Question 1

If an individual possesses an ability that others cannot acquire, payment to that individual is

Accepted Answer

A) partly economic rent. 
B) a return called the real wage. 
C) a return from investment in human capital. 
D) comparable to the return to well-trained nurses. 
A) partly economic rent. 
B) a return called the real wage. 
C) a return from investment in human capital. 
D) comparable to the return to well-trained nurses.

Question 2

Which of the following is not a reason unions became much less effective in the 1990s?

Accepted Answer

A) Greater competition in domestic markets 
B) Increased foreign competition 
C) Downsizing by American firms 
D) Increased regulatory scrutiny 
A) Greater competition in domestic markets 
B) Increased foreign competition 
C) Downsizing by American firms 
D) Increased regulatory scrutiny

Question 3

Economists would describe a labor union as a

Accepted Answer

A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) monopsony. 
A) trade organization. 
B) necessity for competitive labor markets. 
C) labor monopoly. 
D) monopsony.

Question 4

The marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Accepted Answer

A) True 
 B)False

Question 5

Innovative firms face competition much more quickly than they did 100 years ago.

Accepted Answer

A) True 
 B)False

Question 6

Income effect of lowering wages implies

Accepted Answer

A) workers prefer leisure to work. 
B) an increase in the productivity of labor. 
C) a fall in the demand for labor. 
D) workers would want to work more. 
A) workers prefer leisure to work. 
B) an increase in the productivity of labor. 
C) a fall in the demand for labor. 
D) workers would want to work more.

Question 7

What percentage of American workers now belong to labor unions?

Accepted Answer

A) Less than 20 percent 
B) About 40 percent 
C) About 60 percent 
D) More than 80 percent 
A) Less than 20 percent 
B) About 40 percent 
C) About 60 percent 
D) More than 80 percent

Question 8

One implication of human capital theory is that college graduates should earn substantially less than high school graduates.

Accepted Answer

A) True 
 B)False

Question 9

Explain what is meant when it is said that the demand for labor is a derived demand.

Accepted Answer

The demand for labor is derived from the

Question 10

The income effect of higher wages leads workers to want to work more.

Accepted Answer

A) True 
 B)False

Question 11

Explain the theory of investment in human capital and the specific role that education plays in the theory.

Accepted Answer

The central view of human capital theory

Question 12

Which of the following is not true for the wages of professional athletes?

Accepted Answer

A) They are related to demand for their services. 
B) They include substantial economic rents. 
C) They are high because of scarcity. 
D) They are not related to human capital investment. 
A) They are related to demand for their services. 
B) They include substantial economic rents. 
C) They are high because of scarcity. 
D) They are not related to human capital investment.

Question 13

The labor market is composed of

Accepted Answer

A) a relatively homogeneous supply of labor and downward-sloping demand curve. 
B) a vertical supply curve for labor and relatively elastic market demand. 
C) many submarkets for labor of different types. 
D) more teenagers than any other age group of labor. 
A) a relatively homogeneous supply of labor and downward-sloping demand curve. 
B) a vertical supply curve for labor and relatively elastic market demand. 
C) many submarkets for labor of different types. 
D) more teenagers than any other age group of labor.

Question 14

If wages decrease and workers choose to work more hours or more shifts, their behavior is evidence of

Accepted Answer

A) the substitution effect. 
B) the income effect. 
C) rational expectations. 
D) rational ignorance. 
A) the substitution effect. 
B) the income effect. 
C) rational expectations. 
D) rational ignorance.

Question 15

Which of the following is not a reason workers in American industry are more productive than those in many other countries? because of

Accepted Answer

A) The large supplies of machinery available 
B) Abundant natural resources 
C) Technical know-how 
D) American exceptionalism 
A) The large supplies of machinery available 
B) Abundant natural resources 
C) Technical know-how 
D) American exceptionalism

Question 16

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 17

Which of the following does not affect the marginal physical product of labor?

Accepted Answer

A) A worker's abilities and degree of work effort 
B) The amount of capital available per worker 
C) The technical know-how of the management of the firm 
D) An increase in wages 
A) A worker's abilities and degree of work effort 
B) The amount of capital available per worker 
C) The technical know-how of the management of the firm 
D) An increase in wages

Question 18

Recent studies have shown increases in the minimum wage have significantly reduced employment of teenagers.

Accepted Answer

A) True 
 B)False

Question 19

Most collective bargaining situations lead to strikes.

Accepted Answer

A) True 
 B)False

Question 20

The substitution effect is thought to dominate the behavior of low-wage workers.

Accepted Answer

A) True 
 B)False

Exam 19: Labor and Entrepreneurship: the Human Inputs

If an individual possesses an ability that others cannot acquire, payment to that individual is

Which of the following is not a reason unions became much less effective in the 1990s?

Economists would describe a labor union as a

The marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Innovative firms face competition much more quickly than they did 100 years ago.

Income effect of lowering wages implies

What percentage of American workers now belong to labor unions?

One implication of human capital theory is that college graduates should earn substantially less than high school graduates.

Explain what is meant when it is said that the demand for labor is a derived demand.

The income effect of higher wages leads workers to want to work more.

Explain the theory of investment in human capital and the specific role that education plays in the theory.

Which of the following is not true for the wages of professional athletes?

The labor market is composed of

If wages decrease and workers choose to work more hours or more shifts, their behavior is evidence of

Which of the following is not a reason workers in American industry are more productive than those in many other countries? because of

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

Which of the following does not affect the marginal physical product of labor?

Recent studies have shown increases in the minimum wage have significantly reduced employment of teenagers.

Most collective bargaining situations lead to strikes.

The substitution effect is thought to dominate the behavior of low-wage workers.

What Is Economics

The Economony: 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

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of 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

Contemporary Issues in the Useconomy

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