Question 1

A technological advance that increases the productivity of teachers can be expected to have what effects on the equilibrium labor market for teachers?

Accepted Answer

A)  Wages will rise, and quantity of labor will fall. 
B)  Wages will rise, and quantity of labor will rise. 
C)  Wages will fall, and quantity of labor will fall. 
D)  Wages will fall, and quantity of labor will rise. 
E)  Wages and quantity of labor will remain the same. 
A)  Wages will rise, and quantity of labor will fall. 
B)  Wages will rise, and quantity of labor will rise. 
C)  Wages will fall, and quantity of labor will fall. 
D)  Wages will fall, and quantity of labor will rise. 
E)  Wages and quantity of labor will remain the same.

Question 2

In a competitive labor market, the change in total labor costs divided by the change in labor is always equal to:

Accepted Answer

A)  one. 
B)  the wage rate. 
C)  the number of firms in the market. 
D)  the change in total revenue. 
E)  the competitive market price of the output. 
A)  one. 
B)  the wage rate. 
C)  the number of firms in the market. 
D)  the change in total revenue. 
E)  the competitive market price of the output.

Question 3

Exhibit 10-5  A perfectly competitive labor market   In Exhibit 10-5, how many thousands of workers are firms willing to hire?

Accepted Answer

A)  20. 
B)  10. 
C)  15. 
D)  All 30 workers. 
A)  20. 
B)  10. 
C)  15. 
D)  All 30 workers.

Question 4

A technological advance that increases labor productivity will:

Accepted Answer

A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls. 
A)  lower wages. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
E)  decrease the demand for labor as MP falls.

Question 5

Exhibit 10-1  Labor and output data   In Exhibit 10-1, the marginal product of the 3rd unit of labor is equal to:

Accepted Answer

A)  80. 
B)  45. 
C)  35. 
D)  100. 
E)  25. 
A)  80. 
B)  45. 
C)  35. 
D)  100. 
E)  25.

Question 6

Which of the following best describes marginal revenue product (MRP)?

Accepted Answer

A)  MRP is the level of total revenue generated by total employment of labor and capital. 
B)  MRP is the change in total revenue caused by a one-unit increase in output. 
C)  MRP is the change in total revenue caused by a one-unit increase in a variable input such as labor. 
D)  MRP is total revenue divided by the total quantity of a variable input used. 
A)  MRP is the level of total revenue generated by total employment of labor and capital. 
B)  MRP is the change in total revenue caused by a one-unit increase in output. 
C)  MRP is the change in total revenue caused by a one-unit increase in a variable input such as labor. 
D)  MRP is total revenue divided by the total quantity of a variable input used.

Question 7

Suppose there are 100 identical firms producing package delivery services. One of the firms finds that when it has to pay a wage rate of $7, it hires 20 delivery people. The firm charges an average price of $10 to deliver a package. From this information, we know that the package delivery industry is hiring a total of:

Accepted Answer

A)  100 workers. 
B)  200 workers. 
C)  700 workers. 
D)  2,000 workers. 
E)  10,000 workers. 
A)  100 workers. 
B)  200 workers. 
C)  700 workers. 
D)  2,000 workers. 
E)  10,000 workers.

Question 8

"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:

Accepted Answer

A)  untrue. 
B)  a form of discrimination. 
C)  a conflict between equity and efficiency. 
D)  a conflict between full employment and economic growth. 
E)  b and c. 
A)  untrue. 
B)  a form of discrimination. 
C)  a conflict between equity and efficiency. 
D)  a conflict between full employment and economic growth. 
E)  b and c.

Question 9

The marginal cost of labor for a perfectly competitive firm is given by:

Accepted Answer

A)  the change in total revenue that results from employing an additional worker. 
B)  the market wage rate. 
C)  its marginal revenue product curve. 
D)  the demand curve for labor. 
E)  the marginal product of labor. 
A)  the change in total revenue that results from employing an additional worker. 
B)  the market wage rate. 
C)  its marginal revenue product curve. 
D)  the demand curve for labor. 
E)  the marginal product of labor.

Question 10

In a competitive labor market, marginal revenue product equals marginal product times the wage rate.

Accepted Answer

A) True 
 B)False

Question 11

Exhibit 10-3  Supply and demand curves for food servers   In Exhibit 10-3, 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 12

Exhibit 10-3  Supply and demand curves for food servers   If the equilibrium wage rate in Exhibit 10-3 increased, the cause could be that:

Accepted Answer

A)  the supply of labor increased. 
B)  the demand for labor decreased. 
C)  either the demand for labor increased or the supply of labor decreased. 
D)  none of the above. 
A)  the supply of labor increased. 
B)  the demand for labor decreased. 
C)  either the demand for labor increased or the supply of labor decreased. 
D)  none of the above.

Question 13

An increase in the demand for a product will shift the demand curve for labor producing the product to the right.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following best explains the decline in marginal revenue product (MRP)?

Accepted Answer

A)  As more and more of a variable factor (ex: Labor) is added to a fixed factor (ex: capital), total product become smaller and smaller. 
B)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal product become smaller and smaller as defined by the law of diminishing returns. 
C)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal utility becomes smaller and smaller. 
D)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal revenue product (MRP) become larger and larger. 
A)  As more and more of a variable factor (ex: Labor) is added to a fixed factor (ex: capital), total product become smaller and smaller. 
B)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal product become smaller and smaller as defined by the law of diminishing returns. 
C)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal utility becomes smaller and smaller. 
D)  As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal revenue product (MRP) become larger and larger.

Question 15

Which of the following would be a human capital investment?

Accepted Answer

A)  On-the-job training programs. 
B)  Health care programs. 
C)  Formal education. 
D)  All of the above. 
A)  On-the-job training programs. 
B)  Health care programs. 
C)  Formal education. 
D)  All of the above.

Question 16

An improvement in technology that increases the marginal product will shift the demand for labor curve to the left.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 10-2  Labor supply curve   In Exhibit 10-2, the total wage cost of hiring 6 employees is:

Accepted Answer

A)  $18 per hour. 
B)  $36 per hour. 
C)  $3 per hour. 
D)  $108 per hour. 
E)  $648 per hour. 
A)  $18 per hour. 
B)  $36 per hour. 
C)  $3 per hour. 
D)  $108 per hour. 
E)  $648 per hour.

Question 18

Dividing the change in total revenue by the change in labor gives:

Accepted Answer

A)  marginal product of labor. 
B)  marginal revenue product of labor. 
C)  the price of the output. 
D)  demand for the output. 
E)  economic efficiency. 
A)  marginal product of labor. 
B)  marginal revenue product of labor. 
C)  the price of the output. 
D)  demand for the output. 
E)  economic efficiency.

Question 19

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

Accepted Answer

A)  primary demand. 
B)  secondary demand. 
C)  dependent demand. 
D)  derived demand. 
A)  primary demand. 
B)  secondary demand. 
C)  dependent demand. 
D)  derived demand.

Question 20

Which of the following program(s) examples is (are) in-kind assistance to fight poverty in the United States?

Accepted Answer

A)  b and e. 
B)  Medicaid. 
C)  Unemployment benefits. 
D)  Temporary Assistance to Needy Families (TANF). 
E)  SNAP (food stamps). 
A)  b and e. 
B)  Medicaid. 
C)  Unemployment benefits. 
D)  Temporary Assistance to Needy Families (TANF). 
E)  SNAP (food stamps).

Exam 10: Labor Markets and Income Distribution

A technological advance that increases the productivity of teachers can be expected to have what effects on the equilibrium labor market for teachers?

In a competitive labor market, the change in total labor costs divided by the change in labor is always equal to:

Exhibit 10-5 A perfectly competitive labor market In Exhibit 10-5, how many thousands of workers are firms willing to hire?

A technological advance that increases labor productivity will:

Exhibit 10-1 Labor and output data In Exhibit 10-1, the marginal product of the 3rd unit of labor is equal to:

Which of the following best describes marginal revenue product (MRP)?

"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:

The marginal cost of labor for a perfectly competitive firm is given by:

In a competitive labor market, marginal revenue product equals marginal product times the wage rate.

Exhibit 10-3 Supply and demand curves for food servers In Exhibit 10-3, 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):

Exhibit 10-3 Supply and demand curves for food servers If the equilibrium wage rate in Exhibit 10-3 increased, the cause could be that:

An increase in the demand for a product will shift the demand curve for labor producing the product to the right.

Which of the following best explains the decline in marginal revenue product (MRP)?

Which of the following would be a human capital investment?

An improvement in technology that increases the marginal product will shift the demand for labor curve to the left.

Exhibit 10-2 Labor supply curve In Exhibit 10-2, the total wage cost of hiring 6 employees is:

Dividing the change in total revenue by the change in labor gives:

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

Which of the following program(s) examples is (are) in-kind assistance to fight poverty in the United States?

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

Filters