Question 1

For a firm hiring labor and selling its output in perfectly competitive markets:

Accepted Answer

A) PL = MWC and VMP = MRP 
B) PL = MWC and VMP > MRP 
C) PL > MWC and VMP = MRP 
D) PL > MWC and VMP > MRP 
A) PL = MWC and VMP = MRP 
B) PL = MWC and VMP > MRP 
C) PL > MWC and VMP = MRP 
D) PL > MWC and VMP > MRP A

Question 2

refer to the following table that shows the short-run production relationship and the product demand schedule for a firm.

$\begin{array}{ccc}
\text { Labor } & \text { Output } & \text { Output Price } \
\hline
1 & 10 & \$ 20.00 \
2 & 15 & 19.00 \
3 & 19 & 18.00 \
4 & 22 & 17.00 \
5 & 24 & 16.00 \
6 & 25 & 15.00
\end{array}$
-What is the value of the third worker's marginal product?

Accepted Answer

A) $18 
B) $57 
C) $72 
D) $342 
A) $18 
B) $57 
C) $72 
D) $342 C

Question 3

Which of the following best explains why the market labor supply curve is upward sloping,even though individual supply curves are normally backward bending?

Accepted Answer

A) The statement is not true: market labor supply curves are also backward bending 
B) Market labor supply curves are "price-adjusted," whereas individual supply curves are not 
C) Lower wages in a given market increase the demand for labor,so more labor must be supplied to maintain labor market equilibrium 
D) Higher wages in a given market attract more workers away from other activities,more than compensating for any reduction in hours by individuals already in the market 
A) The statement is not true: market labor supply curves are also backward bending 
B) Market labor supply curves are "price-adjusted," whereas individual supply curves are not 
C) Lower wages in a given market increase the demand for labor,so more labor must be supplied to maintain labor market equilibrium 
D) Higher wages in a given market attract more workers away from other activities,more than compensating for any reduction in hours by individuals already in the market D

Question 4

A firm can hire 20 workers for $10 per hour,but finds it must raise the wage to $11 to attract another worker.If it must pay all its workers the same wage,the marginal wage cost of the 21st worker is:

Accepted Answer

A) $10 
B) $11 
C) $21 
D) $31 
A) $10 
B) $11 
C) $21 
D) $31

Question 5

Which of the following is a true statement?

Accepted Answer

A) Monopolists employ too many labor resources,because the value of the marginal product exceeds the marginal opportunity cost of labor 
B) For a monopolist,the marginal revenue product of labor exceeds marginal wage at the profit maximizing level of employment 
C) Monopolists pay a lower wage than competitors for the same type of labor 
D) The monopolist's demand for labor curve is less elastic than if it were a competitor in the sale of its output. 
A) Monopolists employ too many labor resources,because the value of the marginal product exceeds the marginal opportunity cost of labor 
B) For a monopolist,the marginal revenue product of labor exceeds marginal wage at the profit maximizing level of employment 
C) Monopolists pay a lower wage than competitors for the same type of labor 
D) The monopolist's demand for labor curve is less elastic than if it were a competitor in the sale of its output.

Question 6

A monopsonist's marginal wage cost curve is positively sloped because:

Accepted Answer

A) it "discriminates" by paying each worker a different wage according to his or her opportunity cost 
B) it must charge a lower price for each additional unit of output,and it must charge this lower price for all units sold 
C) it pays its workers lower wages,so that the supply of labor to the market is restricted 
D) it must pay a higher wage to attract additional workers and it must pay this higher wage to all workers 
A) it "discriminates" by paying each worker a different wage according to his or her opportunity cost 
B) it must charge a lower price for each additional unit of output,and it must charge this lower price for all units sold 
C) it pays its workers lower wages,so that the supply of labor to the market is restricted 
D) it must pay a higher wage to attract additional workers and it must pay this higher wage to all workers

Question 7

A perfectly competitive labor market may be characterized by all of the following except:

Accepted Answer

A) neither firms nor workers have any control over the market wage 
B) a few firms that dominate hiring in the market 
C) numerous equally qualified workers 
D) perfect information 
A) neither firms nor workers have any control over the market wage 
B) a few firms that dominate hiring in the market 
C) numerous equally qualified workers 
D) perfect information

Question 8

One criticism of the cobweb model is that:

Accepted Answer

A) students form rational expectations of the effect of changes in labor demand and adjust their supply responses accordingly 
B) the prediction of chronic boom-bust cycles is not borne out in the real world 
C) students adjust career decisions based on starting salaries rather lifetime earnings 
D) demand is likely to shift as the market approaches equilibrium,so that equilibrium is never achieved 
A) students form rational expectations of the effect of changes in labor demand and adjust their supply responses accordingly 
B) the prediction of chronic boom-bust cycles is not borne out in the real world 
C) students adjust career decisions based on starting salaries rather lifetime earnings 
D) demand is likely to shift as the market approaches equilibrium,so that equilibrium is never achieved

Question 9

refer to the following diagram of a perfectly competitive labor market: 
-For the supply and demand curves in the diagram,the level of employment will be highest at:

Accepted Answer

A) wage rate W1 
B) wage rate W2 
C) a wage rate higher than W1 
D) a wage rate lower than W2 
A) wage rate W1 
B) wage rate W2 
C) a wage rate higher than W1 
D) a wage rate lower than W2

Question 10

refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market.
  
-At the profit maximizing level of employment,the wage rate is _____ and the level of employment is _____:

Accepted Answer

A) W1; Q1 
B) W1; Q2 
C) W2; Q1 
D) W2; Q2 
A) W1; Q1 
B) W1; Q2 
C) W2; Q1 
D) W2; Q2

Question 11

At the profit maximizing level of employment for a monopsonist:

Accepted Answer

A) the wage exceeds the marginal wage cost 
B) marginal revenue product equals the wage 
C) the wage is less than marginal wage cost 
D) marginal product equals marginal revenue product 
A) the wage exceeds the marginal wage cost 
B) marginal revenue product equals the wage 
C) the wage is less than marginal wage cost 
D) marginal product equals marginal revenue product

Question 12

Compared to the allocatively efficient amount,a monopsonist tends to hire:

Accepted Answer

A) too few workers because the value of marginal product exceeds marginal revenue product 
B) too few workers because marginal wage cost exceeds the wage rate 
C) too many workers because the value of marginal product exceeds marginal revenue product 
D) too many workers because marginal wage cost exceeds the wage rate 
A) too few workers because the value of marginal product exceeds marginal revenue product 
B) too few workers because marginal wage cost exceeds the wage rate 
C) too many workers because the value of marginal product exceeds marginal revenue product 
D) too many workers because marginal wage cost exceeds the wage rate

Question 13

There will be a shortage of labor in a particular market if:

Accepted Answer

A) labor supply increases and demand decreases 
B) the current wage is above the wage that would clear the market 
C) there is a decrease in the price of a substitute resource 
D) the current wage is below the wage that would clear the market 
A) labor supply increases and demand decreases 
B) the current wage is above the wage that would clear the market 
C) there is a decrease in the price of a substitute resource 
D) the current wage is below the wage that would clear the market

Question 14

refer to the following diagram of a competitive labor market.
  
-Suppose the wage is currently W3 and L1 is the level of employment.Then we should expect the wage to:

Accepted Answer

A) rise and employment to rise 
B) rise and employment to fall 
C) fall and employment to rise 
D) fall and employment to fall 
A) rise and employment to rise 
B) rise and employment to fall 
C) fall and employment to rise 
D) fall and employment to fall

Question 15

Since passage of NAFTA ,trade between the U.S.,Canada,and Mexico has:

Accepted Answer

A) increased,but the effects on employment have been modest 
B) increased,causing substantial loss of U.S.manufacturing jobs 
C) increased,causing substantial loss of U.S.service-sector jobs 
D) not changed,but there has been a substantial loss in U.S.manufacturing jobs 
A) increased,but the effects on employment have been modest 
B) increased,causing substantial loss of U.S.manufacturing jobs 
C) increased,causing substantial loss of U.S.service-sector jobs 
D) not changed,but there has been a substantial loss in U.S.manufacturing jobs

Question 16

In a perfectly competitive environment,the height of the market labor supply curve at any given number of labor hours indicates:

Accepted Answer

A) the total cost of employing that number of hours in the given occupation 
B) the marginal cost of employing the first hour of labor 
C) the value of the alternative activity in which the marginal hour might otherwise be used 
D) the maximum wage employers would be willing to pay to attract additional labor 
A) the total cost of employing that number of hours in the given occupation 
B) the marginal cost of employing the first hour of labor 
C) the value of the alternative activity in which the marginal hour might otherwise be used 
D) the maximum wage employers would be willing to pay to attract additional labor

Question 17

Which one of the following is generally considered a characteristic of a perfectly competitive labor market?

Accepted Answer

A) A few workers of varying skills and capabilities 
B) Wage-setting behavior by firms 
C) Numerous firms hiring labor from the same pool of qualified workers 
D) Costly information 
A) A few workers of varying skills and capabilities 
B) Wage-setting behavior by firms 
C) Numerous firms hiring labor from the same pool of qualified workers 
D) Costly information

Question 18

Which one of the following conditions is required for allocative efficiency?

Accepted Answer

A) Marginal revenue product exceeds the value of marginal product by the greatest amount 
B) Marginal revenue product equals the wage rate 
C) Value of marginal product equals the marginal wage cost 
D) Value of marginal product is the same in all alternative employments of a given type of labor 
A) Marginal revenue product exceeds the value of marginal product by the greatest amount 
B) Marginal revenue product equals the wage rate 
C) Value of marginal product equals the marginal wage cost 
D) Value of marginal product is the same in all alternative employments of a given type of labor

Question 19

refer to the following diagram of a competitive labor market.
  
-Suppose the wage is currently W1 and L1 is the level of employment.If the firm sells its output competitively,the value of the last worker's additional output is _____ and the opportunity cost of the last worker's time is _____:

Accepted Answer

A) W1; W1 
B) W1; W2 
C) W1; W3 
D) W2; W2 
A) W1; W1 
B) W1; W2 
C) W1; W3 
D) W2; W2

Question 20

Compared to a monopsonist that sells its output in a competitive product market,an otherwise identical monopsonist with monopoly power in the product market will pay:

Accepted Answer

A) a lower wage 
B) a higher wage 
C) the same wage 
D) more information is needed 
A) a lower wage 
B) a higher wage 
C) the same wage 
D) more information is needed

For a firm hiring labor and selling its output in perfectly competitive markets:

refer to the following table that shows the short-run production relationship and the product demand schedule for a firm. Labor Output Output Price 1 10 \ 20.00 2 15 19.00 3 19 18.00 4 22 17.00 5 24 16.00 6 25 15.00 -What is the value of the third worker's marginal product?

Which of the following best explains why the market labor supply curve is upward sloping,even though individual supply curves are normally backward bending?

A firm can hire 20 workers for $10 per hour,but finds it must raise the wage to $11 to attract another worker.If it must pay all its workers the same wage,the marginal wage cost of the 21^st worker is:

Which of the following is a true statement?

A monopsonist's marginal wage cost curve is positively sloped because:

A perfectly competitive labor market may be characterized by all of the following except:

One criticism of the cobweb model is that:

refer to the following diagram of a perfectly competitive labor market: -For the supply and demand curves in the diagram,the level of employment will be highest at:

refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. -At the profit maximizing level of employment,the wage rate is _ and the level of employment is _:

At the profit maximizing level of employment for a monopsonist:

Compared to the allocatively efficient amount,a monopsonist tends to hire:

There will be a shortage of labor in a particular market if:

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W₃ and L₁ is the level of employment.Then we should expect the wage to:

Since passage of NAFTA ,trade between the U.S.,Canada,and Mexico has:

In a perfectly competitive environment,the height of the market labor supply curve at any given number of labor hours indicates:

Which one of the following is generally considered a characteristic of a perfectly competitive labor market?

Which one of the following conditions is required for allocative efficiency?

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W₁ and L₁ is the level of employment.If the firm sells its output competitively,the value of the last worker's additional output is _ and the opportunity cost of the last worker's time is _:

Compared to a monopsonist that sells its output in a competitive product market,an otherwise identical monopsonist with monopoly power in the product market will pay:

Labor Economics: Introduction and Overview

The Theory of Individual Labor Supply

Population, Participation Rates, and Hours of Work

Labor Quality: Investing in Human Capital

The Demand for Labor

Alternative Pay Schemes and Labor Efficiency

The Wage Structure

Mobility,Migration,and Efficiency

Labor Unions and Collective Bargaining

The Economic Impact of Unions

Government and the Labor Market: Employment, Expenditures, and Taxation

Government and the Labor Market: Legislation and Regulation

Labor Market Discrimination

Job Search: External and Internal

The Distribution of Personal Earnings

Labor Productivity: Wages,Prices,and Employment

Employment and Unemployment

Filters

Exam 6: Wage Determination and the Allocation of Labor

For a firm hiring labor and selling its output in perfectly competitive markets:

refer to the following table that shows the short-run production relationship and the product demand schedule for a firm. Labor Output Output Price 1 10 \ 20.00 2 15 19.00 3 19 18.00 4 22 17.00 5 24 16.00 6 25 15.00 -What is the value of the third worker's marginal product?

Which of the following best explains why the market labor supply curve is upward sloping,even though individual supply curves are normally backward bending?

A firm can hire 20 workers for $10 per hour,but finds it must raise the wage to $11 to attract another worker.If it must pay all its workers the same wage,the marginal wage cost of the 21st worker is:

Which of the following is a true statement?

A monopsonist's marginal wage cost curve is positively sloped because:

A perfectly competitive labor market may be characterized by all of the following except:

One criticism of the cobweb model is that:

refer to the following diagram of a perfectly competitive labor market: -For the supply and demand curves in the diagram,the level of employment will be highest at:

refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. -At the profit maximizing level of employment,the wage rate is _____ and the level of employment is _____:

At the profit maximizing level of employment for a monopsonist:

Compared to the allocatively efficient amount,a monopsonist tends to hire:

There will be a shortage of labor in a particular market if:

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W3 and L1 is the level of employment.Then we should expect the wage to:

Since passage of NAFTA ,trade between the U.S.,Canada,and Mexico has:

In a perfectly competitive environment,the height of the market labor supply curve at any given number of labor hours indicates:

Which one of the following is generally considered a characteristic of a perfectly competitive labor market?

Which one of the following conditions is required for allocative efficiency?

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W1 and L1 is the level of employment.If the firm sells its output competitively,the value of the last worker's additional output is _____ and the opportunity cost of the last worker's time is _____:

Compared to a monopsonist that sells its output in a competitive product market,an otherwise identical monopsonist with monopoly power in the product market will pay:

Labor Economics: Introduction and Overview

The Theory of Individual Labor Supply

Population, Participation Rates, and Hours of Work

Labor Quality: Investing in Human Capital

The Demand for Labor

Alternative Pay Schemes and Labor Efficiency

The Wage Structure

Mobility,Migration,and Efficiency

Labor Unions and Collective Bargaining

The Economic Impact of Unions

Government and the Labor Market: Employment, Expenditures, and Taxation

Government and the Labor Market: Legislation and Regulation

Labor Market Discrimination

Job Search: External and Internal

The Distribution of Personal Earnings

Labor Productivity: Wages,Prices,and Employment

Employment and Unemployment

Filters

A firm can hire 20 workers for $10 per hour,but finds it must raise the wage to $11 to attract another worker.If it must pay all its workers the same wage,the marginal wage cost of the 21^st worker is:

refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. -At the profit maximizing level of employment,the wage rate is _ and the level of employment is _:

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W₃ and L₁ is the level of employment.Then we should expect the wage to:

refer to the following diagram of a competitive labor market. -Suppose the wage is currently W₁ and L₁ is the level of employment.If the firm sells its output competitively,the value of the last worker's additional output is _ and the opportunity cost of the last worker's time is _: