Question 1

Which of the following equations is correct?

Accepted Answer

A)  Adults not in the labor force = Unemployed − Employed 
B)  Adults not in the labor force = Labor force − Unemployed 
C)  Adults not in the labor force = Potential adult workers 
D)  Adults not in the labor force = Potential adult workers − Labor force 
A)  Adults not in the labor force = Unemployed − Employed 
B)  Adults not in the labor force = Labor force − Unemployed 
C)  Adults not in the labor force = Potential adult workers 
D)  Adults not in the labor force = Potential adult workers − Labor force

Question 2

The following figure shows wage rate versus quantity of labor.
  
-Refer to the figure above.If S₀ is the supply of labor,D₀ is the labor demand curve during a cyclical downturn,and D₁ is the labor demand curve during a cyclical expansion,which expression best represents the level of unemployment during the downturn? (Assume that the level of unemployment during the expansion is zero.)

Accepted Answer

A)  Qᵤ - Q₀ 
B)  Qᵤ + Q₀ 
C)  (Qᵤ + Q₀)/2 
D)  (Qᵤ - Q₀)/2 
A)  Qᵤ - Q₀ 
B)  Qᵤ + Q₀ 
C)  (Qᵤ + Q₀)/2 
D)  (Qᵤ - Q₀)/2

Question 3

If the labor market is perfectly competitive,________.

Accepted Answer

A)  there is always some unemployment 
B)  the quantity of labor demanded always exceeds the quantity of labor supplied 
C)  a worker willing to work at the equilibrium wage rate can instantly find work 
D)  the labor demand curve is upward-sloping and the labor supply curve is downward-sloping 
A)  there is always some unemployment 
B)  the quantity of labor demanded always exceeds the quantity of labor supplied 
C)  a worker willing to work at the equilibrium wage rate can instantly find work 
D)  the labor demand curve is upward-sloping and the labor supply curve is downward-sloping

Question 4

If a firm introduces technology that substitutes capital for labor,________ the labor demand curve of the firm,assuming all else equal.

Accepted Answer

A)  there will be a right shift of 
B)  there will be a left shift of 
C)  there will be a downward movement along 
D)  there will be an upward movement along 
A)  there will be a right shift of 
B)  there will be a left shift of 
C)  there will be a downward movement along 
D)  there will be an upward movement along

Question 5

If the labor force participation rate in an economy is 50 percent and there are 100 million potential adult workers in the economy,then the size of the labor force in the economy will equal ________.

Accepted Answer

A)  2 million 
B)  10 million 
C)  50 million 
D)  100 million 
A)  2 million 
B)  10 million 
C)  50 million 
D)  100 million

Question 6

Downward wage rigidity is likely to ________ in an economy.

Accepted Answer

A)  increase unemployment 
B)  decrease unemployment 
C)  increase wage rates 
D)  decrease wage rates 
A)  increase unemployment 
B)  decrease unemployment 
C)  increase wage rates 
D)  decrease wage rates

Question 7

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂.
  
-Refer to the figure above.What are the equilibrium employment and the wage rate after the demand curve shifts to LD₂?

Accepted Answer

A)  15 units of labor and $20 
B)  20 units of labor and $35 
C)  5 units of labor and $15 
D)  10 units of labor and $10 
A)  15 units of labor and $20 
B)  20 units of labor and $35 
C)  5 units of labor and $15 
D)  10 units of labor and $10

Question 8

The following figure shows wage versus labor demand.
  
-Refer to the figure above.If a new technology is developed that increases the marginal productivity of all workers,what will happen to the labor supply curve?

Accepted Answer

A)  It will shift left. 
B)  It will shift right. 
C)  It will remain the same. 
D)  It depends on how the labor demand curve shifts. 
A)  It will shift left. 
B)  It will shift right. 
C)  It will remain the same. 
D)  It depends on how the labor demand curve shifts.

Question 9

The following figure shows wage versus labor supply.
  
-Refer to the figure above.Assume that the labor market initially is at an equilibrium at point C.Rapid population increases shift the supply of labor to S₂.Over time,technological changes reduces the demand for labor.In this scenario,the distance between point ________ and point ________ illustrates the number of unemployed workers.

Accepted Answer

A)  F; E 
B)  B; C 
C)  D; G 
D)  There is no unemployment in the scenario described. 
A)  F; E 
B)  B; C 
C)  D; G 
D)  There is no unemployment in the scenario described.

Question 10

Contract negotiations between an employer and a labor union representing workers are referred to as ________.

Accepted Answer

A)  treaties 
B)  efficiency wage agreements 
C)  collective bargaining 
D)  subsistence wage agreements 
A)  treaties 
B)  efficiency wage agreements 
C)  collective bargaining 
D)  subsistence wage agreements

Question 11

Scenario: Suppose that professors pay their teaching assistants $10 an hour to grade papers for their classes, and then the professors sell the graded papers back to the students in their classes for $.75 a paper. The following table shows the number of papers graded in a given number of hours.
  
-Refer to the scenario above.What is the value of the marginal productivity of labor of the fifth hour of labor?

Accepted Answer

A)  $5.25 
B)  $9.00 
C)  $10.50 
D)  $15.50 
A)  $5.25 
B)  $9.00 
C)  $10.50 
D)  $15.50

Question 12

Which of the following statements is true?

Accepted Answer

A)  The minimum unemployment rate in the U.S. economy has always been 0 percent. 
B)  The unemployment rate in the United States was the highest ever during the recession of 2007-2009. 
C)  In the past 30 years, the unemployment rate in the United States has never gone below 3 percent. 
D)  The unemployment rate in the U.S. economy has been increasing since 1900. 
A)  The minimum unemployment rate in the U.S. economy has always been 0 percent. 
B)  The unemployment rate in the United States was the highest ever during the recession of 2007-2009. 
C)  In the past 30 years, the unemployment rate in the United States has never gone below 3 percent. 
D)  The unemployment rate in the U.S. economy has been increasing since 1900.

Question 13

Which of the following is true of cyclical unemployment?

Accepted Answer

A)  Cyclical unemployment is also known as frictional unemployment. 
B)  Cyclical unemployment increases during periods of economic boom. 
C)  Cyclical unemployment decreases during periods of economic boom. 
D)  Cyclical unemployment is the deviation of the actual unemployment rate from the natural rate of unemployment. 
A)  Cyclical unemployment is also known as frictional unemployment. 
B)  Cyclical unemployment increases during periods of economic boom. 
C)  Cyclical unemployment decreases during periods of economic boom. 
D)  Cyclical unemployment is the deviation of the actual unemployment rate from the natural rate of unemployment.

Question 14

If a firm hires a worker by paying her a wage lower than the value of the marginal product of the worker,it implies that ________.

Accepted Answer

A)  the firm is earning zero economic profit 
B)  the firm is making an optimum decision 
C)  the firm should reduce its employee strength to maximize profits 
D)  the firm should hire more workers to increase profits 
A)  the firm is earning zero economic profit 
B)  the firm is making an optimum decision 
C)  the firm should reduce its employee strength to maximize profits 
D)  the firm should hire more workers to increase profits

Question 15

The following figure shows wage rate versus quantity of labor.
  
-Refer to the figure above.If S₀ is the supply of labor,D₀ is the labor demand curve during a cyclical downturn,and D₁ is the labor demand curve during a cyclical expansion,which expression best represents the natural level of employment?

Accepted Answer

A)  Qᵤ - Q₀ 
B)  Qᵤ + Q₀ 
C)  (Qᵤ + Q₀)/2 
D)  (Qᵤ - Q₀)/2 
A)  Qᵤ - Q₀ 
B)  Qᵤ + Q₀ 
C)  (Qᵤ + Q₀)/2 
D)  (Qᵤ - Q₀)/2

Question 16

A profit-maximizing firm will pay a worker ________.

Accepted Answer

A)  the revenue that it earns by selling one unit of the product 
B)  the value of the worker's marginal product 
C)  less than the value of the worker's marginal product 
D)  more than the value of the average revenue of the firm 
A)  the revenue that it earns by selling one unit of the product 
B)  the value of the worker's marginal product 
C)  less than the value of the worker's marginal product 
D)  more than the value of the average revenue of the firm

Question 17

Minimum wage laws ________.

Accepted Answer

A)  are used to solve the problem of wage rigidity 
B)  can give rise to wage rigidity 
C)  can cause the quantity of labor demanded to exceed the quantity of labor supplied 
D)  help equate the quantity of labor demanded and the quantity of labor supplied 
A)  are used to solve the problem of wage rigidity 
B)  can give rise to wage rigidity 
C)  can cause the quantity of labor demanded to exceed the quantity of labor supplied 
D)  help equate the quantity of labor demanded and the quantity of labor supplied

Question 18

Scenario: The labor market equilibrium for ski patrol positions at Bridge Bowls Resort is shown in the figure below.
  
-Given the situation above and consider the situation where another ski area opens nearby Bridge Bowls,providing another place for ski patrol to work and for customers to ski and snowboard.How will this cause the graph above to change?

Accepted Answer

A)  The labor supply curve will shift right and labor demand curve will shift left. 
B)  The labor demand curve will shift left and labor supply curve will shift right. 
C)  Both the labor demand curve and labor supply curve will shift right. 
D)  Both the labor demand curve and labor supply curve will shift left. 
A)  The labor supply curve will shift right and labor demand curve will shift left. 
B)  The labor demand curve will shift left and labor supply curve will shift right. 
C)  Both the labor demand curve and labor supply curve will shift right. 
D)  Both the labor demand curve and labor supply curve will shift left.

Question 19

Scenario: Suppose that professors pay their teaching assistants $10 an hour to grade papers for their classes, and then the professors sell the graded papers back to the students in their classes for $.75 a paper. The following table shows the number of papers graded in a given number of hours.
  
-Refer to the scenario above.If the professors then raise the price of papers to $1.50,how many hours of labor should the professors employ to maximize their profits?

Accepted Answer

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

Question 20

The impact of an increase in the wage rate on labor supply will be represented by ________,assuming all else equal.

Accepted Answer

A)  a right shift of the labor supply curve 
B)  a left shift of the labor supply curve 
C)  a downward movement along the labor supply curve 
D)  an upward movement along the labor supply curve 
A)  a right shift of the labor supply curve 
B)  a left shift of the labor supply curve 
C)  a downward movement along the labor supply curve 
D)  an upward movement along the labor supply curve

Which of the following equations is correct?

If the labor market is perfectly competitive,________.

If a firm introduces technology that substitutes capital for labor,________ the labor demand curve of the firm,assuming all else equal.

If the labor force participation rate in an economy is 50 percent and there are 100 million potential adult workers in the economy,then the size of the labor force in the economy will equal ________.

Downward wage rigidity is likely to ________ in an economy.

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂. -Refer to the figure above.What are the equilibrium employment and the wage rate after the demand curve shifts to LD₂?

The following figure shows wage versus labor demand. -Refer to the figure above.If a new technology is developed that increases the marginal productivity of all workers,what will happen to the labor supply curve?

Contract negotiations between an employer and a labor union representing workers are referred to as ________.

Which of the following statements is true?

Which of the following is true of cyclical unemployment?

If a firm hires a worker by paying her a wage lower than the value of the marginal product of the worker,it implies that ________.

A profit-maximizing firm will pay a worker ________.

Minimum wage laws ________.

The impact of an increase in the wage rate on labor supply will be represented by ________,assuming all else equal.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

Exam 9: Employment and Unemployment

Which of the following equations is correct?

If the labor market is perfectly competitive,________.

If a firm introduces technology that substitutes capital for labor,________ the labor demand curve of the firm,assuming all else equal.

If the labor force participation rate in an economy is 50 percent and there are 100 million potential adult workers in the economy,then the size of the labor force in the economy will equal ________.

Downward wage rigidity is likely to ________ in an economy.

The following figure shows the labor demand curve, LD₁, and labor supply curve, LS₁, in a market. A month later, the labor demand curve shifts to LD₂. -Refer to the figure above.What are the equilibrium employment and the wage rate after the demand curve shifts to LD₂?

The following figure shows wage versus labor demand. -Refer to the figure above.If a new technology is developed that increases the marginal productivity of all workers,what will happen to the labor supply curve?

Contract negotiations between an employer and a labor union representing workers are referred to as ________.

Which of the following statements is true?

Which of the following is true of cyclical unemployment?

If a firm hires a worker by paying her a wage lower than the value of the marginal product of the worker,it implies that ________.

A profit-maximizing firm will pay a worker ________.

Minimum wage laws ________.

The impact of an increase in the wage rate on labor supply will be represented by ________,assuming all else equal.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters