Question 1

An increase in the price of grape juice causes an increase in the marginal revenue product of labor used to produce grape juice.

Accepted Answer

A) True 
 B)False  True

Question 2

If the labor demand curve shifts to the right and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The equilibrium wage will rise from W1 to W2 and the equilibrium level of employment will rise from L1 to L2.

Question 3

Increases in population shift the market supply curve for labor to the right.

Accepted Answer

A) True 
 B)False  True

Question 4

The demand curve for labor is also

Accepted Answer

A)   the demand curve for the output produced with labor since the demand for labor is a derived demand.
B)   the marginal product of labor curve.
C)   the marginal revenue product of labor curve.
D)   the supply curve for the output labor is used to produce.

Question 5

Figure 17-3 
-Refer to Figure 17-3. Which of the panels in the diagram best represents an individual's labor supply curve?

Accepted Answer

A)   Panel A
B)   Panel B
C)   Panel C
D)   Panel D

Question 6

Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games). An example of capital used by teams to produce their products is

Accepted Answer

A)   the money teams earn from television contracts and ticket sales.
B)   the land on which baseball games are played.
C)   the labor of baseball players.
D)   the ballparks where the games are played.

Question 7

Table 17-3
  Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labor at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 17-3 shows the relationship between the quantity of labor it hires and the quantity of microwave ovens it produces.
-Refer to Table 17-3. What is the amount of profit added as a result of hiring the fourth worker?

Accepted Answer

A)   $7,200
B)   $1,200
C)   $800
D)   $400

Question 8

Compensating differentials are

Accepted Answer

A)   non-monetary benefits from being employed, such as health-care benefits.
B)   wages paid to workers where the supply of labor is great relative to demand.
C)   higher wages that compensate workers for unpleasant aspects of a job.
D)   higher wages that compensate the more experienced workers in a field.

Question 9

Suppose a competitive firm is paying a wage of $12 an hour. Assume that labor is the only input. If hiring another worker would increase output by four units per hour, then to maximize profits the firm should

Accepted Answer

A)   not change the number of workers it currently hires.
B)   hire the extra worker.
C)   layoff some workers.
D)   There is not enough information to answer the question.

Question 10

The demand for labor is different from the demand for final goods and services because

Accepted Answer

A)   the demand for labor is derived from the demand for the good or service the labor is used to produce.
B)   it is a demand for people, not inanimate objects.
C)   the demand for labor is more inelastic than the demand for the goods and services produced with this labor.
D)   the law of demand does not apply to the demand for labor.

Question 11

The success of Walt Disney's animated film The Lion King in 1994, increased production of animated films, increasing the demand for animators much faster than the supply of animators was increasing. As a result, in the market for animators, the equilibrium wage fell and the equilibrium quantity increased.

Accepted Answer

A) True 
 B)False

Question 12

The Equal Pay Act of 1963 requires that men and women be given equal pay for equal work in the same establishment. Most people agree that gender discrimination in the workplace is unfair, but many economists have criticized advocates of comparable worth. Is paying the same wages for jobs that have comparable worth mandated by the Equal Pay Act? Why don't most economists support proposals to force employers to pay their male and female employees based on comparable worth rules?

Accepted Answer

The answer of The Equal Pay Act of 1963 requires...

Question 13

Personnel economics is

Accepted Answer

A)   the study of the factors that determine wage rates.
B)   the study of how workers are affected by tax law changes.
C)   the application of economic analyses to human resource issues.
D)   the application of economic analysis to the hiring decision.

Question 14

Hotspur Incorporated, a manufacturer of microwaves, is a price taker in both the input and output markets. To maximize its profit, Hotspur will hire labor up to the point where

Accepted Answer

A)   the marginal product of labor is no longer positive.
B)   all economies of scale have been exhausted.
C)   the marginal revenue product of labor equals the wage rate.
D)   the marginal revenue product of labor equals the output price.

Question 15

The primary purpose of labor unions is to

Accepted Answer

A)   ensure that workers receive adequate safety training.
B)   ensure that all members earn identical incomes.
C)   negotiate with employers about wages and working conditions.
D)   endorse candidates and donate money to them.

Question 16

Let MP = marginal product, P = output price, and W = wage; then the equation that represents the condition where a competitive firm would hire another worker is

Accepted Answer

A)   P × MP = W.
B)   P × MP 
C)   P × MP > W.
D)   P × W > MP.

Question 17

Marginal revenue product can be calculated using the formula marginal product × output price

Accepted Answer

A)   only if output price is constant.
B)   only if the marginal product of labor is constant.
C)   only if the both marginal product of labor and the output price are constant.
D)   only if the firm has market power in the labor market.

Question 18

If workers in nuclear power plants underestimate the true risk of their jobs,

Accepted Answer

A)   employers will pay compensating differential to compensate employees fully for the risk they have assumed.
B)   safety legislation will not make workers better off.
C)   the wages of these workers will not be high enough to compensate them fully for the risk they have assumed.
D)   the supply of workers in this occupation will exceed demand.

Question 19

Consider the market for nurses in a given city. In each of the following cases, explain what happens to the equilibrium wage rate and the quantity of nurses hired.
a. One of the major hospitals in the city closes.
b. A record number of students graduate with bachelor's degrees in nursing.
c. Traditionally, nursing is a field that attracts women. However, changes in access to education and to the labor force participation rate by women have led to a greater demand for the services of women in a wide range of occupations. The demand for nurses, however, does not change.
d. Advances in medical technology reduce the amount of time physicians must spend with patients in intensive care and increase the time that nurses spend with patients.

Accepted Answer

The answer of Consider the market for nurses in a...

Question 20

In the medical profession, pediatricians receive lower salaries than cardiologists. Suppose the government passes comparable worth legislation that requires hospitals to pay pediatricians the same salaries as cardiologists. Explain the effect of this legislation and illustrate your answer with demand and supply graphs for the following two scenarios:
a. Hospitals respond by placing salaries at a level between the two existing salaries.
b. Hospitals respond by placing pediatricians' salaries at the initial level of cardiologists.

Accepted Answer

The answer of In the medical profession, pediatricians receive lower...

Exam 17: The Markets for Labor and Other Factors of Production