Question 1

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

Accepted Answer

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

Question 2

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 are new entrants into the labor market who were not present at the competitive 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 3

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

Accepted Answer

A)  increase; more 
B)  increase; fewer 
C)  decrease; more 
D)  decrease; fewer 
A)  increase; more 
B)  increase; fewer 
C)  decrease; more 
D)  decrease; fewer

Question 4

All else equal, if the price of the good that a firm produces decreases, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

Accepted Answer

A)  increase; more 
B)  increase; fewer 
C)  decrease; more 
D)  decrease; fewer 
A)  increase; more 
B)  increase; fewer 
C)  decrease; more 
D)  decrease; fewer

Question 5

All else equal, if the demand for Starbucks coffee increases, then which of the following will follow in the labor market for baristas?

Accepted Answer

A)  Labor demand will decrease. 
B)  Equilibrium wage will decrease. 
C)  Equilibrium quantity of labor hired will decrease. 
D)  Equilibrium wage will increase. 
A)  Labor demand will decrease. 
B)  Equilibrium wage will decrease. 
C)  Equilibrium quantity of labor hired will decrease. 
D)  Equilibrium wage will increase.

Question 6

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then the quantity of labor demanded is _____, and the quantity of labor supplied is:
​
Minimum Wage and Job Loss II

Accepted Answer

A)  1,000; 1,000. 
B)  900; 1,200. 
C)  1,200; 900. 
D)  1,000; 1,200. 
A)  1,000; 1,000. 
B)  900; 1,200. 
C)  1,200; 900. 
D)  1,000; 1,200.

Question 7

A firm in a perfectly competitive goods and labor market produces a good that sells for $3. If the competitive wage is $12, then the firm will keep hiring workers until the marginal product is equal to:

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  5. 
A)  2. 
B)  3. 
C)  4. 
D)  5.

Question 8

Which one of the following statements is TRUE?

Accepted Answer

A)  Industries where the relative demand for workers is lower than supply will pay a higher wage. 
B)  Industries that have identical demand for workers may not pay identical wages. 
C)  Industries where the relative demand for workers is higher than supply will pay a lower wage. 
D)  A higher compensating wage differential in an industry implies a relatively higher supply of workers. 
A)  Industries where the relative demand for workers is lower than supply will pay a higher wage. 
B)  Industries that have identical demand for workers may not pay identical wages. 
C)  Industries where the relative demand for workers is higher than supply will pay a lower wage. 
D)  A higher compensating wage differential in an industry implies a relatively higher supply of workers.

Question 9

Both Starbucks and McDonald's have a similar supply of labor for their retail outlets, and in both chains, workers earn a competitively determined wage of $10 per hour. Suppose that the government increases the minimum wage to $15 per hour. If more McDonald's workers lose their jobs than Starbucks employees, what can you conclude about the demand for workers in both outlets? Use graphs to justify your answer.

Accepted Answer

Because both firms face identical supply

Question 10

Because the demand for labor is more _____ in the long run, a minimum wage increase will lead to _____ job losses in the long run.

Accepted Answer

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

Question 11

Use Table: Production and Revenue. The table shows the number workers and the total production of a firm in a competitive market. Use the table to answer the following questions:
   a. Fill in the missing numbers in the table.
b. If the wage that is determined by the labor market is $12, then how many workers should the firm hire?
c. If the firm is currently hiring six workers, then what can you say about the equilibrium wage rate in the labor market? Justify your answer.

Accepted Answer

a.
 @#IMG-DLM& b. Firms hire workers until the wag

Question 12

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 the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Accepted Answer

A)  three 
B)  four 
C)  five 
D)  six 
A)  three 
B)  four 
C)  five 
D)  six

Question 13

Use Table: Derived Demand for Capital. The table lists the units of capital and the marginal revenue product per hour that are generated by each unit for a firm in a perfectly competitive market. If we know that the firm is hiring six units of capital, then the wage of labor is greater than _____ and less than or equal to:
​

Accepted Answer

A)  $12; $14. 
B)  $8; $10. 
C)  $6; $8. 
D)  $4; $6. 
A)  $12; $14. 
B)  $8; $10. 
C)  $6; $8. 
D)  $4; $6.

Question 14

Which of the following can increase simultaneously the equilibrium quantity of workers hired and the equilibrium wage rate?

Accepted Answer

A)  a decrease in the productivity of workers 
B)  a decrease in the rate of immigration 
C)  an increase in the price level of goods 
D)  an increase in the number of workers of retiring age 
A)  a decrease in the productivity of workers 
B)  a decrease in the rate of immigration 
C)  an increase in the price level of goods 
D)  an increase in the number of workers of retiring age

Question 15

If a government sets a minimum wage higher than the equilibrium wage rate, then the quantity demanded of labor _____, and the quantity supplied of labor:

Accepted Answer

A)  increases; increases. 
B)  increases; decreases. 
C)  decreases; increases. 
D)  decreases; decreases. 
A)  increases; increases. 
B)  increases; decreases. 
C)  decreases; increases. 
D)  decreases; decreases.

Question 16

If a firm increases the total amount of capital that is used in production, then all else equal, the marginal revenue product curve will shift _____, and the firms will hire _____ workers.

Accepted Answer

A)  right; fewer 
B)  right; more 
C)  left; fewer 
D)  left; more 
A)  right; fewer 
B)  right; more 
C)  left; fewer 
D)  left; more

Question 17

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

A firm in a perfectly competitive goods and labor market hires an additional worker, which leads to a three-unit increase in output. If the competitive wage is $15, then the price of the good that the firm sells should be at least _____ for the firm to hire the worker.

Accepted Answer

A)  $2 
B)  $3 
C)  $4 
D)  $5 
A)  $2 
B)  $3 
C)  $4 
D)  $5

Question 19

Use Table: Derived Demand for Capital. The table lists the units of capital and the marginal revenue product per hour that are generated by each unit for a firm in a perfectly competitive market. If we know that the firm is hiring five units of capital, then the rental rate of capital is greater than _____ and less than or equal to:

Accepted Answer

A)  $14; $20. 
B)  $12; $14. 
C)  $8; $10. 
D)  $6; $8. 
A)  $14; $20. 
B)  $12; $14. 
C)  $8; $10. 
D)  $6; $8.

Question 20

Which of the following statements is TRUE for a firm in a perfectly competitive labor market?

Accepted Answer

A)  It has unlimited demand for labor at a given wage. 
B)  It has an unlimited supply of labor at a given wage. 
C)  It can choose the wage that it wants to pay for labor. 
D)  It can hire more labor only by paying a higher wage. 
A)  It has unlimited demand for labor at a given wage. 
B)  It has an unlimited supply of labor at a given wage. 
C)  It can choose the wage that it wants to pay for labor. 
D)  It can hire more labor only by paying a higher wage.

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

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 are new entrants into the labor market who were not present at the competitive wage? Minimum Wage and Job Loss I

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _, and the firms will hire _ workers.

All else equal, if the price of the good that a firm produces decreases, then the marginal revenue product of workers will _, and the firms will hire _ workers.

All else equal, if the demand for Starbucks coffee increases, then which of the following will follow in the labor market for baristas?

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then the quantity of labor demanded is _____, and the quantity of labor supplied is: Minimum Wage and Job Loss II

A firm in a perfectly competitive goods and labor market produces a good that sells for $3. If the competitive wage is $12, then the firm will keep hiring workers until the marginal product is equal to:

Which one of the following statements is TRUE?

Because the demand for labor is more _ in the long run, a minimum wage increase will lead to _ job losses in the long run.

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 the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Which of the following can increase simultaneously the equilibrium quantity of workers hired and the equilibrium wage rate?

If a government sets a minimum wage higher than the equilibrium wage rate, then the quantity demanded of labor _____, and the quantity supplied of labor:

If a firm increases the total amount of capital that is used in production, then all else equal, the marginal revenue product curve will shift _, and the firms will hire _ workers.

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

A firm in a perfectly competitive goods and labor market hires an additional worker, which leads to a three-unit increase in output. If the competitive wage is $15, then the price of the good that the firm sells should be at least _____ for the firm to hire the worker.

Which of the following statements is TRUE for a firm in a perfectly competitive labor market?

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

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

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 are new entrants into the labor market who were not present at the competitive wage? Minimum Wage and Job Loss I

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

All else equal, if the price of the good that a firm produces decreases, then the marginal revenue product of workers will _____, and the firms will hire _____ workers.

All else equal, if the demand for Starbucks coffee increases, then which of the following will follow in the labor market for baristas?

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then the quantity of labor demanded is _____, and the quantity of labor supplied is: ​ Minimum Wage and Job Loss II

A firm in a perfectly competitive goods and labor market produces a good that sells for $3. If the competitive wage is $12, then the firm will keep hiring workers until the marginal product is equal to:

Which one of the following statements is TRUE?

Because the demand for labor is more _____ in the long run, a minimum wage increase will lead to _____ job losses in the long run.

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 the hourly wage of workers is $12 per hour, then the firm will hire _____ workers.

Which of the following can increase simultaneously the equilibrium quantity of workers hired and the equilibrium wage rate?

If a government sets a minimum wage higher than the equilibrium wage rate, then the quantity demanded of labor _____, and the quantity supplied of labor:

If a firm increases the total amount of capital that is used in production, then all else equal, the marginal revenue product curve will shift _____, and the firms will hire _____ workers.

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

A firm in a perfectly competitive goods and labor market hires an additional worker, which leads to a three-unit increase in output. If the competitive wage is $15, then the price of the good that the firm sells should be at least _____ for the firm to hire the worker.

Which of the following statements is TRUE for a firm in a perfectly competitive labor market?

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

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

All else equal, if a technological improvement increases the marginal product of workers, then the marginal revenue product of workers will _, and the firms will hire _ workers.

All else equal, if the price of the good that a firm produces decreases, then the marginal revenue product of workers will _, and the firms will hire _ workers.

Use Figure: Minimum Wage and Job Loss II. If the government sets a minimum wage of $12 per hour, then the quantity of labor demanded is _____, and the quantity of labor supplied is: Minimum Wage and Job Loss II

Because the demand for labor is more _ in the long run, a minimum wage increase will lead to _ job losses in the long run.

If a firm increases the total amount of capital that is used in production, then all else equal, the marginal revenue product curve will shift _, and the firms will hire _ workers.

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