Question 1

A decrease in the price of the output will decrease the firm's demand for labor.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 11-3 Labor supply curve  
-In Exhibit 11-3, the total wage cost of hiring 6 employees is:

Accepted Answer

A)  $18 per hour. 
B)  $36 per hour. 
C)  $3 per hour. 
D)  $108 per hour. 
E)  $648 per hour. 
A)  $18 per hour. 
B)  $36 per hour. 
C)  $3 per hour. 
D)  $108 per hour. 
E)  $648 per hour.

Question 3

An increase in demand for French fries will cause equilibrium wage rates:

Accepted Answer

A)  and quantities of potato workers hired to rise. 
B)  and quantities of potato workers hired to fall. 
C)  to rise and quantities of potato workers hired to fall. 
D)  to fall and quantities of potato workers hired to rise. 
E)  and quantities of potato workers hired to stay the same. 
A)  and quantities of potato workers hired to rise. 
B)  and quantities of potato workers hired to fall. 
C)  to rise and quantities of potato workers hired to fall. 
D)  to fall and quantities of potato workers hired to rise. 
E)  and quantities of potato workers hired to stay the same.

Question 4

A technological advance that increases labor productivity will:

Accepted Answer

A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. 
A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls.

Question 5

A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least:

Accepted Answer

A)  92 cars per day. 
B)  100 cars per day. 
C)  104 cars per day. 
D)  110 cars per day. 
A)  92 cars per day. 
B)  100 cars per day. 
C)  104 cars per day. 
D)  110 cars per day.

Question 6

If a union is able to successfully lobby Congress to limit imports of rival products, and thus to raise the demand (and thus price) for the goods or services they make, then which of the following best describes the outcome? ​

Accepted Answer

A)  ​The supply of labor will increase. 
B)  ​The demand for labor will increase. 
C)  ​The supply of labor will decrease. 
D)  ​The demand for labor will decrease. 
A)  ​The supply of labor will increase. 
B)  ​The demand for labor will increase. 
C)  ​The supply of labor will decrease. 
D)  ​The demand for labor will decrease.

Question 7

Exhibit 11-2 Labor and output data $$\begin{array} { | c | c | } 
\hline \text { Labor } & \text { Output } \
\hline 0 & 0 \
1 & 20 \
2 & 45 \
3 & 80 \
4 & 100 \
5 & 110 \
\hline
\end{array}$$
-In Exhibit 11-2, if product price is fixed at $5, the MRP of the third worker is equal to:

Accepted Answer

A)  $35. 
B)  $125. 
C)  $25. 
D)  $175. 
E)  $100. 
A)  $35. 
B)  $125. 
C)  $25. 
D)  $175. 
E)  $100.

Question 8

Which of the following most clearly illustrates the concept of derived demand?

Accepted Answer

A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise. 
A)  An increase in the price of steak causes the demand for poultry to increase. 
B)  An increase in the demand for new houses leads to an increase in the demand for construction workers. 
C)  An increase in consumer income leads to an increase in the demand for services provided by the government. 
D)  An increase in the demand for new cars causes the demand for used automobiles to rise.

Question 9

Featherbedding allows unions to increase wages by:

Accepted Answer

A)  limiting the supply of labor. 
B)  increasing firms' demand for labor. 
C)  forcing firms to accept higher-than-equilibrium wages. 
D)  reducing labor share of payroll taxes. 
A)  limiting the supply of labor. 
B)  increasing firms' demand for labor. 
C)  forcing firms to accept higher-than-equilibrium wages. 
D)  reducing labor share of payroll taxes.

Question 10

The economic theory of labor markets leads to the conclusion that professional athletes who are paid tens of thousands of dollars per appearance must be paid more than their marginal revenue product.
​

Accepted Answer

A) True 
 B)False

Question 11

The marginal factor cost for a monopsonist is:

Accepted Answer

A)  equal to the market wage rate. 
B)  above the market wage rate. 
C)  below the market wage rate. 
D)  affected by the fact that workers are less willing to work than under conditions of perfect competition. 
E)  lower than the marginal revenue product of labor in equilibrium. 
A)  equal to the market wage rate. 
B)  above the market wage rate. 
C)  below the market wage rate. 
D)  affected by the fact that workers are less willing to work than under conditions of perfect competition. 
E)  lower than the marginal revenue product of labor in equilibrium.

Question 12

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

Accepted Answer

A)  primary demand. 
B)  secondary demand. 
C)  dependent demand. 
D)  derived demand. 
A)  primary demand. 
B)  secondary demand. 
C)  dependent demand. 
D)  derived demand.

Question 13

Exhibit 11-11 Labor wage and cost data $$\begin{array} { | c | c | c | c | } 
\hline \text { Labor } & \text { Wage } & \text { TWC } & \text { MFC } \
\hline 10 & \$ & \$ 50.00 & \$ \
11 & 5.80 & & \
12 & & & 17.80 \
13 & & 102.70 & \
14 & & 126.00 & \
15 & & & 46.50 \
\hline
\end{array}$$
-In Exhibit 11-11, the marginal factor cost of the 14th employee is equal to:

Accepted Answer

A)  $9.00. 
B)  $126.00. 
C)  $46.50. 
D)  $23.30. 
E)  $28.80. 
A)  $9.00. 
B)  $126.00. 
C)  $46.50. 
D)  $23.30. 
E)  $28.80.

Question 14

The demand for labor is:

Accepted Answer

A)  derived demand. 
B)  featherbedding demand. 
C)  marginal utility demand. 
D)  all of these. 
A)  derived demand. 
B)  featherbedding demand. 
C)  marginal utility demand. 
D)  all of these.

Question 15

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?

Accepted Answer

A)  $40. 
B)  $45. 
C)  $50. 
D)  $55. 
E)  $60. 
A)  $40. 
B)  $45. 
C)  $50. 
D)  $55. 
E)  $60.

Question 16

In a monopsonistic labor market, workers are paid a wage:

Accepted Answer

A)  below their MRP. 
B)  equal to the intersection of MRP and S. 
C)  equal to the MFC. 
D)  equal to the price of the output. 
E)  above their MFC. 
A)  below their MRP. 
B)  equal to the intersection of MRP and S. 
C)  equal to the MFC. 
D)  equal to the price of the output. 
E)  above their MFC.

Question 17

If a product's price increases, then its:

Accepted Answer

A)  MP will increase. 
B)  MFC will increase. 
C)  MRP will increase. 
D)  MP will decrease. 
A)  MP will increase. 
B)  MFC will increase. 
C)  MRP will increase. 
D)  MP will decrease.

Question 18

The best number of workers for any employer to hire is that quantity in which:

Accepted Answer

A)  the marginal revenue product equals the marginal factor cost. 
B)  the marginal revenue product exceeds the marginal factor cost. 
C)  total costs are minimized. 
D)  total revenue is maximized. 
E)  none of these 
A)  the marginal revenue product equals the marginal factor cost. 
B)  the marginal revenue product exceeds the marginal factor cost. 
C)  total costs are minimized. 
D)  total revenue is maximized. 
E)  none of these

Question 19

For a perfectly competitive firm, marginal revenue product is equal to price minus marginal revenue.

Accepted Answer

A) True 
 B)False

Question 20

As the price of a competitive firm's product rises, the firm's demand for labor also rises.

Accepted Answer

A) True 
 B)False

A decrease in the price of the output will decrease the firm's demand for labor.

Exhibit 11-3 Labor supply curve -In Exhibit 11-3, the total wage cost of hiring 6 employees is:

An increase in demand for French fries will cause equilibrium wage rates:

A technological advance that increases labor productivity will:

A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least:

If a union is able to successfully lobby Congress to limit imports of rival products, and thus to raise the demand (and thus price) for the goods or services they make, then which of the following best describes the outcome?

Exhibit 11-2 Labor and output data Labor Output 0 0 1 20 2 45 3 80 4 100 5 110 -In Exhibit 11-2, if product price is fixed at $5, the MRP of the third worker is equal to:

Which of the following most clearly illustrates the concept of derived demand?

Featherbedding allows unions to increase wages by:

The economic theory of labor markets leads to the conclusion that professional athletes who are paid tens of thousands of dollars per appearance must be paid more than their marginal revenue product.

The marginal factor cost for a monopsonist is:

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

Exhibit 11-11 Labor wage and cost data Labor Wage TWC MFC 10 \ \ 50.00 \ 11 5.80 12 17.80 13 102.70 14 126.00 15 46.50 -In Exhibit 11-11, the marginal factor cost of the 14th employee is equal to:

The demand for labor is:

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?

In a monopsonistic labor market, workers are paid a wage:

If a product's price increases, then its:

The best number of workers for any employer to hire is that quantity in which:

For a perfectly competitive firm, marginal revenue product is equal to price minus marginal revenue.

As the price of a competitive firm's product rises, the firm's demand for labor also rises.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 11: Labor Markets

A decrease in the price of the output will decrease the firm's demand for labor.

Exhibit 11-3 Labor supply curve -In Exhibit 11-3, the total wage cost of hiring 6 employees is:

An increase in demand for French fries will cause equilibrium wage rates:

A technological advance that increases labor productivity will:

A competitive car wash currently hires 4 workers, who together can wash 80 cars per day. The market price of car washes is $5 per wash, and the price of workers is $60 per day. The car wash should hire a fifth worker if it would increase total production to at least:

If a union is able to successfully lobby Congress to limit imports of rival products, and thus to raise the demand (and thus price) for the goods or services they make, then which of the following best describes the outcome? ​

Exhibit 11-2 Labor and output data Labor Output 0 0 1 20 2 45 3 80 4 100 5 110 -In Exhibit 11-2, if product price is fixed at $5, the MRP of the third worker is equal to:

Which of the following most clearly illustrates the concept of derived demand?

Featherbedding allows unions to increase wages by:

The economic theory of labor markets leads to the conclusion that professional athletes who are paid tens of thousands of dollars per appearance must be paid more than their marginal revenue product. ​

The marginal factor cost for a monopsonist is:

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

Exhibit 11-11 Labor wage and cost data Labor Wage TWC MFC 10 \ \ 50.00 \ 11 5.80 12 17.80 13 102.70 14 126.00 15 46.50 -In Exhibit 11-11, the marginal factor cost of the 14th employee is equal to:

The demand for labor is:

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?

In a monopsonistic labor market, workers are paid a wage:

If a product's price increases, then its:

The best number of workers for any employer to hire is that quantity in which:

For a perfectly competitive firm, marginal revenue product is equal to price minus marginal revenue.

As the price of a competitive firm's product rises, the firm's demand for labor also rises.

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

If a union is able to successfully lobby Congress to limit imports of rival products, and thus to raise the demand (and thus price) for the goods or services they make, then which of the following best describes the outcome?

The economic theory of labor markets leads to the conclusion that professional athletes who are paid tens of thousands of dollars per appearance must be paid more than their marginal revenue product.