Question 1

Compared to the labor market outcome when there are no payroll taxes, imposing a payroll tax on labor will typically result in:

Accepted Answer

A) firms paying a higher wage. 
B) workers receiving a lower wage net of taxes. 
C) a decrease in overall employment. 
D) an increase in dead weight loss. 
E) all of these are possible outcomes. 
A) firms paying a higher wage. 
B) workers receiving a lower wage net of taxes. 
C) a decrease in overall employment. 
D) an increase in dead weight loss. 
E) all of these are possible outcomes.

Question 2

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

Accepted Answer

A) The firm's marginal cost of hiring curve is the labor supply curve. 
B) The firm hires more workers than it would if it were a competitive firm. 
C) The firm chooses employment and wage levels in order to maximize profit. 
D) The firm pays each worker his or her reservation wage. 
E) The labor supply curve can be upward sloping. 
A) The firm's marginal cost of hiring curve is the labor supply curve. 
B) The firm hires more workers than it would if it were a competitive firm. 
C) The firm chooses employment and wage levels in order to maximize profit. 
D) The firm pays each worker his or her reservation wage. 
E) The labor supply curve can be upward sloping.

Question 3

Which of the following is not an accurate summary of the equilibrium associated with a single competitive labor market?

Accepted Answer

A) Firms receive surplus equal to the area above the wage rate and below the demand for labor. 
B) Workers receive surplus equal to the area below the wage rate and above the supply of labor. 
C) All workers are paid the same market-clearing wage. 
D) Total firm surplus equals total worker surplus. 
E) Total economic surplus is maximized. 
A) Firms receive surplus equal to the area above the wage rate and below the demand for labor. 
B) Workers receive surplus equal to the area below the wage rate and above the supply of labor. 
C) All workers are paid the same market-clearing wage. 
D) Total firm surplus equals total worker surplus. 
E) Total economic surplus is maximized.

Question 4

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

Accepted Answer

A) the firm receiving zero profit. 
B) the firm substituting capital for labor. 
C) the firm receiving all of the surplus. 
D) the firm avoiding payroll taxes. 
E) workers being unwilling to work at the offered wage. 
A) the firm receiving zero profit. 
B) the firm substituting capital for labor. 
C) the firm receiving all of the surplus. 
D) the firm avoiding payroll taxes. 
E) workers being unwilling to work at the offered wage.

Question 5

If immigrant workers are complementary to native workers, then

Accepted Answer

A) native workers will be better off with open borders. 
B) immigrant workers will receive a higher wage than native workers. 
C) immigration will shift the demand for native labor to the left. 
D) very few immigrants will find jobs. 
E) each firm will hire only immigrants or only natives but not a mixture of the two. 
A) native workers will be better off with open borders. 
B) immigrant workers will receive a higher wage than native workers. 
C) immigration will shift the demand for native labor to the left. 
D) very few immigrants will find jobs. 
E) each firm will hire only immigrants or only natives but not a mixture of the two.

Question 6

If native workers and immigrants are substitutes, then

Accepted Answer

A) native workers will be better off with open borders. 
B) native workers will encourage immigration. 
C) native firms will discourage immigration. 
D) immigrant workers will receive a higher wage than native workers. 
E) immigration will shift the labor supply curve to the right. 
A) native workers will be better off with open borders. 
B) native workers will encourage immigration. 
C) native firms will discourage immigration. 
D) immigrant workers will receive a higher wage than native workers. 
E) immigration will shift the labor supply curve to the right.

Question 7

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Accepted Answer

A) the marginal cost of labor curve is above the labor supply curve. 
B) the labor supply curve is above the marginal cost of labor curve. 
C) labor is supplied inelastically. 
D) the firm's labor demand curve is downward-sloping. 
E) the firm's objective is to minimize the wage rather than to maximize profits. 
A) the marginal cost of labor curve is above the labor supply curve. 
B) the labor supply curve is above the marginal cost of labor curve. 
C) labor is supplied inelastically. 
D) the firm's labor demand curve is downward-sloping. 
E) the firm's objective is to minimize the wage rather than to maximize profits.

Question 8

Suppose a law firm negotiates a very low price for each of its 1,000 employees to be members at the athletic club that is located next to the law firm. Which of the following is not likely to be true?

Accepted Answer

A) The law firm can pay its workers less than a comparable law firm that does not offer the gym benefit. 
B) The firm can likely negotiate a lower per person price at the gym than each employee could negotiate alone. 
C) Some employees will take advantage of the gym benefit, while others will not. 
D) In the long run, the law firm will probably attract workers who value the gym benefit the most. 
E) If the typical individual gym membership costs $50 per month, the law firm should expect to save $50,000 per month in wages. 
A) The law firm can pay its workers less than a comparable law firm that does not offer the gym benefit. 
B) The firm can likely negotiate a lower per person price at the gym than each employee could negotiate alone. 
C) Some employees will take advantage of the gym benefit, while others will not. 
D) In the long run, the law firm will probably attract workers who value the gym benefit the most. 
E) If the typical individual gym membership costs $50 per month, the law firm should expect to save $50,000 per month in wages.

Question 9

If labor is supplied perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except:

Accepted Answer

A) reduce the wage rate by exactly the amount of the tax. 
B) leave employment levels unchanged. 
C) leave firm profits unchanged. 
D) reduce total output. 
E) generate tax revenue paid to the government. 
A) reduce the wage rate by exactly the amount of the tax. 
B) leave employment levels unchanged. 
C) leave firm profits unchanged. 
D) reduce total output. 
E) generate tax revenue paid to the government.

Question 10

When the government imposes a payroll tax on workers,

Accepted Answer

A) the effects are identical to the effects had the government imposed the tax on employers. 
B) the costs of hiring remain constant. 
C) the labor supply curve shifts to the right. 
D) total employment remains constant. 
E) workers' real wages are unchanged. 
A) the effects are identical to the effects had the government imposed the tax on employers. 
B) the costs of hiring remain constant. 
C) the labor supply curve shifts to the right. 
D) total employment remains constant. 
E) workers' real wages are unchanged.

Compared to the labor market outcome when there are no payroll taxes, imposing a payroll tax on labor will typically result in:

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

Which of the following is not an accurate summary of the equilibrium associated with a single competitive labor market?

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

If immigrant workers are complementary to native workers, then

If native workers and immigrants are substitutes, then

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Suppose a law firm negotiates a very low price for each of its 1,000 employees to be members at the athletic club that is located next to the law firm. Which of the following is not likely to be true?

If labor is supplied perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except:

When the government imposes a payroll tax on workers,

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

Compared to the labor market outcome when there are no payroll taxes, imposing a payroll tax on labor will typically result in:

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

Which of the following is not an accurate summary of the equilibrium associated with a single competitive labor market?

A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in

If immigrant workers are complementary to native workers, then

If native workers and immigrants are substitutes, then

In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because

Suppose a law firm negotiates a very low price for each of its 1,000 employees to be members at the athletic club that is located next to the law firm. Which of the following is not likely to be true?

If labor is supplied perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all of the following except:

When the government imposes a payroll tax on workers,

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