Question 1

According to conventional human capital theory, college graduates earn more than high school graduates because

Accepted Answer

A) college graduates insist on a financial return on their human investments. 
B) college graduates are made more productive by their greater training. 
C) jobs that require more education must pay higher wages to attract enough workers. 
D) All of the above are correct. 
A) college graduates insist on a financial return on their human investments. 
B) college graduates are made more productive by their greater training. 
C) jobs that require more education must pay higher wages to attract enough workers. 
D) All of the above are correct.

Question 2

For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?

Accepted Answer

A) air traffic controller 
B) marketing manager 
C) waitress 
D) dentist 
A) air traffic controller 
B) marketing manager 
C) waitress 
D) dentist

Question 3

The real minimum wage has increased significantly over the last 40 years.

Accepted Answer

A) True 
 B)False

Question 4

Inventions like gunpowder and the wheelbarrow were created by the Chinese hundreds of years ago.The fact that such items were not put to productive use was caused primarily by a lack of ____.

Accepted Answer

A) financial capital 
B) entrepreneurship 
C) an adequate price system 
D) marginal analysis 
A) financial capital 
B) entrepreneurship 
C) an adequate price system 
D) marginal analysis

Question 5

Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in employment.

Accepted Answer

A) True 
 B)False

Question 6

Cannon Mills used to be virtually the only employer in Kannapolis, North Carolina.What is the name for a single hirer of labor, and how do wages and the number of jobs available compare to a competitive labor market?

Accepted Answer

Monopsonists hire fewer workers and pay

Question 7

Creative destruction by innovation means

Accepted Answer

A) destruction of an innovative product once it fails in the market. 
B) introduction of an innovative product makes older substitute goods obsolete. 
C) substitute goods make innovative goods less competitive in the market. 
D) introduction of innovative goods increase the competition in the market 
A) destruction of an innovative product once it fails in the market. 
B) introduction of an innovative product makes older substitute goods obsolete. 
C) substitute goods make innovative goods less competitive in the market. 
D) introduction of innovative goods increase the competition in the market

Question 8

College graduates now earn nearly twice as much as their high school-educated peers and that gap is increasing.

Accepted Answer

A) True 
 B)False

Question 9

The supply curve is believed to bend backward at high wage rates because

Accepted Answer

A) income effects outweigh substitution effects. 
B) substitution effects outweigh income effects. 
C) the income and substitution effects work together to create the backward bend. 
D) leisure time is less attractive. 
A) income effects outweigh substitution effects. 
B) substitution effects outweigh income effects. 
C) the income and substitution effects work together to create the backward bend. 
D) leisure time is less attractive.

Question 10

A relatively high wage is predicted to be enjoyed by workers where

Accepted Answer

A) the population is large relative to industrial activity. 
B) the jobs are disagreeable or dangerous. 
C) the jobs are pleasant and satisfying. 
D) demand is weak and supply is high. 
A) the population is large relative to industrial activity. 
B) the jobs are disagreeable or dangerous. 
C) the jobs are pleasant and satisfying. 
D) demand is weak and supply is high.

Question 11

Workers in American industry are more productive than those in many other countries because of

Accepted Answer

A) the large supplies of machinery available. 
B) abundant natural resources. 
C) technical know-how. 
D) All of the above contribute to American worker productivity. 
A) the large supplies of machinery available. 
B) abundant natural resources. 
C) technical know-how. 
D) All of the above contribute to American worker productivity.

Question 12

The more money firms spend on R&D the faster the economy is expected to grow.

Accepted Answer

A) True 
 B)False

Question 13

Wage negotiations in baseball can fit the bilateral monopoly situation when a star player negotiates with an owner.Explain how collective bargaining would be used in wage negotiations and the role of player strikes.

Accepted Answer

Collective bargaining asks the player an

Question 14

All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

Accepted Answer

A) True 
 B)False

Question 15

Explain how the demand for labor is determined.

Accepted Answer

The demand for labor is the downward-slo

Question 16

How do modern markets differ from other economic systems in their capacity to produce "growth miracles"?

Accepted Answer

While other societies have had spectacul

Question 17

The last two decades in the United States have seen

Accepted Answer

A) a fall in real wages. 
B) an increase in labor-force participation. 
C) growth in service sector employment. 
D) All of the above are correct. 
A) a fall in real wages. 
B) an increase in labor-force participation. 
C) growth in service sector employment. 
D) All of the above are correct.

Question 18

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Accepted Answer

A) True 
 B)False

Question 19

If the MRP of labor is below the wage rate, the firm should lay off workers.

Accepted Answer

A) True 
 B)False

Question 20

Explain why on average the profit levels for invention and entrepreneurship are generally so low.

Accepted Answer

Although a new invention initially impli

Exam 19: Labor and Entrepreneurship: the Human Inputs

According to conventional human capital theory, college graduates earn more than high school graduates because

For which of the following workers would the substitution effect be more likely to outweigh the income effect of an increase in wage?

The real minimum wage has increased significantly over the last 40 years.

Inventions like gunpowder and the wheelbarrow were created by the Chinese hundreds of years ago.The fact that such items were not put to productive use was caused primarily by a lack of ____.

Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in employment.

Cannon Mills used to be virtually the only employer in Kannapolis, North Carolina.What is the name for a single hirer of labor, and how do wages and the number of jobs available compare to a competitive labor market?

Creative destruction by innovation means

College graduates now earn nearly twice as much as their high school-educated peers and that gap is increasing.

The supply curve is believed to bend backward at high wage rates because

A relatively high wage is predicted to be enjoyed by workers where

Workers in American industry are more productive than those in many other countries because of

The more money firms spend on R&D the faster the economy is expected to grow.

Wage negotiations in baseball can fit the bilateral monopoly situation when a star player negotiates with an owner.Explain how collective bargaining would be used in wage negotiations and the role of player strikes.

All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

Explain how the demand for labor is determined.

How do modern markets differ from other economic systems in their capacity to produce "growth miracles"?

The last two decades in the United States have seen

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

If the MRP of labor is below the wage rate, the firm should lay off workers.

Explain why on average the profit levels for invention and entrepreneurship are generally so low.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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