Question 1

A change in the wage rate causes a firm's labor demand curve to shift.

Accepted Answer

A) True 
 B)False  False

Question 2

The local labor market for lawn-mowing workers is initially in equilibrium.These workers are also able to clean swimming pools and have no preference for one job over the other.If the wage rate for pool cleaning rises,which of the following would occur in the lawn-mowing labor market?

Accepted Answer

A) Both labor demand and labor supply will drop,leading to a lower wage rate and lower employment. 
B) Both labor demand and labor supply will rise,leading to a higher wage rate and lower employment. 
C) Labor supply will drop,leading to a higher wage rate and lower employment. 
D) Labor supply will drop,leading to a lower wage rate and lower employment. 
E) Labor demand will drop,leading to a lower wage rate and lower employment. 
A) Both labor demand and labor supply will drop,leading to a lower wage rate and lower employment. 
B) Both labor demand and labor supply will rise,leading to a higher wage rate and lower employment. 
C) Labor supply will drop,leading to a higher wage rate and lower employment. 
D) Labor supply will drop,leading to a lower wage rate and lower employment. 
E) Labor demand will drop,leading to a lower wage rate and lower employment. C

Question 3

A labor market differs from a product market because

Accepted Answer

A) in a labor market,firms are suppliers and households are demanders 
B) the usual laws of economics do not apply to labor markets 
C) supply and demand are only relevant for labor markets 
D) supply and demand are only relevant for product markets 
E) in a labor market,firms are demanders and households are suppliers 
A) in a labor market,firms are suppliers and households are demanders 
B) the usual laws of economics do not apply to labor markets 
C) supply and demand are only relevant for labor markets 
D) supply and demand are only relevant for product markets 
E) in a labor market,firms are demanders and households are suppliers E

Question 4

Wage rates in other markets are assumed constant along the labor supply curve for a particular labor market.

Accepted Answer

A) True 
 B)False

Question 5

A firm's labor demand curve is derived from the demand for the goods and services it produces.

Accepted Answer

A) True 
 B)False

Question 6

Assume that the labor market for auto mechanics is initially in equilibrium.Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?

Accepted Answer

A) a decrease in the price of a substitutable input 
B) a decrease in the price of a complementary input 
C) an increase in training costs for auto mechanics 
D) a decrease in wages in an alternate labor market 
E) a decrease in demand for the output of firms employing auto mechanics 
A) a decrease in the price of a substitutable input 
B) a decrease in the price of a complementary input 
C) an increase in training costs for auto mechanics 
D) a decrease in wages in an alternate labor market 
E) a decrease in demand for the output of firms employing auto mechanics

Question 7

If both the market for a firm's output and the market in which it hires its labor are perfectly competitive,the firm's labor demand curve will be perfectly elastic.

Accepted Answer

A) True 
 B)False

Question 8

One baker can bake 15 pies in a day.Two bakers can bake 35 pies in a day.If the marginal revenue product of hiring the second baker is $200,then in a perfectly competitive product market

Accepted Answer

A) each pie sells for $10. 
B) there are diminishing marginal returns. 
C) there are decreasing economies of scale. 
D) they are operating in a constant cost industry. 
E) the marginal cost of production is $200. 
A) each pie sells for $10. 
B) there are diminishing marginal returns. 
C) there are decreasing economies of scale. 
D) they are operating in a constant cost industry. 
E) the marginal cost of production is $200.

Question 9

The marginal approach to profit

Accepted Answer

A) says that a firm should take any action that adds more to cost than it adds to revenue 
B) says that a firm should take any action that adds more to revenue than it adds to cost 
C) says that a firm should strive to set profit equal to zero. 
D) says that a firms profit is maximized when average revenue equals average cost 
E) says that profit should be marginalized 
A) says that a firm should take any action that adds more to cost than it adds to revenue 
B) says that a firm should take any action that adds more to revenue than it adds to cost 
C) says that a firm should strive to set profit equal to zero. 
D) says that a firms profit is maximized when average revenue equals average cost 
E) says that profit should be marginalized

Question 10

-Figure 12-3 illustrates the marginal revenue product of labor and three possible labor supply curves facing a firm that hires industrial design engineers.The firm initially is in equilibrium at point e.Then,the cost of training rises for new industrial design engineers.Assume that the full impact of the change in training costs is indicated by one of the curves in the figure.After all long-run adjustments are made,this firm pays a wage

Accepted Answer

A) of $18 per hour and employs 29 industrial design engineers 
B) of $26 per hour and employs 20 industrial design engineers 
C) between $22 and $26 per hour,while employing less than 20 industrial design engineers 
D) between $18 and $22 per hour,while employing more than 29 industrial design engineers 
E) between $18 and $22 per hour,while employing between 25 and 29 industrial design engineers 
A) of $18 per hour and employs 29 industrial design engineers 
B) of $26 per hour and employs 20 industrial design engineers 
C) between $22 and $26 per hour,while employing less than 20 industrial design engineers 
D) between $18 and $22 per hour,while employing more than 29 industrial design engineers 
E) between $18 and $22 per hour,while employing between 25 and 29 industrial design engineers

Question 11

An increase in the wage rate will cause

Accepted Answer

A) increased employment 
B) a leftward shift in the labor supply curve 
C) an upward movement along the labor supply curve 
D) a rightward shift of the labor supply curve 
E) a leftward shift of the labor demand curve 
A) increased employment 
B) a leftward shift in the labor supply curve 
C) an upward movement along the labor supply curve 
D) a rightward shift of the labor supply curve 
E) a leftward shift of the labor demand curve

Question 12

-Figure 12-6 shows the production function for a firm that sells its output in a perfectly competitive market where the market price is $20.Between the second and third workers,the marginal revenue product of labor equals

Accepted Answer

A) $200 
B) $2,000 
C) $600 
D) $4,000 
E) $1,200 
A) $200 
B) $2,000 
C) $600 
D) $4,000 
E) $1,200

Question 13

For any resource it hires,a firm's marginal revenue product

Accepted Answer

A) is the change in the firm's total cost divided by the change in employment of that resource 
B) equals the resource's marginal factor cost 
C) equals marginal cost 
D) is the change in the firm's total revenue divided by the change in employment of that resource 
E) equals the change in the firm's marginal revenue 
A) is the change in the firm's total cost divided by the change in employment of that resource 
B) equals the resource's marginal factor cost 
C) equals marginal cost 
D) is the change in the firm's total revenue divided by the change in employment of that resource 
E) equals the change in the firm's marginal revenue

Question 14

The relationship between the marginal product of labor (MP),the product price (P)and the marginal revenue product of labor (MRP)in a perfectly competitive market is

Accepted Answer

A) MP = P x MRP 
B) MP = P + MRP 
C) MRP = P / MP 
D) MRP = P x MP 
E) MRP = P + MP 
A) MP = P x MRP 
B) MP = P + MRP 
C) MRP = P / MP 
D) MRP = P x MP 
E) MRP = P + MP

Question 15

The wage premium for the average college graduate (vs.the average high school graduate)has gone down significantly in recent years.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following could explain a decrease in labor supply to a particular labor market?

Accepted Answer

A) an increased preference for this type of work 
B) a decrease in the size of the population 
C) an increase in the number of firms in the market 
D) a leftward shift of the marginal revenue product curve of labor at a typical firm 
E) a reduction in wages rates for similar types of work 
A) an increased preference for this type of work 
B) a decrease in the size of the population 
C) an increase in the number of firms in the market 
D) a leftward shift of the marginal revenue product curve of labor at a typical firm 
E) a reduction in wages rates for similar types of work

Question 17

In a perfectly competitive labor market,the supply of labor curve facing a firm will be

Accepted Answer

A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) equal to its marginal revenue product curve 
A) horizontal 
B) vertical 
C) upward sloping 
D) downward sloping 
E) equal to its marginal revenue product curve

Question 18

The wage rate is constant along a firm's labor demand curve.

Accepted Answer

A) True 
 B)False

Question 19

The demand for labor curve depicts

Accepted Answer

A) a relationship between the price of a good and the quantity of labor necessary to produce different amounts of that good 
B) a relationship between wages and profits in a firm 
C) how the wage rate changes when the price of the good produced by labor changes 
D) a relationship between the real wage rate and the quantity of labor demanded 
E) how much labor will be hired at different profit levels 
A) a relationship between the price of a good and the quantity of labor necessary to produce different amounts of that good 
B) a relationship between wages and profits in a firm 
C) how the wage rate changes when the price of the good produced by labor changes 
D) a relationship between the real wage rate and the quantity of labor demanded 
E) how much labor will be hired at different profit levels

Question 20

If a firm produces in a perfectly competitive output market,

Accepted Answer

A) then it demands its resources in perfectly competitive input markets 
B) then it demands labor in a perfectly competitive labor market 
C) the type of market in which it demands labor may be perfectly competitive or imperfectly competitive 
D) the labor demand curve is the same as its product demand curve 
E) the labor demand curve facing the firm is perfectly elastic 
A) then it demands its resources in perfectly competitive input markets 
B) then it demands labor in a perfectly competitive labor market 
C) the type of market in which it demands labor may be perfectly competitive or imperfectly competitive 
D) the labor demand curve is the same as its product demand curve 
E) the labor demand curve facing the firm is perfectly elastic

A change in the wage rate causes a firm's labor demand curve to shift.

The local labor market for lawn-mowing workers is initially in equilibrium.These workers are also able to clean swimming pools and have no preference for one job over the other.If the wage rate for pool cleaning rises,which of the following would occur in the lawn-mowing labor market?

A labor market differs from a product market because

Wage rates in other markets are assumed constant along the labor supply curve for a particular labor market.

A firm's labor demand curve is derived from the demand for the goods and services it produces.

Assume that the labor market for auto mechanics is initially in equilibrium.Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?

If both the market for a firm's output and the market in which it hires its labor are perfectly competitive,the firm's labor demand curve will be perfectly elastic.

One baker can bake 15 pies in a day.Two bakers can bake 35 pies in a day.If the marginal revenue product of hiring the second baker is $200,then in a perfectly competitive product market

The marginal approach to profit

An increase in the wage rate will cause

-Figure 12-6 shows the production function for a firm that sells its output in a perfectly competitive market where the market price is $20.Between the second and third workers,the marginal revenue product of labor equals

For any resource it hires,a firm's marginal revenue product

The relationship between the marginal product of labor (MP),the product price (P)and the marginal revenue product of labor (MRP)in a perfectly competitive market is

The wage premium for the average college graduate (vs.the average high school graduate)has gone down significantly in recent years.

Which of the following could explain a decrease in labor supply to a particular labor market?

In a perfectly competitive labor market,the supply of labor curve facing a firm will be

The wage rate is constant along a firm's labor demand curve.

The demand for labor curve depicts

If a firm produces in a perfectly competitive output market,

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 12: Labor Markets

A change in the wage rate causes a firm's labor demand curve to shift.

The local labor market for lawn-mowing workers is initially in equilibrium.These workers are also able to clean swimming pools and have no preference for one job over the other.If the wage rate for pool cleaning rises,which of the following would occur in the lawn-mowing labor market?

A labor market differs from a product market because

Wage rates in other markets are assumed constant along the labor supply curve for a particular labor market.

A firm's labor demand curve is derived from the demand for the goods and services it produces.

Assume that the labor market for auto mechanics is initially in equilibrium.Which of the following would lead to an increase in both the wage rate and employment for auto mechanics?

If both the market for a firm's output and the market in which it hires its labor are perfectly competitive,the firm's labor demand curve will be perfectly elastic.

One baker can bake 15 pies in a day.Two bakers can bake 35 pies in a day.If the marginal revenue product of hiring the second baker is $200,then in a perfectly competitive product market

The marginal approach to profit

An increase in the wage rate will cause

-Figure 12-6 shows the production function for a firm that sells its output in a perfectly competitive market where the market price is $20.Between the second and third workers,the marginal revenue product of labor equals

For any resource it hires,a firm's marginal revenue product

The relationship between the marginal product of labor (MP),the product price (P)and the marginal revenue product of labor (MRP)in a perfectly competitive market is

The wage premium for the average college graduate (vs.the average high school graduate)has gone down significantly in recent years.

Which of the following could explain a decrease in labor supply to a particular labor market?

In a perfectly competitive labor market,the supply of labor curve facing a firm will be

The wage rate is constant along a firm's labor demand curve.

The demand for labor curve depicts

If a firm produces in a perfectly competitive output market,

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Elasticity

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters