Question 1

What is the term used for the process by which an entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, making older substitutes obsolete?

Accepted Answer

A)  creative destruction 
B)  innovation 
C)  the substitution effect 
D)  backward-bending innovation

Question 2

In a famous series of commercials, the International Ladies' Garment Workers Union (ILGWU) urged buyers to "look for the union label" and to avoid buying clothes not made by ILGWU members.Through the commercials, the ILGWU tried to attain its goals by

Accepted Answer

A)  restricting the number of ILGWU members. 
B)  featherbedding. 
C)  raising the marginal revenue products of ILGWU members. 
D)  creating lower prices for goods made by ILGWU members.

Question 3

The substitution effect of a wage increase

Accepted Answer

A)  probably leads most workers to want to work more. 
B)  certainly leads all workers to want to work more. 
C)  probably leads most workers to want to work less. 
D)  certainly leads most firms to want to employ more workers.

Question 4

P = MC is a recipe for financial loss in an innovative firm established by an innovative entrepreneur.Explain.

Accepted Answer

The answer of P = MC is a recipe for...

Question 5

Which of the following were invented centuries ago in China?

Accepted Answer

A)  gunpowder 
B)  the wheelbarrow 
C)  printing with movable type 
D)  all of the above

Question 6

Unionism is much more prevalent in the United States than in other industrialized countries.

Accepted Answer

A) True 
 B)False

Question 7

Economists would describe a labor union as a

Accepted Answer

A)  trade organization. 
B)  necessity for competitive labor markets. 
C)  labor monopoly. 
D)  pure monopsony.

Question 8

Spending on an education is considered an investment because it involves a sacrifice of current income for higher expected future income.

Accepted Answer

A) True 
 B)False

Question 9

A union acts like a monopoly seller of labor.

Accepted Answer

A) True 
 B)False

Question 10

The demand for labor is a derived demand.Employers hire workers until the

Accepted Answer

A)  wage rate equals the average product of labor. 
B)  wage rate equals the marginal revenue product of labor. 
C)  last worker hired adds nothing to total output. 
D)  average product of labor is zero.

Question 11

The number of persons who could become lawyers or surgeons is potentially quite large, yet these two groups earn fairly high incomes.One of the main reasons why they do is the

Accepted Answer

A)  return on the investment of many years of training. 
B)  evening-out of their low income during schooling. 
C)  rent on their unique and rare talents. 
D)  scarcity value of their abilities.

Question 12

The term "bilateral monopoly" refers to market situations in which

Accepted Answer

A)  there are two participants on the selling side. 
B)  there are two participants on the buying side. 
C)  there is a monopoly on the selling side and a monopsony on the buying side. 
D)  a monopoly has evaded antitrust laws.

Question 13

Briefly and concisely define the following terms and explain their relevance to the study of economics.
a.
industrial and craft unions
b.closed shop
c.union shop
d.bilateral monopoly
e.collective-bargaining agreement

Accepted Answer

The answer of Briefly and concisely define the following terms...

Question 14

Doctors demand large salaries in part because

Accepted Answer

A)  they are forbidden by U.S.law from receiving economic rent. 
B)  most doctors have backward-bending labor supply curves. 
C)  they participate in the secondary labor market. 
D)  they have made significant investments in human capital.

Question 15

With a monopsony in the labor market, a union can often raise wages and the number of workers hired.

Accepted Answer

A) True 
 B)False

Question 16

It has been shown that when offered higher wages, women will work more hours.This is because

Accepted Answer

A)  women tend to work more hours than men at any wage rate. 
B)  the substitution effect is more dominant for women. 
C)  the income effect is more dominant for women. 
D)  women are more productive than men at higher wages.

Question 17

The labor market is composed of

Accepted Answer

A)  a relatively homogeneous supply of labor and downward-sloping demand curve. 
B)  a vertical supply curve for labor and relatively elastic market demand. 
C)  many submarkets for labor of different types. 
D)  more teenagers than any other age group of labor.

Question 18

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following observations concerning labor cost patterns over the last century is true?

Accepted Answer

A)  Average real wages started rising after 1973. 
B)  Hourly compensation rates have fallen dramatically. 
C)  Compensation growth slowed markedly. 
D)  Average hours worked per week have increased by almost 50 percent.

Question 20

A bilateral monopoly is a market situation in which there is only one buyer and only one seller.

Accepted Answer

A) True 
 B)False

Exam 20: Labor and Entrepreneurship: The Human Inputs

What is the term used for the process by which an entrepreneur creates or recognizes a new and better product, acquires it, and brings it to market, making older substitutes obsolete?

In a famous series of commercials, the International Ladies' Garment Workers Union (ILGWU) urged buyers to "look for the union label" and to avoid buying clothes not made by ILGWU members.Through the commercials, the ILGWU tried to attain its goals by

The substitution effect of a wage increase

P = MC is a recipe for financial loss in an innovative firm established by an innovative entrepreneur.Explain.

Which of the following were invented centuries ago in China?

Unionism is much more prevalent in the United States than in other industrialized countries.

Economists would describe a labor union as a

Spending on an education is considered an investment because it involves a sacrifice of current income for higher expected future income.

A union acts like a monopoly seller of labor.

The demand for labor is a derived demand.Employers hire workers until the

The number of persons who could become lawyers or surgeons is potentially quite large, yet these two groups earn fairly high incomes.One of the main reasons why they do is the

The term "bilateral monopoly" refers to market situations in which

Briefly and concisely define the following terms and explain their relevance to the study of economics. a. industrial and craft unions b.closed shop c.union shop d.bilateral monopoly e.collective-bargaining agreement

Doctors demand large salaries in part because

With a monopsony in the labor market, a union can often raise wages and the number of workers hired.

It has been shown that when offered higher wages, women will work more hours.This is because

The labor market is composed of

Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

Which of the following observations concerning labor cost patterns over the last century is true?

A bilateral monopoly is a market situation in which there is only one buyer and only one seller.