Question 1

If labor supply of unskilled workers is perfectly inelastic, then

Accepted Answer

A) firms face an increasing marginal cost of hiring unskilled labor. 
B) firms face a horizontal value of marginal product of employment curve. 
C) the labor supply curve of unskilled workers is horizontal at the market clearing wage. 
D) the labor supply curve of unskilled workers is vertical at the total number of unskilled workers in the market. 
E) workers will supply more hours of labor to the market when wages increase. 
A) firms face an increasing marginal cost of hiring unskilled labor. 
B) firms face a horizontal value of marginal product of employment curve. 
C) the labor supply curve of unskilled workers is horizontal at the market clearing wage. 
D) the labor supply curve of unskilled workers is vertical at the total number of unskilled workers in the market. 
E) workers will supply more hours of labor to the market when wages increase. D

Question 2

When the government mandates that firms supply a particular benefit, it is usually the case that

Accepted Answer

A) the cost of providing the benefit is less than the worker's value of the benefit. 
B) employment will increase. 
C) the wage will increase. 
D) the wage will decrease by more than the cost of providing the benefit. 
E) the wage will decrease by less than the cost of providing the benefit. 
A) the cost of providing the benefit is less than the worker's value of the benefit. 
B) employment will increase. 
C) the wage will increase. 
D) the wage will decrease by more than the cost of providing the benefit. 
E) the wage will decrease by less than the cost of providing the benefit. E

Question 3

The general consensus is that wages in the stricken area increase substantially in the months immediately following a natural disaster. This is most likely a result of what?

Accepted Answer

A) The government requiring wages to increase. 
B) The government's anti-gauging laws. 
C) A decrease in labor demand. 
D) A decrease in labor supply as some workers leave the afflicted area. 
E) An increase in labor supply as workers stream to the afflicted area. 
A) The government requiring wages to increase. 
B) The government's anti-gauging laws. 
C) A decrease in labor demand. 
D) A decrease in labor supply as some workers leave the afflicted area. 
E) An increase in labor supply as workers stream to the afflicted area. D

Question 4

A profit-maximizing monopsonist

Accepted Answer

A) pays the same wage to all types of labor. 
B) hires an equal number of male and female workers and pays them the same wage. 
C) hires more minority workers than non-minority workers, but pays the minority workers less than the non-minorities. 
D) hires fewer workers and pays its workers less than it would if it were operating in a competitive labor market. 
E) substitutes low-skilled labor for high-skilled labor in the long run. 
A) pays the same wage to all types of labor. 
B) hires an equal number of male and female workers and pays them the same wage. 
C) hires more minority workers than non-minority workers, but pays the minority workers less than the non-minorities. 
D) hires fewer workers and pays its workers less than it would if it were operating in a competitive labor market. 
E) substitutes low-skilled labor for high-skilled labor in the long run.

Question 5

If unskilled domestic labor and unskilled immigrant labor are substitutes in the production process, then a more open immigration policy will likely result in all but which of the following?

Accepted Answer

A) The total market supply of unskilled labor shifts out. 
B) The market-clearing wage for unskilled labor decreases. 
C) Total employment of unskilled labor increases. 
D) The wage received by unskilled native workers decreases. 
E) The demand curve for unskilled labor shifts up (out). 
A) The total market supply of unskilled labor shifts out. 
B) The market-clearing wage for unskilled labor decreases. 
C) Total employment of unskilled labor increases. 
D) The wage received by unskilled native workers decreases. 
E) The demand curve for unskilled labor shifts up (out).

Question 6

A perfectly discriminating monopsonist

Accepted Answer

A) pays the equilibrium wage to all workers. 
B) pays each worker his or her reservation wage. 
C) receives zero profit in the long run. 
D) disregards minimum wage laws. 
E) faces an increasing value of marginal product curve. 
A) pays the equilibrium wage to all workers. 
B) pays each worker his or her reservation wage. 
C) receives zero profit in the long run. 
D) disregards minimum wage laws. 
E) faces an increasing value of marginal product curve.

Question 7

Many immigrants and many American high school dropouts possess very few skills. What impact will these low-skill immigrants likely have on the labor market opportunities of American high school dropouts?

Accepted Answer

A) Immigration of low-skilled workers is associated with higher wages paid to American high school dropouts. 
B) Immigration of low-skilled workers is associated with lower wages paid to American high school dropouts. 
C) Immigration of low-skilled workers does not affect wages paid to American high school dropouts. 
D) Immigration of low-skilled workers is associated with greater employment among American high school dropouts. 
E) None of the above. 
A) Immigration of low-skilled workers is associated with higher wages paid to American high school dropouts. 
B) Immigration of low-skilled workers is associated with lower wages paid to American high school dropouts. 
C) Immigration of low-skilled workers does not affect wages paid to American high school dropouts. 
D) Immigration of low-skilled workers is associated with greater employment among American high school dropouts. 
E) None of the above.

Question 8

Standard economic theory suggests which of the following in terms of labor migration across states in the U.S.?

Accepted Answer

A) Workers migrate randomly. 
B) Workers migrate at most twice per lifetime. 
C) Workers are likely to migrate from low-wage states to high-wage states. 
D) Workers are likely to migrate from high-wage states to low-wage states. 
E) Older workers are more likely to migrate than are younger workers. 
A) Workers migrate randomly. 
B) Workers migrate at most twice per lifetime. 
C) Workers are likely to migrate from low-wage states to high-wage states. 
D) Workers are likely to migrate from high-wage states to low-wage states. 
E) Older workers are more likely to migrate than are younger workers.

Question 9

A monopsonist is

Accepted Answer

A) a firm with partial control over an industry. 
B) a firm operating in a regulated industry. 
C) a firm that is the single purchaser of a factor of production. 
D) a firm that competes for labor but sells its output in a non-competitive market. 
E) a group of firms, much like a cartel, that restricts the demand for labor in a market. 
A) a firm with partial control over an industry. 
B) a firm operating in a regulated industry. 
C) a firm that is the single purchaser of a factor of production. 
D) a firm that competes for labor but sells its output in a non-competitive market. 
E) a group of firms, much like a cartel, that restricts the demand for labor in a market.

Question 10

Assuming a country has a constant returns to scale Cobb-Douglas production function, what effect will immigration have on native labor that has a high degree of substitutability with the immigrant labor?

Accepted Answer

A) Immigration has no long-run effect on native wages. 
B) Immigration lowers native wages in the long run. 
C) Immigration raises the labor-capital ratio in the long run. 
D) Immigration has no short-run effect on native wages. 
E) Immigration has a negative effect on total employment in the short run. 
A) Immigration has no long-run effect on native wages. 
B) Immigration lowers native wages in the long run. 
C) Immigration raises the labor-capital ratio in the long run. 
D) Immigration has no short-run effect on native wages. 
E) Immigration has a negative effect on total employment in the short run.

Question 11

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Accepted Answer

A) An increase in immigration. 
B) An increase in the output price. 
C) A decrease in productivity. 
D) An increase in native labor supply. 
E) A decrease in labor demand. 
A) An increase in immigration. 
B) An increase in the output price. 
C) A decrease in productivity. 
D) An increase in native labor supply. 
E) A decrease in labor demand.

Question 12

Which of the following statements regarding the Affordable Care Act (ACA) is true?

Accepted Answer

A) The ACA could have negative employment effects as some firms will not expand above having 50 workers in order to avoid the mandate. 
B) The ACA should not be viewed as an employer-provided benefit as the ACA is a federal mandate. 
C) The ACA will likely lead to an increase in wages. 
D) Prior to the passage of the ACA, over 100 million (more than one-third of) Americans did not have health insurance. 
E) All of the statements are true. 
A) The ACA could have negative employment effects as some firms will not expand above having 50 workers in order to avoid the mandate. 
B) The ACA should not be viewed as an employer-provided benefit as the ACA is a federal mandate. 
C) The ACA will likely lead to an increase in wages. 
D) Prior to the passage of the ACA, over 100 million (more than one-third of) Americans did not have health insurance. 
E) All of the statements are true.

Question 13

Which is the distinguishing feature of the standard cobweb model?

Accepted Answer

A) The firm is a perfectly discriminating monopsonist. 
B) Wages and employment levels adjust slowly over time. 
C) Payroll taxes create a tax wedge, which in turn increases overall employment levels. 
D) Real wages steadily increase. 
E) Capital is not fixed in the short run. 
A) The firm is a perfectly discriminating monopsonist. 
B) Wages and employment levels adjust slowly over time. 
C) Payroll taxes create a tax wedge, which in turn increases overall employment levels. 
D) Real wages steadily increase. 
E) Capital is not fixed in the short run.

Question 14

When the government imposes a payroll tax on employers (and not on workers), which of the following effects will not come about?

Accepted Answer

A) The labor demand curve shifts down. 
B) Employment falls. 
C) Firms and workers typically both bear a portion of the tax. 
D) Real wages will remain fixed if the labor market is competitive. 
E) The costs of hiring increase. 
A) The labor demand curve shifts down. 
B) Employment falls. 
C) Firms and workers typically both bear a portion of the tax. 
D) Real wages will remain fixed if the labor market is competitive. 
E) The costs of hiring increase.

Question 15

The equilibrium of a competitive labor market is associated with

Accepted Answer

A) no unemployment as everyone has a job. 
B) no unemployment as everyone who wants a job at the equilibrium wage has one. 
C) no unemployment as labor is assumed to be supplied inelastically. 
D) some unemployment as some people do not have a job at the equilibrium wage. 
E) some unemployment as firms are not required to pay the minimum wage. 
A) no unemployment as everyone has a job. 
B) no unemployment as everyone who wants a job at the equilibrium wage has one. 
C) no unemployment as labor is assumed to be supplied inelastically. 
D) some unemployment as some people do not have a job at the equilibrium wage. 
E) some unemployment as firms are not required to pay the minimum wage.

Question 16

Which of the following statements regarding immigration is true?

Accepted Answer

A) For each employed immigrant there is an unemployed native worker. 
B) Immigration always results in lower native wages. 
C) All immigrants are low-skilled. 
D) Firms do not receive a substantial immigrant surplus. 
E) Consumers benefit from immigration via lower prices. 
A) For each employed immigrant there is an unemployed native worker. 
B) Immigration always results in lower native wages. 
C) All immigrants are low-skilled. 
D) Firms do not receive a substantial immigrant surplus. 
E) Consumers benefit from immigration via lower prices.

Question 17

Which of the following does not describe a perfectly discriminating monopsonist?

Accepted Answer

A) The firm hires different workers at different wages. 
B) The firm hires workers to the point where the labor supply curve intersects the firm's labor demand curve. 
C) The firm's marginal cost of labor equals the labor supply curve faced by the firm. 
D) The firm uses fewer hours of labor than it would if it were in a competitive market. 
E) The wage-labor outcome is efficient. 
A) The firm hires different workers at different wages. 
B) The firm hires workers to the point where the labor supply curve intersects the firm's labor demand curve. 
C) The firm's marginal cost of labor equals the labor supply curve faced by the firm. 
D) The firm uses fewer hours of labor than it would if it were in a competitive market. 
E) The wage-labor outcome is efficient.

Question 18

The standard cobweb model makes the following two assumptions:

Accepted Answer

A) Workers are forward-looking, and job adjustments take time. 
B) Workers are myopic, and job adjustments take time. 
C) Workers are forward-looking, and job adjustments are instantaneous. 
D) Workers are myopic, and job adjustments are instantaneous. 
E) Workers are myopic, and retraining of one's skills happens instantaneously. 
A) Workers are forward-looking, and job adjustments take time. 
B) Workers are myopic, and job adjustments take time. 
C) Workers are forward-looking, and job adjustments are instantaneous. 
D) Workers are myopic, and job adjustments are instantaneous. 
E) Workers are myopic, and retraining of one's skills happens instantaneously.

Question 19

Which of the following would prevent a single equilibrium wage existing across all labor markets?

Accepted Answer

A) A competitive labor market. 
B) Workers having various skills and preferences. 
C) Firms being free to enter any of the labor markets. 
D) Potential workers being able to freely enter any of the labor markets. 
E) A payroll tax paid equally by workers and firms. 
A) A competitive labor market. 
B) Workers having various skills and preferences. 
C) Firms being free to enter any of the labor markets. 
D) Potential workers being able to freely enter any of the labor markets. 
E) A payroll tax paid equally by workers and firms.

Question 20

The assumption that a firm operates in a competitive labor market means that

Accepted Answer

A) the firm offers a real wage rate that is indexed for inflation. 
B) the firm faces an upward-sloped marginal cost of labor curve. 
C) the firm faces a downward-sloped marginal cost of labor curve. 
D) the firm faces a constant wage regardless of how much labor it employs. 
E) the firm doesn't use capital in the production process. 
A) the firm offers a real wage rate that is indexed for inflation. 
B) the firm faces an upward-sloped marginal cost of labor curve. 
C) the firm faces a downward-sloped marginal cost of labor curve. 
D) the firm faces a constant wage regardless of how much labor it employs. 
E) the firm doesn't use capital in the production process.

If labor supply of unskilled workers is perfectly inelastic, then

When the government mandates that firms supply a particular benefit, it is usually the case that

The general consensus is that wages in the stricken area increase substantially in the months immediately following a natural disaster. This is most likely a result of what?

A profit-maximizing monopsonist

If unskilled domestic labor and unskilled immigrant labor are substitutes in the production process, then a more open immigration policy will likely result in all but which of the following?

A perfectly discriminating monopsonist

Many immigrants and many American high school dropouts possess very few skills. What impact will these low-skill immigrants likely have on the labor market opportunities of American high school dropouts?

Standard economic theory suggests which of the following in terms of labor migration across states in the U.S.?

A monopsonist is

Assuming a country has a constant returns to scale Cobb-Douglas production function, what effect will immigration have on native labor that has a high degree of substitutability with the immigrant labor?

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Which of the following statements regarding the Affordable Care Act (ACA) is true?

Which is the distinguishing feature of the standard cobweb model?

When the government imposes a payroll tax on employers (and not on workers), which of the following effects will not come about?

The equilibrium of a competitive labor market is associated with

Which of the following statements regarding immigration is true?

Which of the following does not describe a perfectly discriminating monopsonist?

The standard cobweb model makes the following two assumptions:

Which of the following would prevent a single equilibrium wage existing across all labor markets?

The assumption that a firm operates in a competitive labor market means that

Introduction to Labor Economics

Labor Supply

Labor Demand

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 4: Labor Market Equilibrium

If labor supply of unskilled workers is perfectly inelastic, then

When the government mandates that firms supply a particular benefit, it is usually the case that

The general consensus is that wages in the stricken area increase substantially in the months immediately following a natural disaster. This is most likely a result of what?

A profit-maximizing monopsonist

If unskilled domestic labor and unskilled immigrant labor are substitutes in the production process, then a more open immigration policy will likely result in all but which of the following?

A perfectly discriminating monopsonist

Many immigrants and many American high school dropouts possess very few skills. What impact will these low-skill immigrants likely have on the labor market opportunities of American high school dropouts?

Standard economic theory suggests which of the following in terms of labor migration across states in the U.S.?

A monopsonist is

Assuming a country has a constant returns to scale Cobb-Douglas production function, what effect will immigration have on native labor that has a high degree of substitutability with the immigrant labor?

Which of the following would result in a short-run increase in the wage rate in a competitive labor market?

Which of the following statements regarding the Affordable Care Act (ACA) is true?

Which is the distinguishing feature of the standard cobweb model?

When the government imposes a payroll tax on employers (and not on workers), which of the following effects will not come about?

The equilibrium of a competitive labor market is associated with

Which of the following statements regarding immigration is true?

Which of the following does not describe a perfectly discriminating monopsonist?

The standard cobweb model makes the following two assumptions:

Which of the following would prevent a single equilibrium wage existing across all labor markets?

The assumption that a firm operates in a competitive labor market means that

Introduction to Labor Economics

Labor Supply

Labor Demand

Compensating Wage Differentials

Human Capital

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters