Question 1

In order for a labour supply curve to be backward bending at high wages,

Accepted Answer

A)  leisure must be an inferior good. 
B)  the substitution effect of a wage increase must be greater than the income effect. 
C)  workers must have an irrational response to wage increases. 
D)  the income effect of a wage increase must be greater than the substitution effect. 
A)  leisure must be an inferior good. 
B)  the substitution effect of a wage increase must be greater than the income effect. 
C)  workers must have an irrational response to wage increases. 
D)  the income effect of a wage increase must be greater than the substitution effect.

Question 2

The marginal revenue product of labour is defined as

Accepted Answer

A)  the change in the firm's revenue as a result of selling one more unit of output. 
B)  the change in the firm's output as a result of hiring one more worker. 
C)  the change in the firm's profit as a result of hiring one more worker. 
D)  the change in the firm's revenue as a result of hiring one more worker. 
A)  the change in the firm's revenue as a result of selling one more unit of output. 
B)  the change in the firm's output as a result of hiring one more worker. 
C)  the change in the firm's profit as a result of hiring one more worker. 
D)  the change in the firm's revenue as a result of hiring one more worker.

Question 3

What is the formula you should use to determine a bank account's future value in one year?

Accepted Answer

A)  Future value equals the present value plus the rate of interest. 
B)  Future value equals the present value minus the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  Future value equals the present value divided by one plus the rate of interest in decimals. 
A)  Future value equals the present value plus the rate of interest. 
B)  Future value equals the present value minus the rate of interest. 
C)  Future value equals the present value multiplied by one plus the rate of interest in decimals. 
D)  Future value equals the present value divided by one plus the rate of interest in decimals.

Question 4

One implication of compensating differentials is that laws passed to protect the health and safety of workers may not make workers better off than they were prior to the passages of the laws.Why is this so?

Accepted Answer

A)  Workers may suffer from cognitive dissonance, which means that the perception workers have that their jobs are hazardous is not true. 
B)  If the laws make the work environment safer, there is no reason to pay workers a compensating differential for the risk associated with their jobs. 
C)  The principal-agent problem that exists in the workplace may cause workers to shirk more after the work environment becomes safer. 
D)  In non-competitive markets, workers are unlikely to receive a compensating differential to compensate for jobs with extra risk. As a result, after the laws are passed, their wages will not change. 
A)  Workers may suffer from cognitive dissonance, which means that the perception workers have that their jobs are hazardous is not true. 
B)  If the laws make the work environment safer, there is no reason to pay workers a compensating differential for the risk associated with their jobs. 
C)  The principal-agent problem that exists in the workplace may cause workers to shirk more after the work environment becomes safer. 
D)  In non-competitive markets, workers are unlikely to receive a compensating differential to compensate for jobs with extra risk. As a result, after the laws are passed, their wages will not change.

Question 5

If the market wage rate increases,a firm's labour demand curve does not shift,but the labour supply curve shifts to the right.

Accepted Answer

A) True 
 B)False

Question 6

Economic rent refers to the price of a factor of production which is fixed in supply.

Accepted Answer

A) True 
 B)False

Question 7

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

Accepted Answer

A)  $80 
B)  $80 minus the firm's profit mark-up 
C)  It depends on what the going wage rate is in the labour market. 
D)  There is insufficient information to answer the question. 
A)  $80 
B)  $80 minus the firm's profit mark-up 
C)  It depends on what the going wage rate is in the labour market. 
D)  There is insufficient information to answer the question.

Question 8

One difference between the labour market and markets for goods and services is

Accepted Answer

A)  the demand in the labour market is inelastic; the demand for goods and services may be elastic or inelastic. 
B)  the supply of labour is perfectly inelastic because the quantity supplied is constant. The elasticity of supply for goods and services is different in different markets. 
C)  concepts of fairness arise more frequently in labour markets than in the markets for goods and services. 
D)  in the labour market, firms are suppliers while households are demanders. 
A)  the demand in the labour market is inelastic; the demand for goods and services may be elastic or inelastic. 
B)  the supply of labour is perfectly inelastic because the quantity supplied is constant. The elasticity of supply for goods and services is different in different markets. 
C)  concepts of fairness arise more frequently in labour markets than in the markets for goods and services. 
D)  in the labour market, firms are suppliers while households are demanders.

Question 9

Which of the following is an example of a compensating wage differential?

Accepted Answer

A)  Nurse anaesthetists are paid less than anaesthetists with medical degrees. 
B)  Workers in a dynamite mine receive higher wages than if they worked in other jobs that require the same level of skills. 
C)  In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. 
D)  Popular movie stars like George Clooney command much higher salaries than other talented but lesser-known actors. 
A)  Nurse anaesthetists are paid less than anaesthetists with medical degrees. 
B)  Workers in a dynamite mine receive higher wages than if they worked in other jobs that require the same level of skills. 
C)  In the market for lawyers, top graduates from the top programs earn starting salaries that are significantly higher than the starting salaries earned by lower-ranked graduates from the lower-ranked programs. 
D)  Popular movie stars like George Clooney command much higher salaries than other talented but lesser-known actors.

Question 10

The marginal product of labour is

Accepted Answer

A)  the payment made to workers for their contribution to the output they produce. 
B)  equal to the demand for labour. 
C)  the change in a firm's revenue as a result of hiring one more worker. 
D)  the additional output a firm produces as a result of hiring one more worker. 
A)  the payment made to workers for their contribution to the output they produce. 
B)  equal to the demand for labour. 
C)  the change in a firm's revenue as a result of hiring one more worker. 
D)  the additional output a firm produces as a result of hiring one more worker.

Question 11

Which of the following is not held constant along a firm's demand curve for labour?

Accepted Answer

A)  The quantity of other inputs used by the firm 
B)  The wage rate 
C)  Changes in technology 
D)  The price of the product produced by the firm 
A)  The quantity of other inputs used by the firm 
B)  The wage rate 
C)  Changes in technology 
D)  The price of the product produced by the firm

Question 12

In general,the supply curve for a natural resource

Accepted Answer

A)  is vertical. 
B)  is horizontal. 
C)  slopes downward to reflect decreasing available quantities over time. 
D)  slopes upward. 
A)  is vertical. 
B)  is horizontal. 
C)  slopes downward to reflect decreasing available quantities over time. 
D)  slopes upward.

Question 13

If Molly Bee increases her work hours when her wage increases,then

Accepted Answer

A)  the income effect of the wage increase outweighs the substitution effect. 
B)  the substitution effect of the wage increase outweighs the income effect. 
C)  leisure is an inferior good to Molly. 
D)  Molly is spending beyond her means. 
A)  the income effect of the wage increase outweighs the substitution effect. 
B)  the substitution effect of the wage increase outweighs the income effect. 
C)  leisure is an inferior good to Molly. 
D)  Molly is spending beyond her means.

In order for a labour supply curve to be backward bending at high wages,

The marginal revenue product of labour is defined as

What is the formula you should use to determine a bank account's future value in one year?

One implication of compensating differentials is that laws passed to protect the health and safety of workers may not make workers better off than they were prior to the passages of the laws.Why is this so?

If the market wage rate increases,a firm's labour demand curve does not shift,but the labour supply curve shifts to the right.

Economic rent refers to the price of a factor of production which is fixed in supply.

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

One difference between the labour market and markets for goods and services is

Which of the following is an example of a compensating wage differential?

The marginal product of labour is

Which of the following is not held constant along a firm's demand curve for labour?

In general,the supply curve for a natural resource

If Molly Bee increases her work hours when her wage increases,then

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

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Exam 10: Monopoly and Antitrust

In order for a labour supply curve to be backward bending at high wages,

The marginal revenue product of labour is defined as

What is the formula you should use to determine a bank account's future value in one year?

One implication of compensating differentials is that laws passed to protect the health and safety of workers may not make workers better off than they were prior to the passages of the laws.Why is this so?

If the market wage rate increases,a firm's labour demand curve does not shift,but the labour supply curve shifts to the right.

Economic rent refers to the price of a factor of production which is fixed in supply.

If a worker can produce 20 units of output which can be sold for $4 per unit,what is the maximum wage that firm should pay to hire this worker?

One difference between the labour market and markets for goods and services is

Which of the following is an example of a compensating wage differential?

The marginal product of labour is

Which of the following is not held constant along a firm's demand curve for labour?

In general,the supply curve for a natural resource

If Molly Bee increases her work hours when her wage increases,then

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters