Question 1

The demand for labour depends primarily on the additional output produced as a result of hiring an additional worker and

Accepted Answer

A)  the additional revenue received from selling the output produced as a result of hiring an additional worker. 
B)  the payment made to the worker for producing the additional output. 
C)  the elasticity of demand for the output produced by the worker. 
D)  the number of workers willing to produce the additional output.

Question 2

Technological advancements that increase labour's productivity shift the labour supply curve to the right.

Accepted Answer

A) True 
 B)False

Question 3

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

Accepted Answer

A)  Differences in education 
B)  Geographic location 
C)  Differences in experience 
D)  Differing preferences for jobs

Question 4

The labour supply for an industry would decrease if

Accepted Answer

A)  the wage rate falls. 
B)  the percentage of the population from age 16 to 65 decreases. 
C)  the government welcomes foreign workers into the country. 
D)  a greater percentage of women want to work outside the home.

Question 5

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

Question 6

A firm chooses its profit-maximising quantity of capital by

Accepted Answer

A)  comparing the marginal revenue product of capital with the rental price of capital. 
B)  comparing the price of capital with the price of labour. 
C)  examining the total cost of capital equipment. 
D)  determining the rate at which the firm can borrow funds to purchase plant and equipment.

Question 7

Competitive markets tend to eliminate economic discrimination,but there are many historical examples of firms that hired few,or no,black or female workers.Which of the following is not a reason for the persistence of this form of discrimination?

Accepted Answer

A)  In many cases, white workers refused to work with black workers. 
B)  Some white consumers were unwilling to buy from companies that employed black workers. 
C)  If discrimination makes it difficult for a member of a group to be hired in a particular occupation, there is less incentive for members of the group to be trained to enter that occupation. 
D)  Laws passed by the federal government made it more expensive to hire black or female workers. As a result, it was less expensive for employers to hire mostly white male workers.

Question 8

If national laws protecting the health and safety of workers completely eliminate any and all risk,then

Accepted Answer

A)  workers in risky occupations become better off. 
B)  compensating wage differentials disappear and workers in risky occupations may be no better off. 
C)  compensating differentials would grow because workers could not be compensated by being given lower-risk jobs. 
D)  more people would be employed.

Question 9

The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services.

Accepted Answer

A) True 
 B)False

Question 10

How will an increase in labour productivity affect equilibrium in the labour market?

Accepted Answer

A)  The supply of labour will increase and the equilibrium wage and quantity of labour will increase. 
B)  The demand for jobs will increase and the equilibrium wage and quantity of labour will increase. 
C)  The demand for labour will increase and the equilibrium wage and quantity of labour will increase. 
D)  The demand for labour will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labour will decrease.

Question 11

If a stock's dividend is expected to grow at a constant rate of 6 per cent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 per cent rate of return,what would you be willing to pay per share for this stock?

Accepted Answer

A)  $9 
B)  $20 
C)  $45 
D)  $106

Question 12

The substitution effect of a wage increase is observed when

Accepted Answer

A)  the higher wage income causes workers to take more leisure and work less. 
B)  leisure's higher opportunity cost causes workers to take less leisure and work more. 
C)  the higher wage income causes workers to take more leisure and work more. 
D)  leisure's higher opportunity cost causes workers to take more leisure and work less.

Question 13

Which of the following helps to explain why the supply curve of labour is upward sloping?

Accepted Answer

A)  The supply curve of labour is a derived supply curve; since the output supply curve is upward sloping, so is the labour supply curve. 
B)  As the wage rate rises, the income effect causes the quantity of labour supplied to increase. 
C)  The substitution effect of a price change makes a good more expensive relative to other goods. 
D)  As the wage rate rises, the opportunity cost of leisure rises.

Question 14

Table 10-3
  Hotspur Incorporated, a manufacturer of microwave ovens, is a price taker in its input and output markets. The firm hires labour at a constant wage rate of $800 per week and sells microwave ovens at a constant price of $80. Table 10-3 shows the relationship between the quantity of labour it hires and the quantity of microwave ovens it produces.
-Refer to Table 10-3.What is Hotspur's profit-maximising quantity of labour?

Accepted Answer

A)  2 workers 
B)  3 workers 
C)  5 workers 
D)  6 workers

Question 15

Figure 10-1  Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies.
-Refer to Figure 10-1.If Dale can sell her doilies at $2 each,what is the marginal product of the 5th worker?

Accepted Answer

A)  $28 
B)  28 doilies 
C)  14 doilies 
D)  $56

Question 16

Seth's grandmother gave him a $50 savings bond for his birthday.The bond pays $50 at maturity,which is in five years.If the interest rate is 5 per cent,the bond has a present value of $43.19.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is a reason why some firms do not use commission pay?

Accepted Answer

A)  It gives workers incentive to produce more. 
B)  It increases firm profits. 
C)  It is difficult to measure output and attribute output to a particular worker. 
D)  The best workers stay and less productive workers leave.

Question 18

A decrease in the wage rate causes

Accepted Answer

A)  an increase in the quantity of labour demanded. 
B)  a rightward shift of the firm's labour demand curve. 
C)  a leftward shift of the firm's labour demand curve. 
D)  a decrease in labour's productivity.

Question 19

The typical labour supply curve is upward sloping,but it is possible for the curve to be backward bending-negatively sloped-at very high wage levels.Which of the following would cause a backward-bending supply curve?

Accepted Answer

A)  This would occur when the income effect from an increase in the wage becomes larger than the substitution effect. 
B)  This would occur when the substitution effect from an increase in the wage becomes larger than the income effect. 
C)  This would occur if leisure is an inferior good. 
D)  This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure.

Question 20

What is the shape of the labour supply curve implied by the following statements?
a.'I'm sorry kids,but now that I'm earning more,I just can't afford to come home early in the afternoon,so I won't be here when you get home from school.'
b.'They can pay me a lot or they can pay me a little.I'll still put in my 8 hours a day.'
c.'Now that I have received a salary increase,I am going to work 36 hours instead of 40 hours a week'

Accepted Answer

The answer of What is the shape of the labour...

Exam 10: Monopoly and Antitrust

The demand for labour depends primarily on the additional output produced as a result of hiring an additional worker and

Technological advancements that increase labour's productivity shift the labour supply curve to the right.

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

The labour supply for an industry would decrease if

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

A firm chooses its profit-maximising quantity of capital by

Competitive markets tend to eliminate economic discrimination,but there are many historical examples of firms that hired few,or no,black or female workers.Which of the following is not a reason for the persistence of this form of discrimination?

If national laws protecting the health and safety of workers completely eliminate any and all risk,then

The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services.

How will an increase in labour productivity affect equilibrium in the labour market?

If a stock's dividend is expected to grow at a constant rate of 6 per cent in the future and it has just paid a dividend of $3.00 per share,and you have an alternative investment of equal risk that will earn a 9 per cent rate of return,what would you be willing to pay per share for this stock?

The substitution effect of a wage increase is observed when

Which of the following helps to explain why the supply curve of labour is upward sloping?

Figure 10-1 Figure 10-1 shows the marginal revenue product for Dale's Hand-Sewn Doilies, a producer of linen doilies. -Refer to Figure 10-1.If Dale can sell her doilies at $2 each,what is the marginal product of the 5th worker?

Seth's grandmother gave him a $50 savings bond for his birthday.The bond pays $50 at maturity,which is in five years.If the interest rate is 5 per cent,the bond has a present value of $43.19.

Which of the following is a reason why some firms do not use commission pay?

A decrease in the wage rate causes

The typical labour supply curve is upward sloping,but it is possible for the curve to be backward bending-negatively sloped-at very high wage levels.Which of the following would cause a backward-bending supply curve?