Question 1

The profit-maximizing firm should continue hiring additional labor as long as:

Accepted Answer

A)  MRC  MRP. 
C)  MRC = MRP. 
D)  the MP of labor > 0. 
A)  MRC  MRP. 
C)  MRC = MRP. 
D)  the MP of labor > 0.

Question 2

A decrease in the demand for the output that an input produces will cause the input's:

Accepted Answer

A)  supply curve to shift to the right. 
B)  supply curve to shift to the left. 
C)  demand curve to shift to the right. 
D)  demand curve to shift to the left. 
A)  supply curve to shift to the right. 
B)  supply curve to shift to the left. 
C)  demand curve to shift to the right. 
D)  demand curve to shift to the left.

Question 3

Other things being equal,an increase in the workplace amenities,such as increased health care and more generous vacation options,would tend to shift the labor supply curve to the ____.

Accepted Answer

A)  left, increasing wages. 
B)  right, increasing wages. 
C)  left, decreasing wages. 
D)  right, decreasing wages. 
A)  left, increasing wages. 
B)  right, increasing wages. 
C)  left, decreasing wages. 
D)  right, decreasing wages.

Question 4

Which of the following is not a reason it is harder to unionize in the fast growing service industry?

Accepted Answer

A)  Service sector jobs are often in small firms, making it difficult to organize large numbers of employees across the industry. 
B)  Service industry jobs are often standardized, reducing the need for unions to negotiate working conditions. 
C)  Employees in the service sector often work more closely with management. 
D)  Service industry jobs are more varied, making it harder to negotiate as a group. 
A)  Service sector jobs are often in small firms, making it difficult to organize large numbers of employees across the industry. 
B)  Service industry jobs are often standardized, reducing the need for unions to negotiate working conditions. 
C)  Employees in the service sector often work more closely with management. 
D)  Service industry jobs are more varied, making it harder to negotiate as a group.

Question 5

When the wage rate increases:

Accepted Answer

A)  all workers wish to work more hours. 
B)  all workers wish to work fewer hours. 
C)  the number of hours laborers wish to work does not change. 
D)  some workers will wish to work more hours, and some will wish to work fewer hours. 
A)  all workers wish to work more hours. 
B)  all workers wish to work fewer hours. 
C)  the number of hours laborers wish to work does not change. 
D)  some workers will wish to work more hours, and some will wish to work fewer hours.

Question 6

If the demand for softballs increases,one could expect the demand for leather to increase.This is due to the:

Accepted Answer

A)  principle of diminishing marginal product. 
B)  change in the opportunity cost of producing a softball. 
C)  reduction in the cost of producing softballs. 
D)  demand for an input being a derived demand. 
A)  principle of diminishing marginal product. 
B)  change in the opportunity cost of producing a softball. 
C)  reduction in the cost of producing softballs. 
D)  demand for an input being a derived demand.

Question 7

A worker's contribution to the firm's revenue is measured directly by the worker's:

Accepted Answer

A)  value of marginal product. 
B)  marginal product multiplied by his/her wage. 
C)  marginal product minus his/her wage. 
D)  contribution to total output. 
A)  value of marginal product. 
B)  marginal product multiplied by his/her wage. 
C)  marginal product minus his/her wage. 
D)  contribution to total output.

Question 8

Based on the table below,how many workers will the firm employ in order to maximize profits?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  7 
A)  4 
B)  5 
C)  6 
D)  7

Question 9

When wages increase:

Accepted Answer

A)  the quantity of labor supplied by an individual always increases. 
B)  the quantity of labor supplied by an individual always decreases. 
C)  the opportunity cost of leisure time increases. 
D)  the opportunity cost of leisure time decreases. 
A)  the quantity of labor supplied by an individual always increases. 
B)  the quantity of labor supplied by an individual always decreases. 
C)  the opportunity cost of leisure time increases. 
D)  the opportunity cost of leisure time decreases.

Question 10

The most significant factor enabling unions to negotiate increased wages for its members is likely:

Accepted Answer

A)  that unions increase the demand for labor. 
B)  that unions decrease the supply of labor in the union sector. 
C)  that unions increase the marginal product of labor. 
D)  that unions increase the supply of labor in the union sector. 
A)  that unions increase the demand for labor. 
B)  that unions decrease the supply of labor in the union sector. 
C)  that unions increase the marginal product of labor. 
D)  that unions increase the supply of labor in the union sector.

Question 11

The intersection of the market demand for labor and the market supply for labor determines the equilibrium wage rate.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following could be considered an example of a monopsony?

Accepted Answer

A)  a professional sports league 
B)  the only auto repair shop in a small town 
C)  a single mining firm that was the only employer in the area 
D)  all of the above 
A)  a professional sports league 
B)  the only auto repair shop in a small town 
C)  a single mining firm that was the only employer in the area 
D)  all of the above

Question 13

At higher interest rates,fewer people or firms will want to borrow.At lower interest rates,fewer people or firms will want to save.

Accepted Answer

A) True 
 B)False

Question 14

In the diagram,when unions successfully increase the wages of its members,the supply curve in the union sector shifts from ____ and ____ workers lose their jobs as a result.

Accepted Answer

A)  S1 to S2; L3 - L1 
B)  S2 to S1; L3 - L1 
C)  S1 to S2; L2 - L1 
D)  S2 to S1; L2 - L1 
A)  S1 to S2; L3 - L1 
B)  S2 to S1; L3 - L1 
C)  S1 to S2; L2 - L1 
D)  S2 to S1; L2 - L1

Question 15

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as:

Accepted Answer

A)  overhead expenditures. 
B)  investments in human capital. 
C)  marginal revenue product. 
D)  investments in social capital. 
A)  overhead expenditures. 
B)  investments in human capital. 
C)  marginal revenue product. 
D)  investments in social capital.

Question 16

Job amenities:

Accepted Answer

A)  have no impact on the supply of labor. 
B)  are not part of the compensation workers receive from employers. 
C)  help determine the position of the labor supply curve. 
D)  never affect the monetary wages paid to workers. 
A)  have no impact on the supply of labor. 
B)  are not part of the compensation workers receive from employers. 
C)  help determine the position of the labor supply curve. 
D)  never affect the monetary wages paid to workers.

Question 17

If an increase occurs in the demand for the output of industry A,we would expect all of the following to happen except:

Accepted Answer

A) an increase in the profits of industry A. 
B) a decrease in prices of inputs used in the production of A. 
C) an increase in the output of industry A. 
D) an increase in the demand for inputs used in the production of A. 
A) an increase in the profits of industry A. 
B) a decrease in prices of inputs used in the production of A. 
C) an increase in the output of industry A. 
D) an increase in the demand for inputs used in the production of A.

Question 18

Which of the following is likely to increase the supply of labor?

Accepted Answer

A)  a decrease in the population 
B)  a relaxation of restrictions on immigration 
C)  a decrease in fringe benefits 
D)  an increase in the value placed on leisure 
A)  a decrease in the population 
B)  a relaxation of restrictions on immigration 
C)  a decrease in fringe benefits 
D)  an increase in the value placed on leisure

Question 19

Ceteris paribus,the wages of clerks would increase if there was a decrease in:

Accepted Answer

A)  the period of training required for clerk jobs. 
B)  non-monetary "fringe" benefits received by clerks. 
C)  the marginal revenue product of clerks. 
D)  the cost of medical insurance benefits paid to clerks. 
A)  the period of training required for clerk jobs. 
B)  non-monetary "fringe" benefits received by clerks. 
C)  the marginal revenue product of clerks. 
D)  the cost of medical insurance benefits paid to clerks.

Question 20

Exhibit 16-2 The following lists possible capital investments that a business might pursue.
  Refer to Exhibit 16-2.If the interest rate is 8 percent,which projects would the business not invest in?

Accepted Answer

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

Exam 16: The Markets for Labor, Capital, and Land

The profit-maximizing firm should continue hiring additional labor as long as:

A decrease in the demand for the output that an input produces will cause the input's:

Other things being equal,an increase in the workplace amenities,such as increased health care and more generous vacation options,would tend to shift the labor supply curve to the ____.

Which of the following is not a reason it is harder to unionize in the fast growing service industry?

When the wage rate increases:

If the demand for softballs increases,one could expect the demand for leather to increase.This is due to the:

A worker's contribution to the firm's revenue is measured directly by the worker's:

Based on the table below,how many workers will the firm employ in order to maximize profits?

When wages increase:

The most significant factor enabling unions to negotiate increased wages for its members is likely:

The intersection of the market demand for labor and the market supply for labor determines the equilibrium wage rate.

Which of the following could be considered an example of a monopsony?

At higher interest rates,fewer people or firms will want to borrow.At lower interest rates,fewer people or firms will want to save.

In the diagram,when unions successfully increase the wages of its members,the supply curve in the union sector shifts from ____ and ____ workers lose their jobs as a result.

Economists refer to expenditures on training,education,and skill development designed to increase the productivity of an individual as:

Job amenities:

If an increase occurs in the demand for the output of industry A,we would expect all of the following to happen except:

Which of the following is likely to increase the supply of labor?

Ceteris paribus,the wages of clerks would increase if there was a decrease in:

Exhibit 16-2 The following lists possible capital investments that a business might pursue. Refer to Exhibit 16-2.If the interest rate is 8 percent,which projects would the business not invest in?

The Role and Method of Economics

Economics: Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Markets in Motion and Price Controls

Elasticities

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

Income, Poverty, and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Aggregate Demand and Aggregate Supply

The Aggregate Expenditure Model

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Trade

International Finance

Filters

In the diagram,when unions successfully increase the wages of its members,the supply curve in the union sector shifts from and workers lose their jobs as a result.