Question 1

The United States suffers more from strikes than Japan but fewer strikes than Canada.

Accepted Answer

A) True 
 B)False

Question 2

A person's decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain amount of leisure per week.

Accepted Answer

A) True 
 B)False

Question 3

Unions can only achieve wage gains by sacrificing employment.

Accepted Answer

A) True 
 B)False

Question 4

Economic rents can lead to large wage differentials.

Accepted Answer

A) True 
 B)False

Question 5

Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in employment.

Accepted Answer

A) True 
 B)False

Question 6

American unions came under increasing pressure in the 1950s because of stronger competition both at home and abroad.

Accepted Answer

A) True 
 B)False

Question 7

The supply curve of truck drivers is upward sloping and demand curve is downward sloping.A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will ____ the equilibrium wage of truck drivers and ____ the number of drivers employed.

Accepted Answer

A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase 
A)  decrease; decrease 
B)  decrease; increase 
C)  increase; decrease 
D)  increase; increase

Question 8

Explain the expression "time is more valuable than money." Explain in words and use a diagram to illustrate the implications of this for a person's labor supply curve.

Accepted Answer

A person has a certain amount of time th

Question 9

Wages in American industry are very high because of wage laws.

Accepted Answer

A) True 
 B)False

Question 10

The concept of economic rent would be more applicable to the earnings of

Accepted Answer

A)  a secretary. 
B)  Peyton Manning. 
C)  a doctor or a lawyer. 
D)  only a landowner. 
A)  a secretary. 
B)  Peyton Manning. 
C)  a doctor or a lawyer. 
D)  only a landowner.

Question 11

The human capital model assumes that

Accepted Answer

A)  education is a productive investment that raises total output. 
B)  education does not change potential productivity, but it does save resources by reducing sorting costs for employers. 
C)  the educational system is a very expensive process to legitimize the intergenerational transmission of privileged status. 
D)  such factors as the love of learning should be included in the analysis. 
A)  education is a productive investment that raises total output. 
B)  education does not change potential productivity, but it does save resources by reducing sorting costs for employers. 
C)  the educational system is a very expensive process to legitimize the intergenerational transmission of privileged status. 
D)  such factors as the love of learning should be included in the analysis.

Question 12

The fact that invention is based largely on fixed costs and is a public good means that which of the following is not relevant to the process?

Accepted Answer

A)  average total cost 
B)  marginal cost 
C)  external cost 
D)  average variable cost 
A)  average total cost 
B)  marginal cost 
C)  external cost 
D)  average variable cost

Question 13

Explain why on average the profit levels for invention and entrepreneurship are generally so low.

Accepted Answer

Although a new invention initially impli

Question 14

The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

Accepted Answer

A) True 
 B)False

Question 15

Figure 20-3
  
-Figure 20-3 shows a worker's backward-bending supply curve of labor.Which of the following statements is correct?

Accepted Answer

A)  The substitution effect of a change in the wage dominates the income effect at all points on the curve. 
B)  The income effect of a change in the wage dominates the substitution effect at all points on the curve. 
C)  Above W*, the substitution effect of a change in the wage dominates the income effect; below W*, the income effect dominates the substitution effect. 
D)  Above W*, the income effect of a change in the wage dominates the substitution effect; below W*, the substitution effect dominates the income effect. 
A)  The substitution effect of a change in the wage dominates the income effect at all points on the curve. 
B)  The income effect of a change in the wage dominates the substitution effect at all points on the curve. 
C)  Above W*, the substitution effect of a change in the wage dominates the income effect; below W*, the income effect dominates the substitution effect. 
D)  Above W*, the income effect of a change in the wage dominates the substitution effect; below W*, the substitution effect dominates the income effect.

Question 16

A tax on wages will

Accepted Answer

A)  reduce labor supply since leisure becomes cheaper. 
B)  raise labor supply since income is reduced. 
C)  have an unpredictable impact on labor supply since there are both substitution and income effects. 
D)  have a predictable impact since economists know substitution effects will dominate. 
A)  reduce labor supply since leisure becomes cheaper. 
B)  raise labor supply since income is reduced. 
C)  have an unpredictable impact on labor supply since there are both substitution and income effects. 
D)  have a predictable impact since economists know substitution effects will dominate.

Question 17

All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

Accepted Answer

A) True 
 B)False

Question 18

A minimum wage law might increase wages without reducing employment if the hiring firm is

Accepted Answer

A)  in perfect competition. 
B)  a monopolist. 
C)  a monopolistic competitor. 
D)  a monopsonist. 
A)  in perfect competition. 
B)  a monopolist. 
C)  a monopolistic competitor. 
D)  a monopsonist.

Question 19

According to the process of creative destruction, at first the entrepreneur will be able to sell her product for

Accepted Answer

A)  a low price because it is not well known. 
B)  a high price because there is no competition. 
C)  a fair price because these are contestable markets. 
D)  at a price of zero until the market is created. 
A)  a low price because it is not well known. 
B)  a high price because there is no competition. 
C)  a fair price because these are contestable markets. 
D)  at a price of zero until the market is created.

Question 20

Figure 20-4
  
-In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

Accepted Answer

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

Exam 20: Labor and Entrepreneurship: The Human Inputs

The United States suffers more from strikes than Japan but fewer strikes than Canada.

A person's decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain amount of leisure per week.

Unions can only achieve wage gains by sacrificing employment.

Economic rents can lead to large wage differentials.

Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in employment.

American unions came under increasing pressure in the 1950s because of stronger competition both at home and abroad.

The supply curve of truck drivers is upward sloping and demand curve is downward sloping.A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will ____ the equilibrium wage of truck drivers and ____ the number of drivers employed.

Explain the expression "time is more valuable than money." Explain in words and use a diagram to illustrate the implications of this for a person's labor supply curve.

Wages in American industry are very high because of wage laws.

The concept of economic rent would be more applicable to the earnings of

The human capital model assumes that

The fact that invention is based largely on fixed costs and is a public good means that which of the following is not relevant to the process?

Explain why on average the profit levels for invention and entrepreneurship are generally so low.

The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto manufacturing companies can do nothing in response.

Figure 20-3 -Figure 20-3 shows a worker's backward-bending supply curve of labor.Which of the following statements is correct?

A tax on wages will

All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

A minimum wage law might increase wages without reducing employment if the hiring firm is

According to the process of creative destruction, at first the entrepreneur will be able to sell her product for

Figure 20-4 -In Figure 20-4, which panel depicts a union suffering unemployment during a recession rather than allowing the wage to fall?

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

Filters

The supply curve of truck drivers is upward sloping and demand curve is downward sloping.A reduction in the price of hauling freight by truck relative to the price of hauling freight by rail will the equilibrium wage of truck drivers and the number of drivers employed.