Question 1

Exhibit 11-12 A monopsonist
 
In Exhibit 11-12, we know this exhibit shows a monopsonistic labor market because:

Accepted Answer

A)  the MRP curve slopes down. 
B)  the market supply of labor curve is horizontal. 
C)  the MFC curve lies above the supply of labor curve. 
D)  the MRP curve lies below the supply of labor curve. 
A)  the MRP curve slopes down. 
B)  the market supply of labor curve is horizontal. 
C)  the MFC curve lies above the supply of labor curve. 
D)  the MRP curve lies below the supply of labor curve.

Question 2

Suppose a firm can hire 100 workers at $8.00 per hour but must pay $8.05 per hour to hire 101 workers. Marginal factor cost (MFC) for the 101st worker is approximately equal to:

Accepted Answer

A)  $8.00. 
B)  $8.05. 
C)  $13.05. 
D)  $13.00. 
A)  $8.00. 
B)  $8.05. 
C)  $13.05. 
D)  $13.00.

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. 
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.

Question 4

Exhibit 11-2 Labor and output data
 
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)  $80. 
D)  $175. 
A)  $35. 
B)  $125. 
C)  $80. 
D)  $175.

Question 5

Exhibit 11-4 Supply and demand curves for food servers
 
If the equilibrium wage rate in Exhibit 11-4 increased, the cause could be that:

Accepted Answer

A)  the wage increased. 
B)  the marginal product of labor decreased. 
C)  either the demand for labor increased or the supply of labor decreased. 
D)  the price of the product produced by the labor decreased. 
A)  the wage increased. 
B)  the marginal product of labor decreased. 
C)  either the demand for labor increased or the supply of labor decreased. 
D)  the price of the product produced by the labor decreased.

Question 6

If an employer currently finds that the MRP of its labor resources equals $67, and the MFC equals $56, what would you advise the firm to do?

Accepted Answer

A)  Stay at its current output level. 
B)  Hire additional workers. 
C)  Raise product prices. 
D)  Reduce employment. 
A)  Stay at its current output level. 
B)  Hire additional workers. 
C)  Raise product prices. 
D)  Reduce employment.

Question 7

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 8

If cats become a more popular pet in the United States than they are now, what can we expect to happen to the market for cat food workers?

Accepted Answer

A)  MP increases 
B)  MRP increases 
C)  wage decreases 
D)  MRP decreases 
A)  MP increases 
B)  MRP increases 
C)  wage decreases 
D)  MRP decreases

Question 9

Which of the following is the most accurate definition of a worker's marginal revenue product?

Accepted Answer

A)  The change in the firm's profits as the result of hiring an additional worker. 
B)  The change in the firm's total revenue as the result of hiring an additional worker. 
C)  The change in the firm's output as the result of hiring an additional worker. 
D)  The change in the firm's cost as the result of hiring an additional worker. 
A)  The change in the firm's profits as the result of hiring an additional worker. 
B)  The change in the firm's total revenue as the result of hiring an additional worker. 
C)  The change in the firm's output as the result of hiring an additional worker. 
D)  The change in the firm's cost as the result of hiring an additional worker.

Question 10

Which of the following statements is true ?

Accepted Answer

A)  Derived demand for labor depends on the demand for the other inputs into production. 
B)  Unions can either increase demand or decrease the supply of labor. 
C)  Investment in human capital is expected to decrease the demand for those workers because there will be a greater number of qualified workers available. 
D)  Unions can effectively increase wages by lobbying for looser immigration laws. 
A)  Derived demand for labor depends on the demand for the other inputs into production. 
B)  Unions can either increase demand or decrease the supply of labor. 
C)  Investment in human capital is expected to decrease the demand for those workers because there will be a greater number of qualified workers available. 
D)  Unions can effectively increase wages by lobbying for looser immigration laws.

Question 11

Exhibit 11-11 Labor wage and cost data
 
In Exhibit 11-11, the total wage cost of hiring 12 employees is equal to:

Accepted Answer

A)  $17.80. 
B)  $63.80. 
C)  $102.70. 
D)  $81.60. 
A)  $17.80. 
B)  $63.80. 
C)  $102.70. 
D)  $81.60.

Question 12

Exhibit 11-4 Supply and demand curves for food servers
 
In Exhibit 11-4, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage rate creates a(n):

Accepted Answer

A)  new labor market equilibrium. 
B)  excess demand for labor of 10 thousand food servers. 
C)  excess supply of labor of food servers. 
D)  situation of full employment for food servers. 
A)  new labor market equilibrium. 
B)  excess demand for labor of 10 thousand food servers. 
C)  excess supply of labor of food servers. 
D)  situation of full employment for food servers.

Question 13

If the wage rate is fixed at a certain level, the:

Accepted Answer

A)  labor supply curve is horizontal. 
B)  labor supply is a straight upward sloping line. 
C)  MP must be constant. 
D)  labor supply will increase at an increasing rate. 
A)  labor supply curve is horizontal. 
B)  labor supply is a straight upward sloping line. 
C)  MP must be constant. 
D)  labor supply will increase at an increasing rate.

Question 14

Harold Brown runs a company that sells encyclopedia sets for $250 each. When he employs 10 workers, they can sell 60 sets per week, while only 54 sets are sold when 9 workers are employed. What is the weekly marginal revenue product of the tenth worker?

Accepted Answer

A)  $250. 
B)  $1,250. 
C)  $1,500. 
D)  $15,000. 
A)  $250. 
B)  $1,250. 
C)  $1,500. 
D)  $15,000.

Question 15

Exhibit 11-8 A labor market
 
If the labor market shown in Exhibit 11-8 is competitive, the wage rate and number of workers employed will be determined at point:
​

Accepted Answer

A)  F. 
B)  B. 
C)  C. 
D)  D. 
A)  F. 
B)  B. 
C)  C. 
D)  D.

Question 16

If a town has a monopsony, this means:

Accepted Answer

A)  there is only one employer. 
B)  price discrimination takes place. 
C)  goods are priced too high. 
D)  no unions can exist. 
A)  there is only one employer. 
B)  price discrimination takes place. 
C)  goods are priced too high. 
D)  no unions can exist.

Question 17

Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:

Accepted Answer

A)  equal to that in a competitive labor market. 
B)  less than that in a competitive labor market. 
C)  greater than that in a competitive labor market. 
D)  there is insufficient information for a conclusion. 
A)  equal to that in a competitive labor market. 
B)  less than that in a competitive labor market. 
C)  greater than that in a competitive labor market. 
D)  there is insufficient information for a conclusion.

Question 18

In Exhibit 11-5, at what wage rate will the firms stop hiring these workers?

Accepted Answer

A)  $25.00. 
B)  $20.00. 
C)  $15.00. 
D)  $10.00. 
A)  $25.00. 
B)  $20.00. 
C)  $15.00. 
D)  $10.00.

Question 19

A monopsony will:

Accepted Answer

A)  hire more workers than a competitive employer. 
B)  pay a higher wage than a competitive employer. 
C)  employ a quantity of labor where the marginal revenue product equals the marginal factor cost. 
D)  have a marginal factor cost curve equal to the labor supply curve. 
A)  hire more workers than a competitive employer. 
B)  pay a higher wage than a competitive employer. 
C)  employ a quantity of labor where the marginal revenue product equals the marginal factor cost. 
D)  have a marginal factor cost curve equal to the labor supply curve.

Question 20

Explain how the presence of a superstar basketball player can increase the marginal revenue product of the other players on the team.

Accepted Answer

The superstar is a complement, raising t

Exam 11: Labor Markets

Exhibit 11-12 A monopsonist In Exhibit 11-12, we know this exhibit shows a monopsonistic labor market because:

Suppose a firm can hire 100 workers at $8.00 per hour but must pay $8.05 per hour to hire 101 workers. Marginal factor cost (MFC) for the 101st worker is approximately equal to:

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

Exhibit 11-2 Labor and output data In Exhibit 11-2, if product price is fixed at $5, the MRP of the third worker is equal to:

Exhibit 11-4 Supply and demand curves for food servers If the equilibrium wage rate in Exhibit 11-4 increased, the cause could be that:

If an employer currently finds that the MRP of its labor resources equals $67, and the MFC equals $56, what would you advise the firm to do?

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?

If cats become a more popular pet in the United States than they are now, what can we expect to happen to the market for cat food workers?

Which of the following is the most accurate definition of a worker's marginal revenue product?

Which of the following statements is true ?

Exhibit 11-11 Labor wage and cost data In Exhibit 11-11, the total wage cost of hiring 12 employees is equal to:

Exhibit 11-4 Supply and demand curves for food servers In Exhibit 11-4, suppose that in the interest of boosting incomes of the working poor, Congress imposes a minimum wage of $6.00 per hour. This minimum wage rate creates a(n):

If the wage rate is fixed at a certain level, the:

Harold Brown runs a company that sells encyclopedia sets for $250 each. When he employs 10 workers, they can sell 60 sets per week, while only 54 sets are sold when 9 workers are employed. What is the weekly marginal revenue product of the tenth worker?

Exhibit 11-8 A labor market If the labor market shown in Exhibit 11-8 is competitive, the wage rate and number of workers employed will be determined at point: ​

If a town has a monopsony, this means:

Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:

In Exhibit 11-5, at what wage rate will the firms stop hiring these workers?

A monopsony will:

Explain how the presence of a superstar basketball player can increase the marginal revenue product of the other players on the team.

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

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

Exhibit 11-8 A labor market If the labor market shown in Exhibit 11-8 is competitive, the wage rate and number of workers employed will be determined at point: