Question 1

An offer curve is made up of

Accepted Answer

A)  the various wages one company is willing to pay at different levels of risk. 
B)  the various wages one worker is willing to accept at various levels of risk. 
C)  the wages paid by various companies at various risk levels. 
D)  the wages paid by various companies and potentially accepted by various workers at different risk levels. 
A)  the various wages one company is willing to pay at different levels of risk. 
B)  the various wages one worker is willing to accept at various levels of risk. 
C)  the wages paid by various companies at various risk levels. 
D)  the wages paid by various companies and potentially accepted by various workers at different risk levels. D

Question 2

Suppose workers at a firm are willing to pay (in foregone after-tax wages ) $1200 a year in order to get a fringe benefit. The worker's tax bracket is 40% (so that for every $1000 a firm pays a worker, they get $600 in after-tax take home pay). If a firm gives the worker the fringe benefit and workers reduce their after-tax wage by $1200, how much is wage paid by the firm being reduced by?

Accepted Answer

A)  $2000 
B)  $3000 
C)  $1200 
D)  $720 
A)  $2000 
B)  $3000 
C)  $1200 
D)  $720 A

Question 3

Predictable layoffs

Accepted Answer

A)  will not increase utility for any workers. 
B)  decrease utility of all workers. 
C)  decrease utility of risk-averse workers. 
D)  imply that leisure is an inferior good to all workers. 
A)  will not increase utility for any workers. 
B)  decrease utility of all workers. 
C)  decrease utility of risk-averse workers. 
D)  imply that leisure is an inferior good to all workers. C

Question 4

Firm A offers the same pension to all workers, regardless of how many hours they work. Workers value the pension at $10,000 a year (and it costs Firm A $10,000 to provide the benefit). Firm B does not offer a pension but is like Firm A in all other job characteristics. The labor market is competitive and all workers have comparable skills. If there are workers in both jobs, then

Accepted Answer

A)  workers that prefer working shorter hours are more likely to work for Firm B. 
B)  all workers will prefer working for Firm A. 
C)  all workers will be indifferent between working for Firm A and Firm B. 
D)  workers that prefer working long hours are more likely to work for Firm B. 
A)  workers that prefer working shorter hours are more likely to work for Firm B. 
B)  all workers will prefer working for Firm A. 
C)  all workers will be indifferent between working for Firm A and Firm B. 
D)  workers that prefer working long hours are more likely to work for Firm B.

Question 5

Workers' indifference curves for wage rates versus benefits will be

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  downward sloping and concave. 
D)  upward sloping and convex. 
A)  downward sloping. 
B)  upward sloping. 
C)  downward sloping and concave. 
D)  upward sloping and convex.

Question 6

On a graph of wage rates versus risk of injury, indifference curves are convex because

Accepted Answer

A)  risk of injury decreases workers' utility. 
B)  each additional dollar of pay increases utility more than the previous dollar. 
C)  utility is constant on indifference curves. 
D)  at low levels of risk, a worker is less willing to give up wages for increased safety. 
A)  risk of injury decreases workers' utility. 
B)  each additional dollar of pay increases utility more than the previous dollar. 
C)  utility is constant on indifference curves. 
D)  at low levels of risk, a worker is less willing to give up wages for increased safety.

Question 7

If all workers like nice working conditions and labor markets are competitive (such that workers are mobile and fully informed), then in equilibrium

Accepted Answer

A)  no worker will be in job that does not have nice working conditions. 
B)  workers will prefer to work in jobs with nice working conditions. 
C)  workers will prefer to work in jobs without nice working conditions. 
D)  workers will be indifferent between jobs with and without nice working conditions. 
A)  no worker will be in job that does not have nice working conditions. 
B)  workers will prefer to work in jobs with nice working conditions. 
C)  workers will prefer to work in jobs without nice working conditions. 
D)  workers will be indifferent between jobs with and without nice working conditions.

Question 8

In the context of the models presented in the text, why are low-income workers more likely to take dangerous jobs?

Accepted Answer

A)  Low-income workers are more easily exploited by employers. 
B)  Safety is an inferior good. 
C)  Low-income workers are not willing to pay as much for more safety as high-income workers. 
D)  All of the above 
A)  Low-income workers are more easily exploited by employers. 
B)  Safety is an inferior good. 
C)  Low-income workers are not willing to pay as much for more safety as high-income workers. 
D)  All of the above

Question 9

Worker A and Worker B both prefer to work 8 hours a day when their hourly wage is $12 an hour. They are currently working 8 hours a day and getting $12 an hour. Another employer wants to employ them only 6 hours a day (and requires them to not work in another job). Worker A will demand a higher wage to take the 6 hour job (compared to Worker B. when

Accepted Answer

A)  worker A has a more curved (bowed in) set of indifference curves. 
B)  worker A has a less curves (less bowed in) set of indifference curves. 
C)  worker A has a higher income elasticity of demand for leisure 
D)  worker A has a higher income elasticity of demand for leisure. 
A)  worker A has a more curved (bowed in) set of indifference curves. 
B)  worker A has a less curves (less bowed in) set of indifference curves. 
C)  worker A has a higher income elasticity of demand for leisure 
D)  worker A has a higher income elasticity of demand for leisure.

Question 10

There are 100 jobs in a town and 100 workers. Forty of the jobs are dangerous, 60 are safe. Workers have the following preferences: worker one dislikes danger by $1, worker two dislikes danger by $2, worker three dislikes danger by $3, and so forth (such that worker hundred dislikes danger by $100). Assume workers are mobile and well-informed and the labor market is mobile. Also assume that safe jobs pay $500 a week. Which of the following statements will be true?

Accepted Answer

A)  Dangerous jobs will pay $540 a week. 
B)  Worker one will earn rents of $39. 
C)  Worker hundred will earn rents of $60. 
D)  All of the above are true. 
A)  Dangerous jobs will pay $540 a week. 
B)  Worker one will earn rents of $39. 
C)  Worker hundred will earn rents of $60. 
D)  All of the above are true.

Question 11

High-paying jobs are also associated with generous benefits because

Accepted Answer

A)  benefits which cost $100 generally increase utility by more than $100 in cash. 
B)  high-paid workers can benefit from the tax advantages given to benefits. 
C)  employers know how to spend money better than their employees. 
D)  high-paid workers are risk neutral. 
A)  benefits which cost $100 generally increase utility by more than $100 in cash. 
B)  high-paid workers can benefit from the tax advantages given to benefits. 
C)  employers know how to spend money better than their employees. 
D)  high-paid workers are risk neutral.

Question 12

A steeply sloped isoprofit curve, with wages on the vertical axis and risk of injury on the horizontal axis, indicates that

Accepted Answer

A)  injury levels can be reduced easily and inexpensively. 
B)  it would be very expensive to increase safety in the workplace. 
C)  the industry is very competitive. 
D)  the industry will pay only small compensating differentials. 
A)  injury levels can be reduced easily and inexpensively. 
B)  it would be very expensive to increase safety in the workplace. 
C)  the industry is very competitive. 
D)  the industry will pay only small compensating differentials.

Question 13

If a worker does not have good information and thinks that risks are lower than they actually are, then OSHA regulations which increase safety standards in the workplace

Accepted Answer

A)  decrease utility for the worker. 
B)  increase utility for the worker. 
C)  could increase or decrease utility for the worker. 
D)  move the worker to his highest possible utility level. 
A)  decrease utility for the worker. 
B)  increase utility for the worker. 
C)  could increase or decrease utility for the worker. 
D)  move the worker to his highest possible utility level.

Question 14

Lawyers work in pleasant surroundings at low risk of injury, but they generally receive higher pay than construction workers. This is because

Accepted Answer

A)  construction workers don't receive a compensating wage differential for their risk of injury and less pleasant surroundings. 
B)  lawyers and construction workers are not comparable due to different preferences. 
C)  lawyers and construction workers are not comparable due to different education levels. 
D)  lawyers' work must be considered unpleasant by many workers. 
A)  construction workers don't receive a compensating wage differential for their risk of injury and less pleasant surroundings. 
B)  lawyers and construction workers are not comparable due to different preferences. 
C)  lawyers and construction workers are not comparable due to different education levels. 
D)  lawyers' work must be considered unpleasant by many workers.

Question 15

Introduction of a benefit that turns out to decrease productivity would cause a firm's isoprofit curve to

Accepted Answer

A)  flatten. 
B)  become steeper. 
C)  remain unchanged. 
D)  become convex. 
A)  flatten. 
B)  become steeper. 
C)  remain unchanged. 
D)  become convex.

Question 16

Along an isoprofit curve

Accepted Answer

A)  the difference between total costs and total revenues is constant. 
B)  the firm's level of safety is constant. 
C)  the firm's level of wages is constant. 
D)  the firm's safety costs are constant. 
A)  the difference between total costs and total revenues is constant. 
B)  the firm's level of safety is constant. 
C)  the firm's level of wages is constant. 
D)  the firm's safety costs are constant.

Question 17

When we state that compensating wage differentials exist for comparable workers, we do NOT assume that

Accepted Answer

A)  workers have several jobs to choose from. 
B)  workers maximize utility. 
C)  workers maximize income. 
D)  workers accurately assess the non-pecuniary benefits of jobs. 
A)  workers have several jobs to choose from. 
B)  workers maximize utility. 
C)  workers maximize income. 
D)  workers accurately assess the non-pecuniary benefits of jobs.

Question 18

A compensating wage differential is

Accepted Answer

A)  an extra wage that compensates workers for undesirable working conditions. 
B)  an extra wage that is above the equilibrium wage. 
C)  an extra wage that will make all workers willing to accept undesirable working conditions. 
D)  an extra wage that implies firms are no longer maximizing profits. 
A)  an extra wage that compensates workers for undesirable working conditions. 
B)  an extra wage that is above the equilibrium wage. 
C)  an extra wage that will make all workers willing to accept undesirable working conditions. 
D)  an extra wage that implies firms are no longer maximizing profits.

Question 19

If comparable workers are paid an extra $1.00 per hour to work outdoors, then

Accepted Answer

A)  the value of indoor work is at least $1.00 per hour to all workers. 
B)  the value of indoor work is more than $1.00 per hour to all workers. 
C)  the value of indoor work is worth at least $1.00 per hour to some workers. 
D)  the value of indoor work is $1.00 per hour to all workers. 
A)  the value of indoor work is at least $1.00 per hour to all workers. 
B)  the value of indoor work is more than $1.00 per hour to all workers. 
C)  the value of indoor work is worth at least $1.00 per hour to some workers. 
D)  the value of indoor work is $1.00 per hour to all workers.

Question 20

A risk-averse worker gains ________ utility from a job with possible layoffs than from one with no layoffs when the two jobs have the same number of expected hours of work and wage rate.

Accepted Answer

A)  more 
B)  less 
C)  at least as much 
D)  the same amount of 
A)  more 
B)  less 
C)  at least as much 
D)  the same amount of

An offer curve is made up of

Predictable layoffs

Workers' indifference curves for wage rates versus benefits will be

On a graph of wage rates versus risk of injury, indifference curves are convex because

If all workers like nice working conditions and labor markets are competitive (such that workers are mobile and fully informed), then in equilibrium

In the context of the models presented in the text, why are low-income workers more likely to take dangerous jobs?

High-paying jobs are also associated with generous benefits because

A steeply sloped isoprofit curve, with wages on the vertical axis and risk of injury on the horizontal axis, indicates that

If a worker does not have good information and thinks that risks are lower than they actually are, then OSHA regulations which increase safety standards in the workplace

Lawyers work in pleasant surroundings at low risk of injury, but they generally receive higher pay than construction workers. This is because

Introduction of a benefit that turns out to decrease productivity would cause a firm's isoprofit curve to

Along an isoprofit curve

When we state that compensating wage differentials exist for comparable workers, we do NOT assume that

A compensating wage differential is

If comparable workers are paid an extra $1.00 per hour to work outdoors, then

A risk-averse worker gains ________ utility from a job with possible layoffs than from one with no layoffs when the two jobs have the same number of expected hours of work and wage rate.

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters

Exam 8: Compensating Wage Differentials and Labor Markets

An offer curve is made up of

Predictable layoffs

Workers' indifference curves for wage rates versus benefits will be

On a graph of wage rates versus risk of injury, indifference curves are convex because

If all workers like nice working conditions and labor markets are competitive (such that workers are mobile and fully informed), then in equilibrium

In the context of the models presented in the text, why are low-income workers more likely to take dangerous jobs?

High-paying jobs are also associated with generous benefits because

A steeply sloped isoprofit curve, with wages on the vertical axis and risk of injury on the horizontal axis, indicates that

If a worker does not have good information and thinks that risks are lower than they actually are, then OSHA regulations which increase safety standards in the workplace

Lawyers work in pleasant surroundings at low risk of injury, but they generally receive higher pay than construction workers. This is because

Introduction of a benefit that turns out to decrease productivity would cause a firm's isoprofit curve to

Along an isoprofit curve

When we state that compensating wage differentials exist for comparable workers, we do NOT assume that

A compensating wage differential is

If comparable workers are paid an extra $1.00 per hour to work outdoors, then

A risk-averse worker gains ________ utility from a job with possible layoffs than from one with no layoffs when the two jobs have the same number of expected hours of work and wage rate.

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters