Question 1

During the twentieth century, the real income of the average American grew by a factor of more than seven.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would likely not be a goal of a union?

Accepted Answer

A) Increasing the size of the union 
B) Increasing union income 
C) Increasing wages of union members 
D) Increasing wages of nonunion members 
A) Increasing the size of the union 
B) Increasing union income 
C) Increasing wages of union members 
D) Increasing wages of nonunion members

Question 3

Explain how productivity growth has led to labor market realignment in the United States.

Accepted Answer

Productivity has cut jobs drastically in

Question 4

Firms operating in competitive markets have little incentive to innovate.

Accepted Answer

A) True 
 B)False

Question 5

The term "bilateral monopoly" refers to market situations in which

Accepted Answer

A) there are two participants on the selling side. 
B) there are two participants on the buying side. 
C) there is a monopoly on the selling side and a monopsony on the buying side. 
D) a monopoly has evaded antitrust laws. 
A) there are two participants on the selling side. 
B) there are two participants on the buying side. 
C) there is a monopoly on the selling side and a monopsony on the buying side. 
D) a monopoly has evaded antitrust laws.

Question 6

Labor strikes are a significant cause of lost production.

Accepted Answer

A) True 
 B)False

Question 7

Capitalism is an economic system in which there is public ownership of the means of production and resource allocation is determined through markets.

Accepted Answer

A) True 
 B)False

Question 8

In general, an increase in wages will lead to some reaction in line with

Accepted Answer

A) the income effect but not the substitution effect. 
B) the substitution effect but not the income effect. 
C) both the income and substitution effect. 
D) neither the income effect nor the substitution effect. 
A) the income effect but not the substitution effect. 
B) the substitution effect but not the income effect. 
C) both the income and substitution effect. 
D) neither the income effect nor the substitution effect.

Question 9

The substitution effect from a change in wages is

Accepted Answer

A) when people switch to higher paying jobs. 
B) when people work less as their income increases. 
C) when companies use more capital or other inputs as wages increase and more labor when wages decrease. 
D) when people have an incentive to work more when wages increase and less when they decrease. 
A) when people switch to higher paying jobs. 
B) when people work less as their income increases. 
C) when companies use more capital or other inputs as wages increase and more labor when wages decrease. 
D) when people have an incentive to work more when wages increase and less when they decrease.

Question 10

Labor union membership, as a percent of workers, has steadily declined since the 1930s.

Accepted Answer

A) True 
 B)False

Question 11

What is the most probable reason why garbage men have higher wages than waiters?

Accepted Answer

A) Marketplace discrimination 
B) Active unionization in the garbage collection field 
C) Higher demand for garbage men than nurses 
D) The nonmonetary attractiveness of garbage collection causing fewer people to want to be garbage men 
A) Marketplace discrimination 
B) Active unionization in the garbage collection field 
C) Higher demand for garbage men than nurses 
D) The nonmonetary attractiveness of garbage collection causing fewer people to want to be garbage men

Question 12

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 13

Increased productivity of workers in manufacturing has

Accepted Answer

A) increased employment in manufacturing. 
B) increased employment in agriculture. 
C) decreased employment in agriculture. 
D) decreased employment in services. 
E) increased employment in services. 
A) increased employment in manufacturing. 
B) increased employment in agriculture. 
C) decreased employment in agriculture. 
D) decreased employment in services. 
E) increased employment in services.

Question 14

Entrepreneurial profits are very low because entrepreneurs are generally overly

Accepted Answer

A) pessimistic and receive psychological rewards for their work. 
B) pessimistic and incur psychological costs from their work. 
C) optimistic and receive psychological rewards for their work. 
D) optimistic and incur psychological costs from their work. 
A) pessimistic and receive psychological rewards for their work. 
B) pessimistic and incur psychological costs from their work. 
C) optimistic and receive psychological rewards for their work. 
D) optimistic and incur psychological costs from their work.

Question 15

Suppose the goal of a union is to maximize the total income of all workers it represents.In this case, it will probably aim for a wage at which the elasticity of demand for workers is

Accepted Answer

A) 0 
B) infinite. 
C) 1 
D) ranging from 2 to 5. 
A) 0 
B) infinite. 
C) 1 
D) ranging from 2 to 5.

Question 16

What is the term used for the process by which an entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, making older substitutes obsolete?

Accepted Answer

A) Creative destruction 
B) Innovation 
C) The substitution effect 
D) Backward-bending innovation 
A) Creative destruction 
B) Innovation 
C) The substitution effect 
D) Backward-bending innovation

Question 17

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

Accepted Answer

A) True 
 B)False

Question 18

If wages are above the MRP, a firm should employ more labor.

Accepted Answer

A) True 
 B)False

Question 19

Anything that influences a good's price or the marginal physical product of labor will influence wages.

Accepted Answer

A) True 
 B)False

Question 20

Teenage unemployment rates have consistently been much higher than the overall unemployment rate and black teenagers have fared worse than white teenagers.

Accepted Answer

A) True 
 B)False

Exam 19: Labor and Entrepreneurship: the Human Inputs

During the twentieth century, the real income of the average American grew by a factor of more than seven.

Which of the following would likely not be a goal of a union?

Explain how productivity growth has led to labor market realignment in the United States.

Firms operating in competitive markets have little incentive to innovate.

The term "bilateral monopoly" refers to market situations in which

Labor strikes are a significant cause of lost production.

Capitalism is an economic system in which there is public ownership of the means of production and resource allocation is determined through markets.

In general, an increase in wages will lead to some reaction in line with

The substitution effect from a change in wages is

Labor union membership, as a percent of workers, has steadily declined since the 1930s.

What is the most probable reason why garbage men have higher wages than waiters?

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

Increased productivity of workers in manufacturing has

Entrepreneurial profits are very low because entrepreneurs are generally overly

Suppose the goal of a union is to maximize the total income of all workers it represents.In this case, it will probably aim for a wage at which the elasticity of demand for workers is

What is the term used for the process by which an entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, making older substitutes obsolete?

Collaborative research is especially important in high-technology sectors because a single firm might not have the resources to develop a significant innovation.

If wages are above the MRP, a firm should employ more labor.

Anything that influences a good's price or the marginal physical product of labor will influence wages.

Teenage unemployment rates have consistently been much higher than the overall unemployment rate and black teenagers have fared worse than white teenagers.

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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