Question 1

Which one of the following statements is FALSE?

Accepted Answer

A)  Industries where the relative demand for workers is lower than supply will pay a lower wage. 
B)  Two industries that have identical demand for workers will also pay the same wage. 
C)  Industries where the relative demand for workers is higher than supply will pay a higher wage. 
D)  A higher compensating wage differential in an industry implies a relatively lower supply of workers. 
A)  Industries where the relative demand for workers is lower than supply will pay a lower wage. 
B)  Two industries that have identical demand for workers will also pay the same wage. 
C)  Industries where the relative demand for workers is higher than supply will pay a higher wage. 
D)  A higher compensating wage differential in an industry implies a relatively lower supply of workers.

Question 2

A firm's demand for labor is determined by the:

Accepted Answer

A)  most that a firm is willing to pay for each unit of labor. 
B)  most that workers are willing to work at a given wage. 
C)  total number of workers who are available in an economy. 
D)  minimum wage that is mandated by the government. 
A)  most that a firm is willing to pay for each unit of labor. 
B)  most that workers are willing to work at a given wage. 
C)  total number of workers who are available in an economy. 
D)  minimum wage that is mandated by the government.

Question 3

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then how many of the total number of unemployed workers were previously employed and lost their jobs from the hike in minimum wage?
​
Minimum Wage and Job Loss I

Accepted Answer

A)  500 
B)  1,000 
C)  1,500 
D)  2,000 
A)  500 
B)  1,000 
C)  1,500 
D)  2,000

Question 4

The availability of good substitutes for labor in the production process makes the demand curve for labor more _____, so increasing minimum wage in this case will lead to _____ unemployment.

Accepted Answer

A)  elastic; higher 
B)  elastic; lower 
C)  inelastic; higher 
D)  inelastic; lower 
A)  elastic; higher 
B)  elastic; lower 
C)  inelastic; higher 
D)  inelastic; lower

Question 5

If a firm has a perfectly inelastic labor demand curve, then a minimum wage will lead to _____ in the number of workers hired and _____ in the wage of workers.

Accepted Answer

A)  an increase; no change 
B)  a decrease; no change 
C)  no change; no change 
D)  no change; an increase 
A)  an increase; no change 
B)  a decrease; no change 
C)  no change; no change 
D)  no change; an increase

Question 6

Because the opportunity cost of work _____ as individuals spend more time working, the labor supply curve is _____ sloping.

Accepted Answer

A)  increases; upward 
B)  decreases; upward 
C)  increases; downward 
D)  decreases; downward 
A)  increases; upward 
B)  decreases; upward 
C)  increases; downward 
D)  decreases; downward

Question 7

Mike and Alice work in different industries that have identical demand for workers. Mike receives a wage of $18 per hour, and Alice receives a wage of $12 per hour. Based on this, we can conclude that the industry in which Mike works has a relatively ______ supply of workers and that the compensating wage differential for Mike is:

Accepted Answer

A)  lower; $18. 
B)  higher; $18. 
C)  lower: $6. 
D)  higher; $6. 
A)  lower; $18. 
B)  higher; $18. 
C)  lower: $6. 
D)  higher; $6.

Question 8

If workers are employed in an industry where they cannot be easily replaced, then the demand curve of labor will be relatively more _____, and an increase in minimum wage will lead to ____ job losses compared to industries where close substitutes of labor are available.

Accepted Answer

A)  elastic; more 
B)  elastic; fewer 
C)  inelastic; more 
D)  inelastic; fewer 
A)  elastic; more 
B)  elastic; fewer 
C)  inelastic; more 
D)  inelastic; fewer

Question 9

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

Accepted Answer

A)  $4. 
B)  $9. 
C)  $15. 
D)  $36. 
A)  $4. 
B)  $9. 
C)  $15. 
D)  $36.

Question 10

The labor demand curve for a firm in a perfectly competitive labor market is _____, and its labor supply curve is:

Accepted Answer

A)  downward sloping; upward sloping. 
B)  downward sloping; horizontal. 
C)  horizontal; upward sloping. 
D)  horizontal; downward sloping. 
A)  downward sloping; upward sloping. 
B)  downward sloping; horizontal. 
C)  horizontal; upward sloping. 
D)  horizontal; downward sloping.

Question 11

A local Starbucks needs exactly five baristas to make coffee during a shift. In this case, the demand curve for baristas is perfectly _____, and an increase in minimum wage will lead to _____ in the number of baristas employed by Starbucks.

Accepted Answer

A)  elastic; no change 
B)  elastic; a decrease 
C)  inelastic; no change 
D)  inelastic; a decrease 
A)  elastic; no change 
B)  elastic; a decrease 
C)  inelastic; no change 
D)  inelastic; a decrease

Question 12

A policymaker has been asked to examine whether raising the minimum wage will lead to a lot of job losses-that is, if many workers currently employed will lose their jobs. What key piece of information is required to answer this question? Explain your answer.

Accepted Answer

Whether raising the minimum wage leads t

Question 13

Which of the following statement is FALSE?

Accepted Answer

A)  The shape of the labor supply curve is based on the trade-off between income and free time. 
B)  If the opportunity cost of work decreases, then the labor supply curve shifts to the right. 
C)  The more time that an individual spends working, the more that the opportunity cost of work decreases. 
D)  As the wage rate increases, the quantity of labor supplied increases. 
A)  The shape of the labor supply curve is based on the trade-off between income and free time. 
B)  If the opportunity cost of work decreases, then the labor supply curve shifts to the right. 
C)  The more time that an individual spends working, the more that the opportunity cost of work decreases. 
D)  As the wage rate increases, the quantity of labor supplied increases.

Question 14

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

Accepted Answer

A)  inelastic 
B)  elastic 
C)  derived 
D)  aggregate 
A)  inelastic 
B)  elastic 
C)  derived 
D)  aggregate

Question 15

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then how many workers will be employed?
​
Minimum Wage and Job Loss II

Accepted Answer

A)  300 
B)  600 
C)  900 
D)  1,200 
A)  300 
B)  600 
C)  900 
D)  1,200

Question 16

All else equal, a decrease in the productivity of workers will lead to _____ in the quantity of labor hired and _____ in the wage rate.

Accepted Answer

A)  an increase; an increase 
B)  a decrease; an increase 
C)  an increase; a decrease 
D)  a decrease; a decrease 
A)  an increase; an increase 
B)  a decrease; an increase 
C)  an increase; a decrease 
D)  a decrease; a decrease

Question 17

Use Figure: Equilibrium in the Labor Market. Which one of the following can shift the equilibrium from point B to point A?
Figure: Equilibrium in the Labor Market

Accepted Answer

A)  an increase in the rate of immigration into an economy 
B)  an increase in the productivity of workers in the economy 
C)  a decrease in the rate of immigration in the economy 
D)  a decrease in the productivity of workers in the economy 
A)  an increase in the rate of immigration into an economy 
B)  an increase in the productivity of workers in the economy 
C)  a decrease in the rate of immigration in the economy 
D)  a decrease in the productivity of workers in the economy

Question 18

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then the total number of unemployed people in the economy will be:
​
Minimum Wage and Job Loss I

Accepted Answer

A)  500. 
B)  1,000. 
C)  1,500. 
D)  2,000. 
A)  500. 
B)  1,000. 
C)  1,500. 
D)  2,000.

Question 19

Use Table: Marginal Revenue Product. The table lists the number of workers and the marginal revenue product per hour that is generated by each worker for a firm in a perfectly competitive market. If we know that the firm is hiring five workers, then the wage of labor is greater than _____ and less than or equal to:
  ​

Accepted Answer

A)  $4; $10. 
B)  $10; $14. 
C)  $14; $18. 
D)  $18; $22. 
A)  $4; $10. 
B)  $10; $14. 
C)  $14; $18. 
D)  $18; $22.

Question 20

Use Figure: Marginal Revenue Product and Labor Demand. The figure shows the marginal revenue product per hour of labor for a competitive firm. If the wage that is determined in a competitive labor market is $16 per hour, then how many workers per hour will the firm hire?
​
Figure: Marginal Revenue Product and Labor Demand

Accepted Answer

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

Which one of the following statements is FALSE?

A firm's demand for labor is determined by the:

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then how many of the total number of unemployed workers were previously employed and lost their jobs from the hike in minimum wage? Minimum Wage and Job Loss I

The availability of good substitutes for labor in the production process makes the demand curve for labor more _, so increasing minimum wage in this case will lead to _ unemployment.

If a firm has a perfectly inelastic labor demand curve, then a minimum wage will lead to _ in the number of workers hired and _ in the wage of workers.

Because the opportunity cost of work _ as individuals spend more time working, the labor supply curve is _ sloping.

If workers are employed in an industry where they cannot be easily replaced, then the demand curve of labor will be relatively more _, and an increase in minimum wage will lead to job losses compared to industries where close substitutes of labor are available.

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

The labor demand curve for a firm in a perfectly competitive labor market is _____, and its labor supply curve is:

A local Starbucks needs exactly five baristas to make coffee during a shift. In this case, the demand curve for baristas is perfectly _, and an increase in minimum wage will lead to _ in the number of baristas employed by Starbucks.

A policymaker has been asked to examine whether raising the minimum wage will lead to a lot of job losses-that is, if many workers currently employed will lose their jobs. What key piece of information is required to answer this question? Explain your answer.

Which of the following statement is FALSE?

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then how many workers will be employed? Minimum Wage and Job Loss II

All else equal, a decrease in the productivity of workers will lead to _ in the quantity of labor hired and _ in the wage rate.

Use Figure: Equilibrium in the Labor Market. Which one of the following can shift the equilibrium from point B to point A? Figure: Equilibrium in the Labor Market

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then the total number of unemployed people in the economy will be: Minimum Wage and Job Loss I

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 11: Factor Markets

Which one of the following statements is FALSE?

A firm's demand for labor is determined by the:

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then how many of the total number of unemployed workers were previously employed and lost their jobs from the hike in minimum wage? ​ Minimum Wage and Job Loss I

The availability of good substitutes for labor in the production process makes the demand curve for labor more _____, so increasing minimum wage in this case will lead to _____ unemployment.

If a firm has a perfectly inelastic labor demand curve, then a minimum wage will lead to _____ in the number of workers hired and _____ in the wage of workers.

Because the opportunity cost of work _____ as individuals spend more time working, the labor supply curve is _____ sloping.

If workers are employed in an industry where they cannot be easily replaced, then the demand curve of labor will be relatively more _____, and an increase in minimum wage will lead to ____ job losses compared to industries where close substitutes of labor are available.

A firm in a perfectly competitive market is looking to hire an additional worker. The marginal revenue from selling the good produced by the worker is $3, and the marginal product of the worker is 12. Therefore, the marginal revenue product of the worker is:

The labor demand curve for a firm in a perfectly competitive labor market is _____, and its labor supply curve is:

A local Starbucks needs exactly five baristas to make coffee during a shift. In this case, the demand curve for baristas is perfectly _____, and an increase in minimum wage will lead to _____ in the number of baristas employed by Starbucks.

A policymaker has been asked to examine whether raising the minimum wage will lead to a lot of job losses-that is, if many workers currently employed will lose their jobs. What key piece of information is required to answer this question? Explain your answer.

Which of the following statement is FALSE?

Because the demand for a factor of production depends on the demand for the good or service that the factor produces, factor demand is referred to as _____ demand.

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then how many workers will be employed? ​ Minimum Wage and Job Loss II

All else equal, a decrease in the productivity of workers will lead to _____ in the quantity of labor hired and _____ in the wage rate.

Use Figure: Equilibrium in the Labor Market. Which one of the following can shift the equilibrium from point B to point A? Figure: Equilibrium in the Labor Market

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then the total number of unemployed people in the economy will be: ​ Minimum Wage and Job Loss I

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Elasticity

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then how many of the total number of unemployed workers were previously employed and lost their jobs from the hike in minimum wage? Minimum Wage and Job Loss I

The availability of good substitutes for labor in the production process makes the demand curve for labor more _, so increasing minimum wage in this case will lead to _ unemployment.

If a firm has a perfectly inelastic labor demand curve, then a minimum wage will lead to _ in the number of workers hired and _ in the wage of workers.

Because the opportunity cost of work _ as individuals spend more time working, the labor supply curve is _ sloping.

If workers are employed in an industry where they cannot be easily replaced, then the demand curve of labor will be relatively more _, and an increase in minimum wage will lead to job losses compared to industries where close substitutes of labor are available.

A local Starbucks needs exactly five baristas to make coffee during a shift. In this case, the demand curve for baristas is perfectly _, and an increase in minimum wage will lead to _ in the number of baristas employed by Starbucks.

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then how many workers will be employed? Minimum Wage and Job Loss II

All else equal, a decrease in the productivity of workers will lead to _ in the quantity of labor hired and _ in the wage rate.

Use Figure: Minimum Wage and Job Loss I. If the government sets a minimum wage of $14 per hour, then the total number of unemployed people in the economy will be: Minimum Wage and Job Loss I