Question 1

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

Accepted Answer

A)  total wage cost curve is horizontal. 
B)  total wage cost curve is a straight upward sloping line. 
C)  MP must be constant. 
D)  total wage cost curve will increase at an increasing rate. 
E)  total wage cost curve will increase at a decreasing rate. 
A)  total wage cost curve is horizontal. 
B)  total wage cost curve is a straight upward sloping line. 
C)  MP must be constant. 
D)  total wage cost curve will increase at an increasing rate. 
E)  total wage cost curve will increase at a decreasing rate.

Question 2

Exhibit 10-1  Labor and output data   In Exhibit 10-1, if product price is fixed at $5, the MRP of the 4th worker is equal to:

Accepted Answer

A)  $35. 
B)  $125. 
C)  $25. 
D)  $175. 
E)  $100. 
A)  $35. 
B)  $125. 
C)  $25. 
D)  $175. 
E)  $100.

Question 3

An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than:

Accepted Answer

A)  $50 per day. 
B)  $150 per day. 
C)  $200 per day. 
D)  $300 per day. 
A)  $50 per day. 
B)  $150 per day. 
C)  $200 per day. 
D)  $300 per day.

Question 4

An advance in technology which increases labor productivity will shift the:

Accepted Answer

A)  labor demand curve to the left. 
B)  MFC curve to the left. 
C)  MP curve downward. 
D)  labor demand curve to the right. 
E)  product demand to the right. 
A)  labor demand curve to the left. 
B)  MFC curve to the left. 
C)  MP curve downward. 
D)  labor demand curve to the right. 
E)  product demand to the right.

Question 5

In the United States, approximately what percentage of the total income is earned by the highest 5 percent of the families?

Accepted Answer

A)  10 percent. 
B)  20 percent. 
C)  30 percent. 
D)  40 percent. 
A)  10 percent. 
B)  20 percent. 
C)  30 percent. 
D)  40 percent.

Question 6

Assume Ajax Company employs 100 workers and total revenue is $400 thousand. When Ajax Company employs 101 workers, total revenue is $405 thousand. The marginal revenue product of the 101st workers is:

Accepted Answer

A)  $40 thousand. 
B)  $5 thousand. 
C)  $405 thousand. 
D)  none of the above. 
A)  $40 thousand. 
B)  $5 thousand. 
C)  $405 thousand. 
D)  none of the above.

Question 7

Contrary to popular belief, the richest families in the United States became slightly poorer in recent years.

Accepted Answer

A) True 
 B)False

Question 8

An example of in-kind assistance to the poor is TANF.

Accepted Answer

A) True 
 B)False

Question 9

The Social Security Act was passed:

Accepted Answer

A)  in 1955. 
B)  just after World War II. 
C)  in 1935. 
D)  in 1964. 
A)  in 1955. 
B)  just after World War II. 
C)  in 1935. 
D)  in 1964.

Question 10

Marginal revenue product is measured by:

Accepted Answer

A)  MR x price. 
B)  MR x MC. 
C)  TR/MP. 
D)  MP x price. 
E)  TC/MP. 
A)  MR x price. 
B)  MR x MC. 
C)  TR/MP. 
D)  MP x price. 
E)  TC/MP.

Question 11

Union membership as a percentage of the civilian labor force is lower in the United States than in Germany or Japan.

Accepted Answer

A) True 
 B)False

Question 12

A firm's demand curve for labor coincides with the:

Accepted Answer

A)  marginal cost curve. 
B)  average cost curve. 
C)  marginal revenue curve. 
D)  marginal revenue product curve. 
A)  marginal cost curve. 
B)  average cost curve. 
C)  marginal revenue curve. 
D)  marginal revenue product curve.

Question 13

Which of the following countries has the largest union membership measured as the percentage of civilian employees in unions?

Accepted Answer

A)  The United States. 
B)  Japan. 
C)  The United Kingdom. 
D)  Sweden. 
A)  The United States. 
B)  Japan. 
C)  The United Kingdom. 
D)  Sweden.

Question 14

If the MRP of labor decreases, labor:

Accepted Answer

A)  demand will decrease. 
B)  demand will increase. 
C)  supply will increase. 
D)  supply will decrease. 
E)  demand and supply will be unaffected. 
A)  demand will decrease. 
B)  demand will increase. 
C)  supply will increase. 
D)  supply will decrease. 
E)  demand and supply will be unaffected.

Question 15

Exhibit 10-7  Income distribution for three countries   Exhibit 10-7 shows the percentage of income received by each population quintile. In Country I we can conclude that the:

Accepted Answer

A)  richest 20 percent of the population received 25 percent of the economy's income. 
B)  richest 20 percent of the population received 40 percent of the economy's income. 
C)  richest 20 percent of the population received 80 percent of the economy's income. 
D)  least-wealthy 20 percent of the population received 40 percent of the economy's income. 
E)  richest 40 percent of the population received 25 percent of the economy's income. 
A)  richest 20 percent of the population received 25 percent of the economy's income. 
B)  richest 20 percent of the population received 40 percent of the economy's income. 
C)  richest 20 percent of the population received 80 percent of the economy's income. 
D)  least-wealthy 20 percent of the population received 40 percent of the economy's income. 
E)  richest 40 percent of the population received 25 percent of the economy's income.

Question 16

Since the 1970s, the percentage of total income earned by the poorest 20 percent of American families has fallen.

Accepted Answer

A) True 
 B)False

Question 17

The labor supply curve facing an individual employer in a perfectly competitive labor market is:

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  greater than MFC. 
E)  the MRP curve. 
A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  greater than MFC. 
E)  the MRP curve.

Question 18

Exhibit 10-4  Sally's labor supply data   In Exhibit 10-4, if the wage rate is $10, how many hours will Sally work?

Accepted Answer

A)  20. 
B)  30. 
C)  35. 
D)  40. 
E)  50. 
A)  20. 
B)  30. 
C)  35. 
D)  40. 
E)  50.

Question 19

If product price increases, then:

Accepted Answer

A)  MP will increase. 
B)  MFC will increase. 
C)  MRP will increase. 
D)  MP will decrease. 
A)  MP will increase. 
B)  MFC will increase. 
C)  MRP will increase. 
D)  MP will decrease.

Question 20

An individual firm in a competitive labor market faces a(n):

Accepted Answer

A)  horizontal labor supply curve. 
B)  backward-bending labor supply curve. 
C)  downward-sloping labor supply curve. 
D)  upward-sloping labor supply curve. 
E)  vertical labor supply curve. 
A)  horizontal labor supply curve. 
B)  backward-bending labor supply curve. 
C)  downward-sloping labor supply curve. 
D)  upward-sloping labor supply curve. 
E)  vertical labor supply curve.

Exam 10: Labor Markets and Income Distribution

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

Exhibit 10-1 Labor and output data In Exhibit 10-1, if product price is fixed at $5, the MRP of the 4th worker is equal to:

An apple orchard currently hires 10 workers. The owner estimates that hiring an additional worker would increase apple yields by 20 bushels per day. The price of apples is $15 per bushel. The owner should hire the extra worker if the wage rate is no greater than:

An advance in technology which increases labor productivity will shift the:

In the United States, approximately what percentage of the total income is earned by the highest 5 percent of the families?

Assume Ajax Company employs 100 workers and total revenue is $400 thousand. When Ajax Company employs 101 workers, total revenue is $405 thousand. The marginal revenue product of the 101st workers is:

Contrary to popular belief, the richest families in the United States became slightly poorer in recent years.

An example of in-kind assistance to the poor is TANF.

The Social Security Act was passed:

Marginal revenue product is measured by:

Union membership as a percentage of the civilian labor force is lower in the United States than in Germany or Japan.

A firm's demand curve for labor coincides with the:

Which of the following countries has the largest union membership measured as the percentage of civilian employees in unions?

If the MRP of labor decreases, labor:

Exhibit 10-7 Income distribution for three countries Exhibit 10-7 shows the percentage of income received by each population quintile. In Country I we can conclude that the:

Since the 1970s, the percentage of total income earned by the poorest 20 percent of American families has fallen.

The labor supply curve facing an individual employer in a perfectly competitive labor market is:

Exhibit 10-4 Sally's labor supply data In Exhibit 10-4, if the wage rate is $10, how many hours will Sally work?

If product price increases, then:

An individual firm in a competitive labor market faces a(n):

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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