Question 1

An increase in the price of a firm's good or service shifts its demand curve for labor leftward.

Accepted Answer

A) True 
 B)False

Question 2

As wages rise, the substitution effect induces households to

Accepted Answer

A)  choose leisure rather than supplying labor in the labor market. 
B)  choose supplying labor in the labor market rather than engage in leisure. 
C)  reduce the opportunity cost of leisure. 
D)  reduce the economic rent from leisure. 
A)  choose leisure rather than supplying labor in the labor market. 
B)  choose supplying labor in the labor market rather than engage in leisure. 
C)  reduce the opportunity cost of leisure. 
D)  reduce the economic rent from leisure.

Question 3

Unions support minimum wage laws because an increase in the minimum wage

Accepted Answer

A)  increases the supply of union labor. 
B)  decreases the supply of union labor. 
C)  increases the demand for union labor. 
D)  decreases the demand for union labor. 
A)  increases the supply of union labor. 
B)  decreases the supply of union labor. 
C)  increases the demand for union labor. 
D)  decreases the demand for union labor.

Question 4

The marginal product of labor is the

Accepted Answer

A)  change in total product produced by hiring an additional unit of labor. 
B)  total revenue divided by units of labor. 
C)  extra revenue gained by selling one more unit of output produced by hiring additional units of labor. 
D)  extra revenue gained by employing one more unit of labor. 
A)  change in total product produced by hiring an additional unit of labor. 
B)  total revenue divided by units of labor. 
C)  extra revenue gained by selling one more unit of output produced by hiring additional units of labor. 
D)  extra revenue gained by employing one more unit of labor.

Question 5

Lynn owns Dust Bunnies, a cleaning company. In one week, she is able to clean 9 houses. If she hires an employee, together they are able to clean 15 houses per week. If Lynn charges $100 to clean a house, what is the marginal product of her employee?

Accepted Answer

A)  9 houses 
B)  15 houses 
C)  $1,500 
D)  6 houses 
A)  9 houses 
B)  15 houses 
C)  $1,500 
D)  6 houses

Question 6

The value of marginal product of labor

Accepted Answer

A)  is the change in total product that results from selling one more unit of a good. 
B)  is equal to the price of the good produced multiplied by the marginal product of labor. 
C)  is equal to marginal revenue multiplied by the quantity. 
D)  increases as the amount of labor employed increases. 
A)  is the change in total product that results from selling one more unit of a good. 
B)  is equal to the price of the good produced multiplied by the marginal product of labor. 
C)  is equal to marginal revenue multiplied by the quantity. 
D)  increases as the amount of labor employed increases.

Question 7

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

Accepted Answer

A)  increases the quantity of labor supplied. 
B)  decreases the quantity of labor supplied. 
C)  shifts the supply of labor curve leftward. 
D)  shifts the supply of labor curve rightward. 
A)  increases the quantity of labor supplied. 
B)  decreases the quantity of labor supplied. 
C)  shifts the supply of labor curve leftward. 
D)  shifts the supply of labor curve rightward.

Question 8

If the demand for dog grooming increases so that the price of dog grooming rises, then number of workers hired by Doug's Dog Grooming would

Accepted Answer

A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  Any of the above answers are possible. 
A)  decrease. 
B)  increase. 
C)  remain unchanged. 
D)  Any of the above answers are possible.

Question 9

The value of marginal product of labor is the increase in

Accepted Answer

A)  revenue created by producing one more unit of output. 
B)  revenue created by hiring one more unit of labor. 
C)  total product necessary to make revenue increase by one dollar. 
D)  total product generated by hiring one more unit of labor. 
A)  revenue created by producing one more unit of output. 
B)  revenue created by hiring one more unit of labor. 
C)  total product necessary to make revenue increase by one dollar. 
D)  total product generated by hiring one more unit of labor.

Question 10

-The figure above shows a labor market. If there is a monopsony in this labor market, employment is

Accepted Answer

A)  0 hours per week. 
B)  50 hours per week. 
C)  100 hours per week. 
D)  150 hours per week. 
A)  0 hours per week. 
B)  50 hours per week. 
C)  100 hours per week. 
D)  150 hours per week.

Question 11

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 4 workers, the wage rate is

Accepted Answer

A)  $90 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day. 
A)  $90 per day. 
B)  $30 per day. 
C)  $70 per day. 
D)  $50 per day.

Question 12

If the supply of a factor is perfectly inelastic, then

Accepted Answer

A)  no more than the existing quantity can be supplied. 
B)  the supply curve is horizontal. 
C)  sellers will provide whatever quantity is demanded at the going price. 
D)  a fall in price results in no quantity being supplied. 
A)  no more than the existing quantity can be supplied. 
B)  the supply curve is horizontal. 
C)  sellers will provide whatever quantity is demanded at the going price. 
D)  a fall in price results in no quantity being supplied.

Question 13

As the quantity of labor employed decreases, the value of marginal product diminishes.

Accepted Answer

A) True 
 B)False

Question 14

-The above figure shows the market for labor. The employer is a monopsony. At the equilibrium level of employment, which of the following is CORRECT?

Accepted Answer

A) MCL = VMP B) VMP > W C) W < MCL D) All of the above are correct. A) MCL = VMP B) VMP > W C) W < MCL D) All of the above are correct.

Question 15

Meredith receives a wage hike. If Meredith decides to work an extra hour

Accepted Answer

A)  her reservation wage rate exceeds her value of marginal product. 
B)  her opportunity cost of leisure is high. 
C)  her substitution effect is greater than her income effect. 
D)  she operates on the backward-bending portion of her labor supply curve. 
A)  her reservation wage rate exceeds her value of marginal product. 
B)  her opportunity cost of leisure is high. 
C)  her substitution effect is greater than her income effect. 
D)  she operates on the backward-bending portion of her labor supply curve.

Question 16

With respect to labor supply, the income effect leads a person to want to work more in order to raise his or her income.

Accepted Answer

A) True 
 B)False

Question 17

-Doug's Dog Grooming is a perfectly competitive firm charging $5 per dog grooming. Doug's Dog Grooming has the total and marginal product of labor schedules in the above table and can hire workers from a perfectly competitive labor market for $15 per hour. What is the value of marginal product of the third worker?

Accepted Answer

A)  $5 
B)  $25 
C)  $15 
D)  $375 
A)  $5 
B)  $25 
C)  $15 
D)  $375

Question 18

Which of the following is a recent trend in the labor market?

Accepted Answer

A)  Low-skilled workers have lost jobs. 
B)  The demand for high-skilled labor has increased as technology has increased. 
C)  The wages of high-skilled labor have decreased. 
D)  The marginal productivity of low-skilled workers has increased. 
A)  Low-skilled workers have lost jobs. 
B)  The demand for high-skilled labor has increased as technology has increased. 
C)  The wages of high-skilled labor have decreased. 
D)  The marginal productivity of low-skilled workers has increased.

Question 19

One reason unions might support an increase in the minimum wage is because such a policy would cause a leftward shift in the demand curve for union labor.

Accepted Answer

A) True 
 B)False

Question 20

If a monopsony must negotiate with a union, then the wage will probably be

Accepted Answer

A)  more than the value of marginal product. 
B)  more than the marginal cost of labor. 
C)  the same as if there had been no union. 
D)  more than what it would have been without a union but not more than the value of marginal product. 
A)  more than the value of marginal product. 
B)  more than the marginal cost of labor. 
C)  the same as if there had been no union. 
D)  more than what it would have been without a union but not more than the value of marginal product.

An increase in the price of a firm's good or service shifts its demand curve for labor leftward.

As wages rise, the substitution effect induces households to

Unions support minimum wage laws because an increase in the minimum wage

The marginal product of labor is the

Lynn owns Dust Bunnies, a cleaning company. In one week, she is able to clean 9 houses. If she hires an employee, together they are able to clean 15 houses per week. If Lynn charges $100 to clean a house, what is the marginal product of her employee?

The value of marginal product of labor

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

If the demand for dog grooming increases so that the price of dog grooming rises, then number of workers hired by Doug's Dog Grooming would

The value of marginal product of labor is the increase in

-The figure above shows a labor market. If there is a monopsony in this labor market, employment is

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 4 workers, the wage rate is

If the supply of a factor is perfectly inelastic, then

As the quantity of labor employed decreases, the value of marginal product diminishes.

-The above figure shows the market for labor. The employer is a monopsony. At the equilibrium level of employment, which of the following is CORRECT?

Meredith receives a wage hike. If Meredith decides to work an extra hour

With respect to labor supply, the income effect leads a person to want to work more in order to raise his or her income.

Which of the following is a recent trend in the labor market?

One reason unions might support an increase in the minimum wage is because such a policy would cause a leftward shift in the demand curve for union labor.

If a monopsony must negotiate with a union, then the wage will probably be

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters

Exam 18: Markets for Factors of Production

An increase in the price of a firm's good or service shifts its demand curve for labor leftward.

As wages rise, the substitution effect induces households to

Unions support minimum wage laws because an increase in the minimum wage

The marginal product of labor is the

Lynn owns Dust Bunnies, a cleaning company. In one week, she is able to clean 9 houses. If she hires an employee, together they are able to clean 15 houses per week. If Lynn charges $100 to clean a house, what is the marginal product of her employee?

The value of marginal product of labor

If the substitution effect from a higher wage rate exceeds the income effect, then a higher wage rate

If the demand for dog grooming increases so that the price of dog grooming rises, then number of workers hired by Doug's Dog Grooming would

The value of marginal product of labor is the increase in

-The figure above shows a labor market. If there is a monopsony in this labor market, employment is

-Winnie's Car Wash is a perfectly competitive firm. The table above shows Winnie's total product schedule. If the price of a car wash is $4, and Winnie maximizes his profit when he employs 4 workers, the wage rate is

If the supply of a factor is perfectly inelastic, then

As the quantity of labor employed decreases, the value of marginal product diminishes.

-The above figure shows the market for labor. The employer is a monopsony. At the equilibrium level of employment, which of the following is CORRECT?

Meredith receives a wage hike. If Meredith decides to work an extra hour

With respect to labor supply, the income effect leads a person to want to work more in order to raise his or her income.

Which of the following is a recent trend in the labor market?

One reason unions might support an increase in the minimum wage is because such a policy would cause a leftward shift in the demand curve for union labor.

If a monopsony must negotiate with a union, then the wage will probably be

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Economic Inequality

Uncertainty and Information

Filters