Question 1

Assume that the average male wage rate is 20 percent higher than the average female wage rate. One can infer that:

Accepted Answer

A) this is evidence of discrimination because females should be paid the same as males. 
B) employers undervalue female employees, so they're able to pay them less. 
C) customers overvalue male employers, so employers pay males more. 
D) this is evidence of discrimination only if all factors affecting productivity are equal. 
A) this is evidence of discrimination because females should be paid the same as males. 
B) employers undervalue female employees, so they're able to pay them less. 
C) customers overvalue male employers, so employers pay males more. 
D) this is evidence of discrimination only if all factors affecting productivity are equal.

Question 2

One reason nonunionized firms do not always drive unionized firms out of business is that:

Accepted Answer

A) markets are not competitive. 
B) unionized firms reduce the value of total output. 
C) unionized firms hire more selectively, employing workers with greater human capital. 
D) unionized firms receive government subsidies. 
A) markets are not competitive. 
B) unionized firms reduce the value of total output. 
C) unionized firms hire more selectively, employing workers with greater human capital. 
D) unionized firms receive government subsidies.

Question 3

Kyle works for a perfectly competitive firm where he receives a wage rate of $15. From this, one can infer that:

Accepted Answer

A) Kyle's marginal product is at least $15. 
B) the price of the firm's output is at least $15. 
C) Kyle's reservation wage is $15. 
D) Kyle's value of marginal product is at least $15. 
A) Kyle's marginal product is at least $15. 
B) the price of the firm's output is at least $15. 
C) Kyle's reservation wage is $15. 
D) Kyle's value of marginal product is at least $15.

Question 4

In a competitive labor market, the equilibrium wage rate is determined by:

Accepted Answer

A) government regulation. 
B) employers. 
C) labor demand and labor supply. 
D) employees. 
A) government regulation. 
B) employers. 
C) labor demand and labor supply. 
D) employees.

Question 5

Assume that the graph below describes the current labor market for nurses in a mid-sized city and that the labor market is perfectly competitive.   If supply shifts from S₀ to S₁ and demand shifts from D₀ to D₁, then

Accepted Answer

A) wages will have to rise to $60 to avoid a nursing shortage. 
B) wages will have to rise to $50 to avoid a nursing shortage. 
C) a wage of $40 will be sufficient to achieve equilibrium. 
D) a wage of $50 will lead to an excess supply of nurses. 
A) wages will have to rise to $60 to avoid a nursing shortage. 
B) wages will have to rise to $50 to avoid a nursing shortage. 
C) a wage of $40 will be sufficient to achieve equilibrium. 
D) a wage of $50 will lead to an excess supply of nurses.

Question 6

Suppose the Tasty Taco Company produces tacos. The number of tacos it can produce each hour depends on the number of workers it hires, as shown in the accompanying table. In addition, each taco can be sold for 50 cents more than the cost of the ingredients needed to produce it.  
$$\begin{array} { | c | c | } 
\hline \text { Number af warkers per hour } & \text { Number of tacas per hour } \
\hline 0 & 0 \
\hline 1 & 25 \
\hline 2 & 45 \
\hline 3 & 60 \
\hline 4 & 70 \
\hline 5 & 75 \
\hline
\end{array}$$  
If the hourly wage for people who make tacos is $8, then how many workers should the Tasty Taco Company hire each hour?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 7

Sam owns a candy factory and hires workers in a competitive labor market to pack cases of candy. The company's weekly output of cases of candy varies with the number of workers hired, as shown in the following table:  
$$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Number d } \
\text { warkers }
\end{array} & \text { Cases/reek } \
\hline 0 & 0 \
\hline 1 & 160 \
\hline 2 & 310 \
\hline 3 & 450 \
\hline 4 & 580 \
\hline 5 & 700 \
\hline 6 & 810 \
\hline
\end{array}$$  
The marginal product of the fourth worker is ________ cases per week.

Accepted Answer

A) 110 
B) 130 
C) 140 
D) 145 
A) 110 
B) 130 
C) 140 
D) 145

Question 8

Charlie is getting a divorce. He selects a female lawyer at a large law firm because he believes they are more aggressive in obtaining favorable settlements in divorce cases. Charlie's behavior is an example of ________ discrimination.

Accepted Answer

A) market 
B) employer 
C) employee 
D) customer 
A) market 
B) employer 
C) employee 
D) customer

Question 9

Curly just graduated from State U and has three job offers: teaching at a prestigious private high school nine months a year with summers off, working forty hours a week at a bank in a small city, and working more than sixty hours a week for a high-powered investment firm in New York. Suppose all of the jobs paid exactly the same annual salary, and that most people prefer leisure to work, all else equal. If that were the case:

Accepted Answer

A) there would be a shortage of teachers at the high school. 
B) there would be a surplus of workers at the investment firm. 
C) there would be a surplus of teachers at the high school. 
D) people would naturally sort themselves into the job that best suits their talents. 
A) there would be a shortage of teachers at the high school. 
B) there would be a surplus of workers at the investment firm. 
C) there would be a surplus of teachers at the high school. 
D) people would naturally sort themselves into the job that best suits their talents.

Question 10

Matt is offered a job driving the campus shuttle bus from 4 p.m. to 6 p.m. each Monday. His reservation wage for this job is $7 per hour. Now suppose the director offers Matt $50 per hour, but also announces that Matt's earnings will be divided equally among Matt and the 99 other students who live in Matt's dorm. What will be Matt's economic surplus from accepting the job?

Accepted Answer

A) $0.50 per hour 
B) $1.00 per hour 
C) -$6.00 per hour 
D) -$6.50 per hour 
A) $0.50 per hour 
B) $1.00 per hour 
C) -$6.00 per hour 
D) -$6.50 per hour

Question 11

According to the textbook, the best possible solution to the problem of poverty is:

Accepted Answer

A) a combination of a negative income tax and public employment. 
B) to maintain the current system. 
C) a negative income tax with the tax credit equal to the poverty threshold. 
D) the complete elimination of all efforts to assist the poor. 
A) a combination of a negative income tax and public employment. 
B) to maintain the current system. 
C) a negative income tax with the tax credit equal to the poverty threshold. 
D) the complete elimination of all efforts to assist the poor.

Question 12

Matt is offered a job driving the campus shuttle bus from 4 p.m. to 6 p.m. each Monday. His reservation wage for this job is $7 per hour. Now suppose the director offers Matt $50 per hour, but also announces that the earnings from the job will be divided equally among Matt and the 99 other students who live in Matt's dorm. Will Matt accept this job?

Accepted Answer

A) Yes, accepting the job means a positive surplus for Matt. 
B) No, accepting the job means a negative surplus for Matt. 
C) Yes, although accepting the job means a negative surplus for Matt, still it's better than having no job. 
D) No, although accepting the job means a positive surplus for Matt, still it's not the best option for him. 
A) Yes, accepting the job means a positive surplus for Matt. 
B) No, accepting the job means a negative surplus for Matt. 
C) Yes, although accepting the job means a negative surplus for Matt, still it's better than having no job. 
D) No, although accepting the job means a positive surplus for Matt, still it's not the best option for him.

Question 13

The value of marginal product curve is downward sloping because:

Accepted Answer

A) firms must lower price to sell more. 
B) at lower wages, only less qualified workers are available. 
C) of the law of diminishing returns. 
D) profits decline as more workers are hired. 
A) firms must lower price to sell more. 
B) at lower wages, only less qualified workers are available. 
C) of the law of diminishing returns. 
D) profits decline as more workers are hired.

Question 14

Which of the following is not a reason why unionized firms can successfully compete with nonunionized firms?

Accepted Answer

A) Employee morale may be higher at unionized firms, so workers are more productive. 
B) Communication between management and workers is better at unionized firms. 
C) Labor turnover is lower at unionized firms, so unionized firms have lower hiring costs. 
D) Unionized firms are legally protected from price competition with nonunionized firms. 
A) Employee morale may be higher at unionized firms, so workers are more productive. 
B) Communication between management and workers is better at unionized firms. 
C) Labor turnover is lower at unionized firms, so unionized firms have lower hiring costs. 
D) Unionized firms are legally protected from price competition with nonunionized firms.

Question 15

Suppose that this graph describes the current labor market for high school teachers:   Why might the supply curve in this market shift to the left?

Accepted Answer

A) Distance learning and computer technology replace human teachers 
B) Women enter the workforce in greater numbers 
C) Immigration by families with children increases the need for teachers 
D) More attractive employment opportunities become available in other professions 
A) Distance learning and computer technology replace human teachers 
B) Women enter the workforce in greater numbers 
C) Immigration by families with children increases the need for teachers 
D) More attractive employment opportunities become available in other professions

Question 16

A winner-take-all labor market is one in which:

Accepted Answer

A) large differences in human capital translate into small differences in wages. 
B) one worker receives all of the available compensation and the rest receive nothing. 
C) small differences in human capital translate into small differences in wages. 
D) small differences in human capital translate into large differences in wages. 
A) large differences in human capital translate into small differences in wages. 
B) one worker receives all of the available compensation and the rest receive nothing. 
C) small differences in human capital translate into small differences in wages. 
D) small differences in human capital translate into large differences in wages.

Question 17

If technological developments increase the marginal product of labor, then the:

Accepted Answer

A) supply of labor will increase. 
B) demand for labor will decrease. 
C) the equilibrium wage rate will decrease. 
D) demand for labor will increase. 
A) supply of labor will increase. 
B) demand for labor will decrease. 
C) the equilibrium wage rate will decrease. 
D) demand for labor will increase.

Question 18

The growth in income inequality in the United States since the early 1980s has been driven primarily by the dramatic:

Accepted Answer

A) increase in real incomes for the top 1 percent of earners. 
B) increase in real incomes for the top 10 percent of earners. 
C) increase in real incomes for the top 20 percent of earners. 
D) decrease in real incomes for the bottom 20 percent of earners. 
A) increase in real incomes for the top 1 percent of earners. 
B) increase in real incomes for the top 10 percent of earners. 
C) increase in real incomes for the top 20 percent of earners. 
D) decrease in real incomes for the bottom 20 percent of earners.

Exam 13: Labor Markets, Poverty, and Income Distribution

Assume that the average male wage rate is 20 percent higher than the average female wage rate. One can infer that:

One reason nonunionized firms do not always drive unionized firms out of business is that:

Kyle works for a perfectly competitive firm where he receives a wage rate of $15. From this, one can infer that:

In a competitive labor market, the equilibrium wage rate is determined by:

Assume that the graph below describes the current labor market for nurses in a mid-sized city and that the labor market is perfectly competitive. If supply shifts from S₀ to S₁ and demand shifts from D₀ to D₁, then

Charlie is getting a divorce. He selects a female lawyer at a large law firm because he believes they are more aggressive in obtaining favorable settlements in divorce cases. Charlie's behavior is an example of ________ discrimination.

According to the textbook, the best possible solution to the problem of poverty is:

The value of marginal product curve is downward sloping because:

Which of the following is not a reason why unionized firms can successfully compete with nonunionized firms?

Suppose that this graph describes the current labor market for high school teachers: Why might the supply curve in this market shift to the left?

A winner-take-all labor market is one in which:

If technological developments increase the marginal product of labor, then the:

The growth in income inequality in the United States since the early 1980s has been driven primarily by the dramatic:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Elasticity

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

An Introduction to Behavioral Economics

Externalities, Property Rights, and the Environment

The Economics of Information

Public Goods and Tax Policy

International Trade and Trade Policy

Macroeconomics: The Birds Eye View of the Economy

Measuring Economic Activity: GDP and Unemployment

Measuring the Price Level and Inflation

Economic Growth, Productivity, and Living Standards

The Labor Market: Workers, Wages, and Unemployment

Saving and Capital Formation

Money Prices and the Federal Reserve

Financial Markets and International Capital Flows

Short-Term Economic Fluctuations: An Introduction

Spending and Output in the Short Run

Stabilizing the Economy: The Role of the Fed

Aggregate Demand, Aggregate Supply, and Inflation

Exchange Rates and the Open Economy

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