Question 1

The production function relates

Accepted Answer

A) factor prices to output prices. 
B) wages to labor employed. 
C) factors of production to total output. 
D) factors of production to profit. 
E) the output price to factors of production. 
A) factor prices to output prices. 
B) wages to labor employed. 
C) factors of production to total output. 
D) factors of production to profit. 
E) the output price to factors of production.

Question 2

Labor demand is more elastic

Accepted Answer

A) the greater is the supply elasticity of capital. 
B) the greater is the elasticity of substitution between labor and capital. 
C) the greater is the elasticity of demand for the firm's output. 
D) the greater is labor's share in total costs. 
E) All of the above. 
A) the greater is the supply elasticity of capital. 
B) the greater is the elasticity of substitution between labor and capital. 
C) the greater is the elasticity of demand for the firm's output. 
D) the greater is labor's share in total costs. 
E) All of the above.

Question 3

Why is the short-run labor demand curve less elastic relative to the long-run labor demand curve?

Accepted Answer

A) Because firms care about changes in wages in the short-run but not in the long-run. 
B) Because firms are better able to substitute capital for labor in the long run compared to the short run. 
C) Because labor is a normal good. 
D) Because a perfectly competitive firm can always pay lower wages in the long run. 
E) Because isocost curves get shallower when the wage increases. 
A) Because firms care about changes in wages in the short-run but not in the long-run. 
B) Because firms are better able to substitute capital for labor in the long run compared to the short run. 
C) Because labor is a normal good. 
D) Because a perfectly competitive firm can always pay lower wages in the long run. 
E) Because isocost curves get shallower when the wage increases.

Question 4

In the U.S. labor market, it is typically the case that:

Accepted Answer

A) If job creation is high, then job destruction is low. 
B) If job creation is low, then job destruction is high. 
C) There is relatively little job destruction during economic up-turns. 
D) There is relatively little job creation during economic down-turns. 
E) There is a large amount of job creation and job destruction happening at the same time, during both expansions and contractions. 
A) If job creation is high, then job destruction is low. 
B) If job creation is low, then job destruction is high. 
C) There is relatively little job destruction during economic up-turns. 
D) There is relatively little job creation during economic down-turns. 
E) There is a large amount of job creation and job destruction happening at the same time, during both expansions and contractions.

Question 5

Firms usually face asymmetric variable adjustment costs because

Accepted Answer

A) hiring costs are typically higher than firing costs. 
B) firing workers is relatively easy compared to hiring workers. 
C) firing workers can be difficult and costly for legal reasons compared to hiring workers. 
D) workers are reluctant to change jobs during a recession but not during an expansion. 
E) firms vary in size. 
A) hiring costs are typically higher than firing costs. 
B) firing workers is relatively easy compared to hiring workers. 
C) firing workers can be difficult and costly for legal reasons compared to hiring workers. 
D) workers are reluctant to change jobs during a recession but not during an expansion. 
E) firms vary in size.

Question 6

The imposition of a minimum wage on a competitive labor market will likely

Accepted Answer

A) create additional employment opportunities because some low-skilled workers will now see their wage increase. 
B) lower the wages of workers earning more than the minimum wage. 
C) create unemployment as some people enter the labor market while some firms reduce the quantity of labor they are willing to employ due to the increased wage. 
D) increase unemployment of high-skilled workers as firms substitute high-skilled labor for low-skilled labor. 
E) lower the unemployment rate of low-income families. 
A) create additional employment opportunities because some low-skilled workers will now see their wage increase. 
B) lower the wages of workers earning more than the minimum wage. 
C) create unemployment as some people enter the labor market while some firms reduce the quantity of labor they are willing to employ due to the increased wage. 
D) increase unemployment of high-skilled workers as firms substitute high-skilled labor for low-skilled labor. 
E) lower the unemployment rate of low-income families.

Question 7

If unskilled labor and capital are substitutes,

Accepted Answer

A) demand for unskilled labor increases when the price of capital decreases. 
B) the cross-elasticity between unskilled labor and capital is positive. 
C) the price of unskilled labor decreases when the price of capital increases. 
D) the price of capital is increasing. 
E) the demand curve for capital is upward-sloping. 
A) demand for unskilled labor increases when the price of capital decreases. 
B) the cross-elasticity between unskilled labor and capital is positive. 
C) the price of unskilled labor decreases when the price of capital increases. 
D) the price of capital is increasing. 
E) the demand curve for capital is upward-sloping.

Question 8

At a wage of $25 per hour, the firm employs 50,000 hours of labor per week. If the wage would increase to $27 per hour, the firm would employ 45,000 hours of labor per week. What is the elasticity of labor demand?

Accepted Answer

A) -2.50. 
B) -1.50. 
C) -1.25. 
D) -0.50. 
E) -0.25. 
A) -2.50. 
B) -1.50. 
C) -1.25. 
D) -0.50. 
E) -0.25.

Question 9

What is the most accurate description of the value of a worker to the firm?

Accepted Answer

A) The wage. 
B) The firm's total output when holding capital fixed. 
C) The firm's average product when holding capital fixed. 
D) The dollar value of the worker's output. 
E) The dollar value of the average worker's output. 
A) The wage. 
B) The firm's total output when holding capital fixed. 
C) The firm's average product when holding capital fixed. 
D) The dollar value of the worker's output. 
E) The dollar value of the average worker's output.

Question 10

The slope of the production function while holding capital fixed is

Accepted Answer

A) the marginal product of labor. 
B) the marginal product of capital. 
C) the average product of labor. 
D) the labor-capital ratio. 
E) the capital-labor ratio. 
A) the marginal product of labor. 
B) the marginal product of capital. 
C) the average product of labor. 
D) the labor-capital ratio. 
E) the capital-labor ratio.

The production function relates

Labor demand is more elastic

Why is the short-run labor demand curve less elastic relative to the long-run labor demand curve?

In the U.S. labor market, it is typically the case that:

Firms usually face asymmetric variable adjustment costs because

The imposition of a minimum wage on a competitive labor market will likely

If unskilled labor and capital are substitutes,

At a wage of $25 per hour, the firm employs 50,000 hours of labor per week. If the wage would increase to $27 per hour, the firm would employ 45,000 hours of labor per week. What is the elasticity of labor demand?

What is the most accurate description of the value of a worker to the firm?

The slope of the production function while holding capital fixed is

Introduction to Labor Economics

Labor Supply

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 3: Labor Demand

The production function relates

Labor demand is more elastic

Why is the short-run labor demand curve less elastic relative to the long-run labor demand curve?

In the U.S. labor market, it is typically the case that:

Firms usually face asymmetric variable adjustment costs because

The imposition of a minimum wage on a competitive labor market will likely

If unskilled labor and capital are substitutes,

At a wage of $25 per hour, the firm employs 50,000 hours of labor per week. If the wage would increase to $27 per hour, the firm would employ 45,000 hours of labor per week. What is the elasticity of labor demand?

What is the most accurate description of the value of a worker to the firm?

The slope of the production function while holding capital fixed is

Introduction to Labor Economics

Labor Supply

Labor Market Equilibrium

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters