Question 1

Which of the following is not a necessary characteristic of an indifference curve?

Accepted Answer

A)  Indifference curves slope downward. 
B)  Indifference curves are differentiable. 
C)  Indifference curves are convex. 
D)  Indifference curves of the same person cannot cross. 
E)  The negative of the slope of an indifference curve is the marginal rate of substitution. 
A)  Indifference curves slope downward. 
B)  Indifference curves are differentiable. 
C)  Indifference curves are convex. 
D)  Indifference curves of the same person cannot cross. 
E)  The negative of the slope of an indifference curve is the marginal rate of substitution. B

Question 2

Which of the following is true about point P on the indifference curve   ?

Accepted Answer

A)  It corresponds to the utility maximizing solution. 
B)  It represents a corner solution where the worker chooses to remain out of the labor force. 
C)  It is not feasible given the constraints. 
D)  It satisfies the tangency condition. 
E)  It represents a feasible outcome that does not maximize the worker's utility. 
A)  It corresponds to the utility maximizing solution. 
B)  It represents a corner solution where the worker chooses to remain out of the labor force. 
C)  It is not feasible given the constraints. 
D)  It satisfies the tangency condition. 
E)  It represents a feasible outcome that does not maximize the worker's utility. C

Question 3

Consider the situation depicted in Figure 4.2,where the worker experiences a decrease in her wage.Her initial budget constraint is B0D,and following the decrease her new budget constraint is B1D.The move from to is the substitution effect,and the move from to is the income effect.

Accepted Answer

A)  R,P,Q,R 
B)  R,Q,Q,P 
C)  Q,R,P,Q 
D)  P,Q,Q,R 
E)  R,P,P,Q 
A)  R,P,Q,R 
B)  R,Q,Q,P 
C)  Q,R,P,Q 
D)  P,Q,Q,R 
E)  R,P,P,Q C

Question 4

An example of a worker adjusting along the extensive margin is when

Accepted Answer

A)  a worker's wage is increased,so he decides to work more. 
B)  a worker's wage is increased,so he decides to work less. 
C)  a worker's wage is decreased,so he switches to another job but works the same number of hours. 
D)  a worker's wage is decreased,so he leaves the labor force. 
E)  a worker's wage is decreased,so he works more hours. 
A)  a worker's wage is increased,so he decides to work more. 
B)  a worker's wage is increased,so he decides to work less. 
C)  a worker's wage is decreased,so he switches to another job but works the same number of hours. 
D)  a worker's wage is decreased,so he leaves the labor force. 
E)  a worker's wage is decreased,so he works more hours.

Question 5

Graphically,when considering the effect of an increase in wealth,the wealth effect is a and the substitution effect is a .

Accepted Answer

A)  movement along a new indifference curve,movement along the initial indifference curve 
B)  movement along a new indifference curve,change in the budget constraint. 
C)  change in the budget constraint,movement along a new indifference curve 
D)  movement along the initial indifference curve,change in the budget constraint 
E)  change in the budget constraint,movement along the initial indifference curve 
A)  movement along a new indifference curve,movement along the initial indifference curve 
B)  movement along a new indifference curve,change in the budget constraint. 
C)  change in the budget constraint,movement along a new indifference curve 
D)  movement along the initial indifference curve,change in the budget constraint 
E)  change in the budget constraint,movement along the initial indifference curve

Question 6

Suppose the government imposes an income tax of 30%.How much can Sarah spend on consumption now (assume she can spend her initial wealth)?

Accepted Answer

A)  $390 
B)  $416 
C)  $620 
D)  $716 
E)  $806 
A)  $390 
B)  $416 
C)  $620 
D)  $716 
E)  $806

Question 7

The marginal rate of substitution

Accepted Answer

A)  represents the amount of money an individual has to be paid to work another hour. 
B)  is constant along an individual's entire indifference curve. 
C)  is the reason why indifference curves are convex. 
D)  is always negative. 
E)  helps determine how to increase a person's utility. 
A)  represents the amount of money an individual has to be paid to work another hour. 
B)  is constant along an individual's entire indifference curve. 
C)  is the reason why indifference curves are convex. 
D)  is always negative. 
E)  helps determine how to increase a person's utility.

Question 8

As Susan's wage increases,she decides to work fewer hours.This implies leisure is a(n)

Accepted Answer

A)  normal good. 
B)  inferior good. 
C)  luxury good 
D)  Giffen good. 
E)  A and C 
A)  normal good. 
B)  inferior good. 
C)  luxury good 
D)  Giffen good. 
E)  A and C

Question 9

Suppose Janet's initial wealth is $480 and there are 24 hours in a day.What is Janet's reservation wage?

Accepted Answer

A)  $10 
B)  $20 
C)  $24 
D)  $240 
E)  $480 
A)  $10 
B)  $20 
C)  $24 
D)  $240 
E)  $480

Question 10

A decrease in an individual's wage causes the budget set to experience

Accepted Answer

A)  a parallel shift outward. 
B)  a parallel shift inward. 
C)  no change. 
D)  a pivot upward. 
E)  a pivot downward. 
A)  a parallel shift outward. 
B)  a parallel shift inward. 
C)  no change. 
D)  a pivot upward. 
E)  a pivot downward.

Question 11

The solution to a utility maximization problem:

Accepted Answer

A)  is located outside the budget constraint. 
B)  is an interior solution located on the budget line,where the individual chooses to work. 
C)  is a corner solution where the individual does not work and lives off her unearned income,A0. 
D)  must meet the tangency requirement. 
E)  answers B or C 
A)  is located outside the budget constraint. 
B)  is an interior solution located on the budget line,where the individual chooses to work. 
C)  is a corner solution where the individual does not work and lives off her unearned income,A0. 
D)  must meet the tangency requirement. 
E)  answers B or C

Question 12

The own wage elasticity

Accepted Answer

A)  is the percentage response in labor supply induced by a 1% impulse in the wage. 
B)  is the effect of a 1% increase in wage on the decision to participate in the labor force. 
C)  is always negative. 
D)  is always positive. 
E)  is always one. 
A)  is the percentage response in labor supply induced by a 1% impulse in the wage. 
B)  is the effect of a 1% increase in wage on the decision to participate in the labor force. 
C)  is always negative. 
D)  is always positive. 
E)  is always one.

Question 13

Which of the following does not limit a worker's choices?

Accepted Answer

A)  Each individual has to contribute 30% of their income toward an income tax. 
B)  A new state law states each person can only work 40 hours a week. 
C)  An individual is given $200 a week for disability payments. 
D)  A worker prefers to not work 40 hours a week. 
E)  There are 24 hours in a day. 
A)  Each individual has to contribute 30% of their income toward an income tax. 
B)  A new state law states each person can only work 40 hours a week. 
C)  An individual is given $200 a week for disability payments. 
D)  A worker prefers to not work 40 hours a week. 
E)  There are 24 hours in a day.

Question 14

As wealth increases,demand for a good decreases.This type of good is a

Accepted Answer

A)  normal good. 
B)  inferior good. 
C)  luxury good. 
D)  Giffen good. 
E)  B and D 
A)  normal good. 
B)  inferior good. 
C)  luxury good. 
D)  Giffen good. 
E)  B and D

Question 15

If an individual's wage increases,it is theoretically ambiguous if the individual will work more or less.Why?

Accepted Answer

A)  The wealth effect will decrease the number of hours worked,but no one knows the direction of the substitution effect. 
B)  The wealth effect has an ambiguous effect on the number of hours worked,but the substitution effect will increase the number of hours worked. 
C)  Both the wealth effect and substitution effect have an ambiguous effect on earnings. 
D)  The wealth effect will increase the number of hours worked,but the
Substitution effect will decrease the number of hours worked. 
E)  The wealth effect will decrease the number of hours worked,but the
Substitution effect will increase the number of hours worked. 
A)  The wealth effect will decrease the number of hours worked,but no one knows the direction of the substitution effect. 
B)  The wealth effect has an ambiguous effect on the number of hours worked,but the substitution effect will increase the number of hours worked. 
C)  Both the wealth effect and substitution effect have an ambiguous effect on earnings. 
D)  The wealth effect will increase the number of hours worked,but the
Substitution effect will decrease the number of hours worked. 
E)  The wealth effect will decrease the number of hours worked,but the
Substitution effect will increase the number of hours worked.

Question 16

Which of the following is true about point Q on the indifference curve   ?

Accepted Answer

A)  It corresponds to the utility maximizing solution. 
B)  It represents a corner solution where the worker chooses to remain out of the labor force. 
C)  It is not feasible given the constraints. 
D)  It satisfies the tangency condition. 
E)  A and D 
A)  It corresponds to the utility maximizing solution. 
B)  It represents a corner solution where the worker chooses to remain out of the labor force. 
C)  It is not feasible given the constraints. 
D)  It satisfies the tangency condition. 
E)  A and D

Question 17

What is Mark's marginal rate of substitution,MRS,between consumption and leisure?

Accepted Answer

A)  0.7 dollars per hour 
B)  1.5 dollars per hour 
C)  3.5 dollars per hour 
D)  4 dollars per hour 
E)  5.5 dollars per hour 
A)  0.7 dollars per hour 
B)  1.5 dollars per hour 
C)  3.5 dollars per hour 
D)  4 dollars per hour 
E)  5.5 dollars per hour

Question 18

If leisure is a normal good,then a decrease in non-labor income will cause the desired number of hours worked to

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase for skilled workers only. 
E)  increase for unskilled workers only. 
A)  increase. 
B)  decrease. 
C)  remain the same. 
D)  increase for skilled workers only. 
E)  increase for unskilled workers only.

Question 19

Sample selection occurs because

Accepted Answer

A)  workers choose not to participate in the labor force. 
B)  the individuals who choose not to participate in the labor force are not random. 
C)  economists do not know with certainty what wage a worker needs to be offered to work 
D)  economists can estimate the income elasticity of the working population. 
E)  economists can estimate the substitution effect of the working population. 
A)  workers choose not to participate in the labor force. 
B)  the individuals who choose not to participate in the labor force are not random. 
C)  economists do not know with certainty what wage a worker needs to be offered to work 
D)  economists can estimate the income elasticity of the working population. 
E)  economists can estimate the substitution effect of the working population.

Question 20

A worker's reservation wage is

Accepted Answer

A)  the minimum wage a worker must receive to join the labor force. 
B)  the maximum wage a worker must receive to stay in the labor force. 
C)  the minimum wage a worker must receive to decide to receive public assistance. 
D)  the maximum wage a worker must receive to decide to receive public assistance. 
E)  the wage at which a worker will switch from part time to full time employment. 
A)  the minimum wage a worker must receive to join the labor force. 
B)  the maximum wage a worker must receive to stay in the labor force. 
C)  the minimum wage a worker must receive to decide to receive public assistance. 
D)  the maximum wage a worker must receive to decide to receive public assistance. 
E)  the wage at which a worker will switch from part time to full time employment.

Which of the following is not a necessary characteristic of an indifference curve?

Which of the following is true about point P on the indifference curve ?

Consider the situation depicted in Figure 4.2,where the worker experiences a decrease in her wage.Her initial budget constraint is B0D,and following the decrease her new budget constraint is B1D.The move from to is the substitution effect,and the move from to is the income effect.

An example of a worker adjusting along the extensive margin is when

Graphically,when considering the effect of an increase in wealth,the wealth effect is a and the substitution effect is a .

Suppose the government imposes an income tax of 30%.How much can Sarah spend on consumption now (assume she can spend her initial wealth)?

The marginal rate of substitution

As Susan's wage increases,she decides to work fewer hours.This implies leisure is a(n)

Suppose Janet's initial wealth is $480 and there are 24 hours in a day.What is Janet's reservation wage?

A decrease in an individual's wage causes the budget set to experience

The solution to a utility maximization problem:

The own wage elasticity

Which of the following does not limit a worker's choices?

As wealth increases,demand for a good decreases.This type of good is a

If an individual's wage increases,it is theoretically ambiguous if the individual will work more or less.Why?

Which of the following is true about point Q on the indifference curve ?

What is Mark's marginal rate of substitution,MRS,between consumption and leisure?

If leisure is a normal good,then a decrease in non-labor income will cause the desired number of hours worked to

Sample selection occurs because

A worker's reservation wage is

Introduction

The Uslabor Market

The Short Run Demand for Labor

Human Capital

On-The-Job Training

Competitive Equilibrium

Policy Application: the Minimum Wage

Policy Application: the War on Poverty

Death and Injury in the Usworkplace-A Hedonic Analysis

Discrimination I: Theory

Discrimination Ii: Evidence and Policy

The Hiring Process

Incentives

Tasks,technologies,and Organizational Design

Careers and the Employment Relation

The Long Run Demand for Labor and Adjustment Costs

Filters

Exam 4: The Supply of Labor

Which of the following is not a necessary characteristic of an indifference curve?

Which of the following is true about point P on the indifference curve ?

Consider the situation depicted in Figure 4.2,where the worker experiences a decrease in her wage.Her initial budget constraint is B0D,and following the decrease her new budget constraint is B1D.The move from to is the substitution effect,and the move from to is the income effect.

An example of a worker adjusting along the extensive margin is when

Graphically,when considering the effect of an increase in wealth,the wealth effect is a and the substitution effect is a .

Suppose the government imposes an income tax of 30%.How much can Sarah spend on consumption now (assume she can spend her initial wealth)?

The marginal rate of substitution

As Susan's wage increases,she decides to work fewer hours.This implies leisure is a(n)

Suppose Janet's initial wealth is $480 and there are 24 hours in a day.What is Janet's reservation wage?

A decrease in an individual's wage causes the budget set to experience

The solution to a utility maximization problem:

The own wage elasticity

Which of the following does not limit a worker's choices?

As wealth increases,demand for a good decreases.This type of good is a

If an individual's wage increases,it is theoretically ambiguous if the individual will work more or less.Why?

Which of the following is true about point Q on the indifference curve ?

What is Mark's marginal rate of substitution,MRS,between consumption and leisure?

If leisure is a normal good,then a decrease in non-labor income will cause the desired number of hours worked to

Sample selection occurs because

A worker's reservation wage is

Introduction

The Uslabor Market

The Short Run Demand for Labor

Human Capital

On-The-Job Training

Competitive Equilibrium

Policy Application: the Minimum Wage

Policy Application: the War on Poverty

Death and Injury in the Usworkplace-A Hedonic Analysis

Discrimination I: Theory

Discrimination Ii: Evidence and Policy

The Hiring Process

Incentives

Tasks,technologies,and Organizational Design

Careers and the Employment Relation

The Long Run Demand for Labor and Adjustment Costs

Filters