectly discriminating monopsonist

Accepted Answer

A)  pays the equilibrium wage to all workers. 
B)  pays each worker his or her reservation wage. 
C)  receives zero profit in the long run. 
D)  disregards minimum wage laws. 
E)  faces an increasing value of the marginal product curve. 
A)  pays the equilibrium wage to all workers. 
B)  pays each worker his or her reservation wage. 
C)  receives zero profit in the long run. 
D)  disregards minimum wage laws. 
E)  faces an increasing value of the marginal product curve.

Question 10

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Accepted Answer

A)  an increase in immigration 
B)  an increase in the output price 
C)  a decrease in productivity 
D)  an increase in native labor supply 
E)  a decrease in labor demand 
A)  an increase in immigration 
B)  an increase in the output price 
C)  a decrease in productivity 
D)  an increase in native labor supply 
E)  a decrease in labor demand

The standard cobweb model makes which two assumptions?

The assumption that a firm operates in a competitive labor market means that the firm

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Which of the following would prevent a single equilibrium wage existing across all labor markets?

A profit-maximizing monopsonist

Standard economic theory suggests which of the following in terms of labor migration across states in the United States?

If labor supply is perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

A perfectly discriminating monopsonist

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Introduction to Labor Economics

Labor Supply

Labor Demand

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 4: Labor Market Equilibrium

The standard cobweb model makes which two assumptions?

The assumption that a firm operates in a competitive labor market means that the firm

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Which of the following would prevent a single equilibrium wage existing across all labor markets?

A profit-maximizing monopsonist

Standard economic theory suggests which of the following in terms of labor migration across states in the United States?

If labor supply is perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

A perfectly discriminating monopsonist

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Introduction to Labor Economics

Labor Supply

Labor Demand

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters