Question 1

Some employers may prefer overtime payments plus a lower standard wage to a higher standard wage producing the same wage costs because

Accepted Answer

A)   This makes it easier to introduce short-time working in a recession
B)   In order to satisfy trade unions
C)   They wish to utilise the existing workforce more intensively
D)   The offer of overtime makes workers less likely to quit. C

Question 2

Absenteeism

Accepted Answer

A)   is positively related to the amount of sick-pay available
B)   is always inefficient
C)   results from the fact that single women absent themselves from work more than single men
D)   results from the fact that temporary employees have a higher propensity to be absent than full-time staff. A

Question 3

If an indifference curve measuring the relationship between wage income and leisure becomes steeper this must mean

Accepted Answer

A)   A worker places more value on wage income relative to leisure than formerly was the case
B)   The marginal utility of income has increased
C)   Hours of work have fallen
D)   The amount of time devoted to leisure must have decreased. A

Question 4

Multiple job-holding can only occur when

Accepted Answer

A)   workers are bored in their main job
B)   there are constraints on the hours of work
C)   overtime is not available
D)   earnings in the main job are too low.

Question 5

The neo-classical theory of labour supply assumes that

Accepted Answer

A)   the individual is faced with a simple choice between leisure and goods
B)   the only source of income is income from work
C)   hours of work are not subject to a time constraint
D)   the substitution effect does not apply.

Question 6

A backward bending labour supply curve indicates that

Accepted Answer

A)   Workers become lazy as they earn more money
B)   Leisure is a normal good
C)   The size of the income effect is greater than that of the substitution effect
D)   Increasing real wages mean that employers have to resort to short-time working.

Question 7

A non-linear budget constraint necessarily implies

Accepted Answer

A)   Other family income has risen
B)   Income tax has been raised
C)   Overtime premium payments have been reduced
D)   None of the above.

Question 8

An income preferrer is an individual who

Accepted Answer

A)   wishes to receive a higher rate of pay for the same amount of hours worked
B)   would prefer to work more hours for the same amount of pay
C)   has large financial commitments outside of work
D)   is a member of a trade union.

Exam 2: The Labour Supply Curve