Question 1

If a firm incurs the same cost to hire each worker,the firm faces

Accepted Answer

A)  a positive labor demand elasticity. 
B)  linear adjustment costs. 
C)  concave adjustment costs. 
D)  convex adjustment costs. 
E)  lumpy adjustment costs. 
A)  a positive labor demand elasticity. 
B)  linear adjustment costs. 
C)  concave adjustment costs. 
D)  convex adjustment costs. 
E)  lumpy adjustment costs.

Question 2

Suppose the firm wants to manufacture an additional 500 units of output and can use either capital or labor.Each additional unit of capital costs $50,while each additional worker demands a wage of $10 an hour.Capital will generate 25 units of output,while a worker will generate 2 units of output per hour.What will the firm do?

Accepted Answer

A)  The firm will employ 250 workers. 
B)  The firm will purchase 20 units of capital. 
C)  The firm will purchase 30 units of capital. 
D)  The firm will employ 20 workers. 
E)  The firm will employ 250 workers and 20 units of capital. 
A)  The firm will employ 250 workers. 
B)  The firm will purchase 20 units of capital. 
C)  The firm will purchase 30 units of capital. 
D)  The firm will employ 20 workers. 
E)  The firm will employ 250 workers and 20 units of capital.

Question 3

Which combination of wages and rental rates would fulfill the "equal-bang-for-the-buck" condition?

Accepted Answer

A)  rental rate = $2,wage = $3 
B)  rental rate = $3,wage = $2 
C)  rental rate = $1,wage = $1 
D)  rental rate = $4,wage = $1 
E)  rental rate = $1,wage = $4 
A)  rental rate = $2,wage = $3 
B)  rental rate = $3,wage = $2 
C)  rental rate = $1,wage = $1 
D)  rental rate = $4,wage = $1 
E)  rental rate = $1,wage = $4

Question 4

If a firm incurs high fixed costs to adjust employment but there is almost no effect on the MRP of labor,the firm faces

Accepted Answer

A)  a positive labor demand elasticity. 
B)  linear adjustment costs. 
C)  concave adjustment costs. 
D)  convex adjustment costs. 
E)  lumpy adjustment costs. 
A)  a positive labor demand elasticity. 
B)  linear adjustment costs. 
C)  concave adjustment costs. 
D)  convex adjustment costs. 
E)  lumpy adjustment costs.

Question 5

If two inputs are gross substitutes,their substitution elasticity will be

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  - 1. 
E)  1. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  - 1. 
E)  1.

Question 6

Which of the following increases the power of unions?

Accepted Answer

A)  Deregulation of an industry,removing a firm's monopoly power. 
B)  An increase in the tariff on foreign inputs. 
C)  An elastic demand curve. 
D)  An increase in the price elasticity of demand for the industry's product. 
E)  The firm not agreeing to a set number of union workers that it must employ (manning levels) 
A)  Deregulation of an industry,removing a firm's monopoly power. 
B)  An increase in the tariff on foreign inputs. 
C)  An elastic demand curve. 
D)  An increase in the price elasticity of demand for the industry's product. 
E)  The firm not agreeing to a set number of union workers that it must employ (manning levels)

Question 7

Which of the following is a true statement about isoquants?

Accepted Answer

A)  Each isoquant corresponds to the same level of capital. 
B)  Each isoquant corresponds to the same level of labor. 
C)  Each isoquant corresponds to the same level of output. 
D)  Isoquants are positively sloped to re?0??4?ect the substitutability between capital and labor. 
E)  Isoquants can cross. 
A)  Each isoquant corresponds to the same level of capital. 
B)  Each isoquant corresponds to the same level of labor. 
C)  Each isoquant corresponds to the same level of output. 
D)  Isoquants are positively sloped to re?0??4?ect the substitutability between capital and labor. 
E)  Isoquants can cross.

Question 8

Suppose the substitution elasticity between capital and labor is ?2- 2.6%.What does this imply about the demand for labor?

Accepted Answer

A)  The long run demand for labor is relatively inelastic. 
B)  The long run demand for labor is relatively elastic. 
C)  The short run demand for labor is relatively inelastic. 
D)  The long run supply of labor is relatively inelastic. 
E)  The long run supply of labor is relatively elastic. 
A)  The long run demand for labor is relatively inelastic. 
B)  The long run demand for labor is relatively elastic. 
C)  The short run demand for labor is relatively inelastic. 
D)  The long run supply of labor is relatively inelastic. 
E)  The long run supply of labor is relatively elastic.

Question 9

Suppose a firm uses three inputs in production,capital,labor,and land.If the price of labor increases,the firm adjusts by decreasing the amount of labor used,increasing the amount of capital used and decreasing the amount of land used.What does this imply about the relationship between the three inputs?

Accepted Answer

A)  Land and labor are net substitutes while labor and capital are net complements. 
B)  Land and labor are net complements while labor and capital are net substitutes. 
C)  Land and labor are gross substitutes while labor and capital are gross complements. 
D)  Land and labor are gross complements while labor and capital are gross substitutes. 
E)  none of the above 
A)  Land and labor are net substitutes while labor and capital are net complements. 
B)  Land and labor are net complements while labor and capital are net substitutes. 
C)  Land and labor are gross substitutes while labor and capital are gross complements. 
D)  Land and labor are gross complements while labor and capital are gross substitutes. 
E)  none of the above

Question 10

When wages increase,

Accepted Answer

A)  the scale and substitution effects counteract each other and the firm's demand for labor remains the same. 
B)  the scale and substitution effects move in the same direction and the firm's demand for labor decreases. 
C)  the scale and substitution effects move in the same direction and the firm's demand for labor increases. 
D)  the scale and substitution effects move in opposite directions and the firm's demand for labor decreases. 
E)  the scale and substitution effects move in opposite directions and the firm's demand for labor increases. 
A)  the scale and substitution effects counteract each other and the firm's demand for labor remains the same. 
B)  the scale and substitution effects move in the same direction and the firm's demand for labor decreases. 
C)  the scale and substitution effects move in the same direction and the firm's demand for labor increases. 
D)  the scale and substitution effects move in opposite directions and the firm's demand for labor decreases. 
E)  the scale and substitution effects move in opposite directions and the firm's demand for labor increases.

Question 11

Suppose the supply of capital is relatively inelastic.If capital and labor are gross complements,the labor demand elasticity will be ,but if capital and labor are gross substitutes,the labor demand elasticity will be .

Accepted Answer

A)  high,high 
B)  low,low 
C)  low,high 
D)  high,low 
E)  zero,zero 
A)  high,high 
B)  low,low 
C)  low,high 
D)  high,low 
E)  zero,zero

Question 12

If two inputs are gross substitutes,their substitution elasticity will be

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  .2- 1. 
E)  1. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  .2- 1. 
E)  1.

Question 13

Suppose the price of capital increases to $11.Which of the following will occur?

Accepted Answer

A)  The amount of capital used will increase to 6. 
B)  The amount of labor used will remain the same. 
C)  The level of output will increase to 36. 
D)  The amount of labor used will increase to 1 unit. 
E)  The level of output will remain the same. 
A)  The amount of capital used will increase to 6. 
B)  The amount of labor used will remain the same. 
C)  The level of output will increase to 36. 
D)  The amount of labor used will increase to 1 unit. 
E)  The level of output will remain the same.

If a firm incurs the same cost to hire each worker,the firm faces

Which combination of wages and rental rates would fulfill the "equal-bang-for-the-buck" condition?

If a firm incurs high fixed costs to adjust employment but there is almost no effect on the MRP of labor,the firm faces

If two inputs are gross substitutes,their substitution elasticity will be

Which of the following increases the power of unions?

Which of the following is a true statement about isoquants?

Suppose the substitution elasticity between capital and labor is ?2- 2.6%.What does this imply about the demand for labor?

When wages increase,

Suppose the supply of capital is relatively inelastic.If capital and labor are gross complements,the labor demand elasticity will be ,but if capital and labor are gross substitutes,the labor demand elasticity will be .

If two inputs are gross substitutes,their substitution elasticity will be

Suppose the price of capital increases to $11.Which of the following will occur?

Introduction

The Uslabor Market

The Short Run Demand for Labor

The Supply of 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

Filters

Exam 26: The Long Run Demand for Labor and Adjustment Costs

If a firm incurs the same cost to hire each worker,the firm faces

Which combination of wages and rental rates would fulfill the "equal-bang-for-the-buck" condition?

If a firm incurs high fixed costs to adjust employment but there is almost no effect on the MRP of labor,the firm faces

If two inputs are gross substitutes,their substitution elasticity will be

Which of the following increases the power of unions?

Which of the following is a true statement about isoquants?

Suppose the substitution elasticity between capital and labor is ?2- 2.6%.What does this imply about the demand for labor?

When wages increase,

Suppose the supply of capital is relatively inelastic.If capital and labor are gross complements,the labor demand elasticity will be ,but if capital and labor are gross substitutes,the labor demand elasticity will be .

If two inputs are gross substitutes,their substitution elasticity will be

Suppose the price of capital increases to $11.Which of the following will occur?

Introduction

The Uslabor Market

The Short Run Demand for Labor

The Supply of 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

Filters