Question 1

The derived demand for labor is determined by

Accepted Answer

A) labor's wage. 
B) labor's marginal revenue. 
C) the marginal cost of the input labor. 
D) labor's marginal revenue product. 
A) labor's wage. 
B) labor's marginal revenue. 
C) the marginal cost of the input labor. 
D) labor's marginal revenue product.

Question 2

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 3

In a famous series of commercials, the International Ladies' Garment Workers Union (ILGWU)urged buyers to "look for the union label" and to avoid buying clothes not made by ILGWU members. Through the commercials, the ILGWU tried to attain its goals by

Accepted Answer

A) restricting the number of ILGWU members. 
B) featherbedding. 
C) raising the marginal revenue products of ILGWU members. 
D) creating lower prices for goods made by ILGWU members. 
A) restricting the number of ILGWU members. 
B) featherbedding. 
C) raising the marginal revenue products of ILGWU members. 
D) creating lower prices for goods made by ILGWU members.

Question 4

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 5

Given a fixed amount of time, a decision to supply labor or not is simultaneously a decision to

Accepted Answer

A) demand goods and services or not. 
B) demand leisure or not. 
C) supply capital and land or not. 
D) supply leisure or not. 
A) demand goods and services or not. 
B) demand leisure or not. 
C) supply capital and land or not. 
D) supply leisure or not.

Question 6

A labor union is an organization representing workers in negotiations with employers over wages, benefits, and working conditions.

Accepted Answer

A) True 
 B)False

Question 7

A monopsony is a market situation in which there is only one seller.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

There is strong evidence that entrepreneurs are characteristically

Accepted Answer

A) driven by greed. 
B) overoptimistic. 
C) not good business people. 
D) satisfied with the status quo. 
A) driven by greed. 
B) overoptimistic. 
C) not good business people. 
D) satisfied with the status quo.

Question 10

Over the last century,

Accepted Answer

A) hours worked have increased as wages have increased. 
B) hours worked have decreased as wages have increased. 
C) hours worked have increased as wages have decreased. 
D) hours worked have decreased as wages have decreased 
A) hours worked have increased as wages have increased. 
B) hours worked have decreased as wages have increased. 
C) hours worked have increased as wages have decreased. 
D) hours worked have decreased as wages have decreased

Question 11

In the United States, because men on average earn more than women, the substitution effect tends to outweigh the income affect when wages increase.

Accepted Answer

A) True 
 B)False

Question 12

The consensus among researchers is that union workers earn 15 percent more than otherwise identical nonunion workers. This means unions have probably raised wages

Accepted Answer

A) exactly 15 percent. 
B) less than 15 percent. 
C) at least 15 percent. 
D) more or less than 15 percent, but one cannot tell exactly. 
A) exactly 15 percent. 
B) less than 15 percent. 
C) at least 15 percent. 
D) more or less than 15 percent, but one cannot tell exactly.

Question 13

P = MC is a recipe for financial loss in an innovative firm established by an innovative entrepreneur. Explain.

Accepted Answer

Invention cannot be successful financial

Question 14

Firms operating in competitive markets have little incentive to innovate.

Accepted Answer

A) True 
 B)False

Question 15

When large oligopolistic firms negotiate with the unions of their employees, the resulting bargaining process closely resembles

Accepted Answer

A) perfect competition. 
B) a dual labor market. 
C) monopolistic competition. 
D) bilateral monopoly. 
A) perfect competition. 
B) a dual labor market. 
C) monopolistic competition. 
D) bilateral monopoly.

Question 16

Since a union represents individuals rather than firms, it cannot be considered a monopoly.

Accepted Answer

A) True 
 B)False

Question 17

History has shown that over the long run, labor-saving technology has actually not reduced employment.

Accepted Answer

A) True 
 B)False

Question 18

The labor supply curve bends backward because

Accepted Answer

A) income effects are greater than substitution effects at higher wages. 
B) substitution effects are greater than income effects at higher wages. 
C) income effects are greater than substitution effects at lower wages. 
D) substitution effects are greater than income effects at lower wages. 
A) income effects are greater than substitution effects at higher wages. 
B) substitution effects are greater than income effects at higher wages. 
C) income effects are greater than substitution effects at lower wages. 
D) substitution effects are greater than income effects at lower wages.

Question 19

The concept of economic rent applies to

Accepted Answer

A) all wage and salary earners. 
B) no wage or salary earners. 
C) only owners of real estate. 
D) people with rare valuable skills. 
A) all wage and salary earners. 
B) no wage or salary earners. 
C) only owners of real estate. 
D) people with rare valuable skills.

Question 20

Explain the three growth-creating properties of innovation.

Accepted Answer

1. Innovation can create cumulative chan

Exam 19: Labor and Entrepreneurship: the Human Inputs

The derived demand for labor is determined by

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?

In a famous series of commercials, the International Ladies' Garment Workers Union (ILGWU)urged buyers to "look for the union label" and to avoid buying clothes not made by ILGWU members. Through the commercials, the ILGWU tried to attain its goals by

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

Given a fixed amount of time, a decision to supply labor or not is simultaneously a decision to

A labor union is an organization representing workers in negotiations with employers over wages, benefits, and working conditions.

A monopsony is a market situation in which there is only one seller.

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

There is strong evidence that entrepreneurs are characteristically

Over the last century,

In the United States, because men on average earn more than women, the substitution effect tends to outweigh the income affect when wages increase.

The consensus among researchers is that union workers earn 15 percent more than otherwise identical nonunion workers. This means unions have probably raised wages

P = MC is a recipe for financial loss in an innovative firm established by an innovative entrepreneur. Explain.

Firms operating in competitive markets have little incentive to innovate.

When large oligopolistic firms negotiate with the unions of their employees, the resulting bargaining process closely resembles

Since a union represents individuals rather than firms, it cannot be considered a monopoly.

History has shown that over the long run, labor-saving technology has actually not reduced employment.

The labor supply curve bends backward because

The concept of economic rent applies to

Explain the three growth-creating properties of innovation.

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

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

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

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