Question 1

If the rate of interest is 15 percent per year,the present value of the $200 to be received in two years is

Accepted Answer

A) $170.00. 
B) $185.00. 
C) $173.91. 
D) $264.50. 
E) $151.23. 
A) $170.00. 
B) $185.00. 
C) $173.91. 
D) $264.50. 
E) $151.23.

Question 2

A constraint on union effectiveness is

Accepted Answer

A) the downward-sloping labour demand curve. 
B) the minimum wage law. 
C) the Fair Labour Standards Practices Act. 
D) increasing export competitiveness. 
E) the competition of other unions. 
A) the downward-sloping labour demand curve. 
B) the minimum wage law. 
C) the Fair Labour Standards Practices Act. 
D) increasing export competitiveness. 
E) the competition of other unions.

Question 3

A shift in a firm's demand curve for labour occurs when there is a change in the

Accepted Answer

A) wage rate. 
B) opportunity cost of labour. 
C) price of the output. 
D) working-age population. 
E) marginal cost of labour. 
A) wage rate. 
B) opportunity cost of labour. 
C) price of the output. 
D) working-age population. 
E) marginal cost of labour.

Question 4

Suppose a profit-maximizing firm hires labour in a competitive labour market.If the value of marginal product of labour is greater than the wage rate,the firm should

Accepted Answer

A) increase the wage rate. 
B) decrease the wage rate. 
C) increase the quantity of labour it hires. 
D) decrease the quantity of labour it hires. 
E) shift to a more labour-intensive production process. 
A) increase the wage rate. 
B) decrease the wage rate. 
C) increase the quantity of labour it hires. 
D) decrease the quantity of labour it hires. 
E) shift to a more labour-intensive production process.

Question 5

If the supply of labour decreases,which of the following events will occur?

Accepted Answer

A) The wage rate will decrease and firms will increase the number of workers to the point at which the value of marginal product equals the new wage rate. 
B) The wage rate will decrease and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate. 
C) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate. 
D) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is greater than the new wage rate. 
E) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is less than the new wage rate. 
A) The wage rate will decrease and firms will increase the number of workers to the point at which the value of marginal product equals the new wage rate. 
B) The wage rate will decrease and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate. 
C) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product equals the new wage rate. 
D) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is greater than the new wage rate. 
E) The wage rate will increase and firms will decrease the number of workers to the point at which the value of marginal product is less than the new wage rate.

Question 6

Use the figure below to answer the following questions.
   
Figure 18.3.2
-Refer to Figure 18.3.2.Suppose this industry is initially in a monopsony situation and then the government introduces a minimum wage of $8 per hour.Choose the correct statement.

Accepted Answer

A) The wage rate rises, but employment decreases. 
B) The wage rate rises, but employment stays the same. 
C) The wage rate rises to $8 per hour, and employment increases to 800 hours. 
D) The wage rate rises to $8 per hour, and employment increases to 600 hours. 
E) The wage rate rises to $8 per hour, and employment increases to 500 hours. 
A) The wage rate rises, but employment decreases. 
B) The wage rate rises, but employment stays the same. 
C) The wage rate rises to $8 per hour, and employment increases to 800 hours. 
D) The wage rate rises to $8 per hour, and employment increases to 600 hours. 
E) The wage rate rises to $8 per hour, and employment increases to 500 hours.

Question 7

The demand curve for labour will shift rightward as a result of

Accepted Answer

A) a decrease in the price of the firm's output. 
B) an increase in the wage rate. 
C) a decrease in the price of a substitute factor of production. 
D) an increase in the price of a substitute factor of production. 
E) a decrease in the wage rate. 
A) a decrease in the price of the firm's output. 
B) an increase in the wage rate. 
C) a decrease in the price of a substitute factor of production. 
D) an increase in the price of a substitute factor of production. 
E) a decrease in the wage rate.

Question 8

Assuming r is the rate of interest,to compute the present value of a dollar to be received a year from today,you

Accepted Answer

A) multiply the dollar by r. 
B) divide the dollar by (1 - r). 
C) multiply the dollar by (1 + r). 
D) divide the dollar by r. 
E) divide the dollar by (1 + r). 
A) multiply the dollar by r. 
B) divide the dollar by (1 - r). 
C) multiply the dollar by (1 + r). 
D) divide the dollar by r. 
E) divide the dollar by (1 + r).

Question 9

A union is formed to restrict labour supply in a previously perfectly competitive labour market.If the union succeeds in raising the wage,

Accepted Answer

A) employment will fall. 
B) employment will rise. 
C) employment will not change. 
D) the total wage bill will rise. 
E) the total wage bill will fall. 
A) employment will fall. 
B) employment will rise. 
C) employment will not change. 
D) the total wage bill will rise. 
E) the total wage bill will fall.

Question 10

A technological change that increases the value of marginal product of labour shifts the labour

Accepted Answer

A) demand curve leftward. 
B) demand curve rightward. 
C) supply curve leftward. 
D) supply curve rightward. 
E) B and D. 
A) demand curve leftward. 
B) demand curve rightward. 
C) supply curve leftward. 
D) supply curve rightward. 
E) B and D.

Question 11

Which one of the following would unions be most likely to support?

Accepted Answer

A) increased barriers to imports 
B) eased immigration restrictions 
C) a decrease in the minimum wage 
D) decreasing demand for the goods their workers produce 
E) decreasing the marginal product of its workers 
A) increased barriers to imports 
B) eased immigration restrictions 
C) a decrease in the minimum wage 
D) decreasing demand for the goods their workers produce 
E) decreasing the marginal product of its workers

Question 12

To maximize profit,a firm hires labour until

Accepted Answer

A) there is no more labour available at the market wage rate. 
B) they can sell that labour for no more than what they paid for it. 
C) the wage rate paid to the labour equals the marginal cost of production. 
D) the additional benefit of hiring the labour is equal to the additional revenue the labour generates. 
E) the value of marginal product equals the wage rate. 
A) there is no more labour available at the market wage rate. 
B) they can sell that labour for no more than what they paid for it. 
C) the wage rate paid to the labour equals the marginal cost of production. 
D) the additional benefit of hiring the labour is equal to the additional revenue the labour generates. 
E) the value of marginal product equals the wage rate.

Question 13

A monopsony exists when there is

Accepted Answer

A) a single buyer in a market. 
B) a single seller in a market. 
C) a small number of large buyers in a market. 
D) a small number of large sellers in a market. 
E) an agreement amongst sellers in a market to set prices. 
A) a single buyer in a market. 
B) a single seller in a market. 
C) a small number of large buyers in a market. 
D) a small number of large sellers in a market. 
E) an agreement amongst sellers in a market to set prices.

Question 14

The Hotelling Principle states that

Accepted Answer

A) hotels will tend to be built next to major highways. 
B) equilibrium in natural resource markets occurs when the expected increase in the price of the resource over time is equal to the interest rate. 
C) the resource will be depleted at a rate equal to the rate of interest. 
D) natural resources should be depleted only for the production of goods that would help maintain environmental quality. 
E) we should conserve nonrenewable natural resources. 
A) hotels will tend to be built next to major highways. 
B) equilibrium in natural resource markets occurs when the expected increase in the price of the resource over time is equal to the interest rate. 
C) the resource will be depleted at a rate equal to the rate of interest. 
D) natural resources should be depleted only for the production of goods that would help maintain environmental quality. 
E) we should conserve nonrenewable natural resources.

Question 15

A decrease in the price of factors of production that are substitutes for labour shifts the labour

Accepted Answer

A) demand curve leftward. 
B) demand curve rightward. 
C) supply curve leftward. 
D) supply curve rightward. 
E) B and D. 
A) demand curve leftward. 
B) demand curve rightward. 
C) supply curve leftward. 
D) supply curve rightward. 
E) B and D.

Question 16

If the wage rate increases,the income effect gives a household the incentive to

Accepted Answer

A) raise its reservation wage. 
B) increase leisure and decrease work. 
C) increase work and decrease leisure. 
D) increase both work and leisure. 
E) decrease both work and leisure. 
A) raise its reservation wage. 
B) increase leisure and decrease work. 
C) increase work and decrease leisure. 
D) increase both work and leisure. 
E) decrease both work and leisure.

Question 17

The substitution effect on labour supply refers to the degree to which

Accepted Answer

A) the firm can substitute other factors of production for labour. 
B) buyers can substitute other products for the products that are made by organized labour. 
C) labour is willing to substitute nonlabour income for wages. 
D) labour prefers to substitute nonmonetary payments for money wages. 
E) labour is willing to substitute work for leisure. 
A) the firm can substitute other factors of production for labour. 
B) buyers can substitute other products for the products that are made by organized labour. 
C) labour is willing to substitute nonlabour income for wages. 
D) labour prefers to substitute nonmonetary payments for money wages. 
E) labour is willing to substitute work for leisure.

Question 18

If the present value of $100 received one year from now is $80,what is the annual interest rate?

Accepted Answer

A) 8 percent 
B) 10 percent 
C) 20 percent 
D) 25 percent 
E) 50 percent 
A) 8 percent 
B) 10 percent 
C) 20 percent 
D) 25 percent 
E) 50 percent

Question 19

Use the figure below to answer the following questions.
   
Figure 18.3.3
-Refer to Figure 18.3.3.Suppose the government passes a minimum wage law that prohibits anyone from hiring labour at less than $8 per hour.The monopsonist will hire

Accepted Answer

A) 250 hours of labour. 
B) 300 hours of labour. 
C) 350 hours of labour. 
D) 400 hours of labour. 
E) 450 hours of labour. 
A) 250 hours of labour. 
B) 300 hours of labour. 
C) 350 hours of labour. 
D) 400 hours of labour. 
E) 450 hours of labour.

Question 20

Unions try to raise the demand for their labour by

Accepted Answer

A) raising wages. 
B) encouraging imports. 
C) supporting less restrictive immigration laws. 
D) sponsoring training for union members. 
E) lobbying against minimum wage laws. 
A) raising wages. 
B) encouraging imports. 
C) supporting less restrictive immigration laws. 
D) sponsoring training for union members. 
E) lobbying against minimum wage laws.

Exam 18: Markets for Factors of Production

If the rate of interest is 15 percent per year,the present value of the $200 to be received in two years is

A constraint on union effectiveness is

A shift in a firm's demand curve for labour occurs when there is a change in the

Suppose a profit-maximizing firm hires labour in a competitive labour market.If the value of marginal product of labour is greater than the wage rate,the firm should

If the supply of labour decreases,which of the following events will occur?

Use the figure below to answer the following questions. Figure 18.3.2 -Refer to Figure 18.3.2.Suppose this industry is initially in a monopsony situation and then the government introduces a minimum wage of $8 per hour.Choose the correct statement.

The demand curve for labour will shift rightward as a result of

Assuming r is the rate of interest,to compute the present value of a dollar to be received a year from today,you

A union is formed to restrict labour supply in a previously perfectly competitive labour market.If the union succeeds in raising the wage,

A technological change that increases the value of marginal product of labour shifts the labour

Which one of the following would unions be most likely to support?

To maximize profit,a firm hires labour until

A monopsony exists when there is

The Hotelling Principle states that

A decrease in the price of factors of production that are substitutes for labour shifts the labour

If the wage rate increases,the income effect gives a household the incentive to

The substitution effect on labour supply refers to the degree to which

If the present value of $100 received one year from now is $80,what is the annual interest rate?

Use the figure below to answer the following questions. Figure 18.3.3 -Refer to Figure 18.3.3.Suppose the government passes a minimum wage law that prohibits anyone from hiring labour at less than $8 per hour.The monopsonist will hire

Unions try to raise the demand for their labour by

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Economic Inequality

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

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