Question 1

On average, women receive ________ of the pay that men receive.

Accepted Answer

A)   100 percent
B)   between 30 and 40 percent
C)   between 50 and 60 percent
D)   between 70 and 90 percentE) C) and D)
F) A) and B)

Question 2

The same year that Derek Jeter, one-time shortstop for the New York Yankees, received an annual salary of $23.2 million, the president of the United States received an annual salary of $400,000. If the president of the United States actually contributed more to society than Derek Jeter, we can conclude that:

Accepted Answer

A)   factors other than marginal revenue product probably explain the salary differences.
B)   the salary differences are based entirely on marginal revenue products.
C)   there is never a relationship between marginal revenue product and pay.
D)   the markets for their respective services are perfectly competitive.E) B) and D)
F) None of the above

Question 3

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Accepted Answer

A)   increase both labor and capital proportionally to meet the cost minimization condition.
B)   decrease both labor and capital proportionally to meet the cost minimization condition.
C)   increase labor and reduce capital to meet the cost minimization condition.
D)   increase capital and reduce labor to meet the cost minimization condition.E) B) and D)
F) C) and D)

Question 4

When wages rise, the opportunity cost of:

Accepted Answer

A)   labor falls.
B)   labor rises.
C)   leisure falls.
D)   leisure rises.E) C) and D)
F) All of the above

Question 5

The optimal level of employment for a monopsonist corresponds to the point where labor:

Accepted Answer

A)   demand intersects labor supply.
B)   supply intersects marginal factor cost.
C)   demand intersects marginal factor cost.
D)   supply intersects marginal revenue product.E) None of the above
F) B) and D)

Question 6

The derived demand curve for labor shows the:

Accepted Answer

A)   minimum amount of labor, measured in labor hours, that a firm requires at various wages.
B)   minimum amount of labor, measured in dollar value, that a firm requires at various wages.
C)   maximum amount of labor, measured in dollar value, that a firm will hire at various wages.
D)   maximum amount of labor, measured in labor hours, that a firm will hire at various wages.E) B) and C)
F) All of the above

Question 7

If the law of diminishing marginal product holds true and workers emigrate from Haiti, the marginal product of the workers remaining in Haiti will:

Accepted Answer

A)   rise because more workers are working with the same amount of capital.
B)   rise because fewer workers are working with the same amount of capital.
C)   fall because more workers are working with the same amount of capital.
D)   fall because fewer workers are working with the same amount of capital.E) A) and D)
F) None of the above

Question 8

The focal point phenomenon:

Accepted Answer

A)   explains why production tends to take place in countries that have fewer trade barriers.
B)   explains why production tends to take place in a few select countries rather than being evenly distributed across countries.
C)   argues that transportation costs make it unprofitable to locate production in other countries.
D)   argues that trade barriers force countries to locate production in other countries.E) C) and D)
F) B) and D)

Question 9

Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

Accepted Answer

A)   The low cost of transportation between the two countries
B)   The lower productivity of Mexican workers
C)   The absence of significant trade barriers
D)   The presence of many Japanese companies in MexicoE) A) and B)
F) All of the above

Question 10

Which of the following will not shift the demand for labor to the right?

Accepted Answer

A)   An increase in the price of a competing input
B)   An increase in the demand for output
C)   An increase in the wage rate
D)   An increase in the competitiveness of an industryE) B) and C)
F) A) and D)

Question 11

The opportunity cost of leisure:

Accepted Answer

A)   increases as wages get higher.
B)   decreases as wages get higher.
C)   remains the same as wages get higher.
D)   has nothing to do with wages.E) B) and C)
F) C) and D)

Question 12

A labor supply elasticity of 0.1 means that a wage increase of 10 percent will:

Accepted Answer

A)   reduce the quantity of labor supplied by 10 percent.
B)   increase the quantity of labor supplied by 10 percent.
C)   increase the quantity of labor supplied by 1 percent.
D)   reduce the quantity of labor supplied by 1 percent.E) B) and D)
F) A) and B)

Question 13

If a union gains significant monopoly power in a competitive market, employment:

Accepted Answer

A)   and wages should increase.
B)   and wages should decrease.
C)   should increase and wages should decrease.
D)   should decrease and wages should increase.E) A) and B)
F) A) and C)

Question 14

Historically, technology has:

Accepted Answer

A)   improved and the demand for labor has decreased as output has increased.
B)   improved and the demand for labor has increased as output has increased.
C)   worsened and the demand for labor has decreased as output has decreased.
D)   worsened and the demand for labor has increased as output has decreased.E) A) and B)
F) C) and D)

Question 15

If an increase in the hourly wage rate from $5 to $6 causes a worker to work 5 hours rather than 4, the worker's elasticity of labor supply is equal to:

Accepted Answer

A)   0.8.
B)   1.25.
C)   0.833.
D)   2.E) All of the above
F) C) and D)

Question 16

The higher the after-tax wage, the greater the quantity of labor supplied.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements best illustrates "Luddite reasoning"?

Accepted Answer

A)   Technology makes it possible to replace workers with machines, and so it will decrease the overall demand for labor.
B)   New technology changes the type of labor demanded.
C)   Technology increases total output, and so it will increase the demand for labor.
D)   Labor is necessary for building and maintaining machines, and so increased demand for machines increases the demand for labor.E) C) and D)
F) None of the above

Question 18

According to economic theory, which of the following types of discrimination is the easiest to eliminate?

Accepted Answer

A)   Discrimination based on individual characteristics that affect job performance
B)   Discrimination based on correctly perceived statistical characteristics of a group
C)   Discrimination that saves the firm money
D)   Discrimination based on individual characteristics that do not affect job performanceE) A) and C)
F) B) and C)

Question 19

Labor demand is less elastic when:

Accepted Answer

A)   there are many substitutes for labor in the production process.
B)   the inputs that could be substituted for labor are relatively inexpensive.
C)   a large amount of labor is essential to the production process.
D)   the demand for output is more elastic.E) A) and C)
F) None of the above

Question 20

Wages under a bilateral monopoly are determined by:

Accepted Answer

A)   the positions of the labor supply and demand curves.
B)   the bargaining power of monopsonists and unions.
C)   marginal factory cost.
D)   labor productivity.E) None of the above
F) A) and B)

Exam 17: Work and the Labor Market

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Correct Answer
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The opportunity cost of leisure:

Correct Answer
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Correct Answer
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Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

Correct Answer
verified

According to economic theory, which of the following types of discrimination is the easiest to eliminate?

Correct Answer
verified

The higher the after-tax wage, the greater the quantity of labor supplied.

Correct Answer
verified

A labor supply elasticity of 0.1 means that a wage increase of 10 percent will:

Correct Answer
verified

The optimal level of employment for a monopsonist corresponds to the point where labor:

Correct Answer
verified

The derived demand curve for labor shows the:

Correct Answer
verified

Which of the following will not shift the demand for labor to the right?

Correct Answer
verified

Which of the following statements best illustrates "Luddite reasoning"?

Correct Answer
verified

On average, women receive ________ of the pay that men receive.

Correct Answer
verified

Wages under a bilateral monopoly are determined by:

Correct Answer
verified

If an increase in the hourly wage rate from $5 to $6 causes a worker to work 5 hours rather than 4, the worker's elasticity of labor supply is equal to:

Correct Answer
verified

If a union gains significant monopoly power in a competitive market, employment:

Correct Answer
verified

When wages rise, the opportunity cost of:

Correct Answer
verified

Historically, technology has:

Correct Answer
verified

Labor demand is less elastic when:

Correct Answer
verified

If the law of diminishing marginal product holds true and workers emigrate from Haiti, the marginal product of the workers remaining in Haiti will:

Correct Answer
verified

The focal point phenomenon:

Correct Answer
verified

Exam 17: Work and the Labor Market

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Correct AnswerverifiedShow Answer

The opportunity cost of leisure:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following factors most likely would explain why a U.S. company would choose to operate in the United States despite much lower wages in Mexico?

Correct AnswerverifiedShow Answer

According to economic theory, which of the following types of discrimination is the easiest to eliminate?

Correct AnswerverifiedShow Answer

The higher the after-tax wage, the greater the quantity of labor supplied.

Correct AnswerverifiedShow Answer

A labor supply elasticity of 0.1 means that a wage increase of 10 percent will:

Correct AnswerverifiedShow Answer

The optimal level of employment for a monopsonist corresponds to the point where labor:

Correct AnswerverifiedShow Answer

The derived demand curve for labor shows the:

Correct AnswerverifiedShow Answer

Which of the following will not shift the demand for labor to the right?

Correct AnswerverifiedShow Answer

Which of the following statements best illustrates "Luddite reasoning"?

Correct AnswerverifiedShow Answer

On average, women receive ________ of the pay that men receive.

Correct AnswerverifiedShow Answer

Wages under a bilateral monopoly are determined by:

Correct AnswerverifiedShow Answer

If an increase in the hourly wage rate from $5 to $6 causes a worker to work 5 hours rather than 4, the worker's elasticity of labor supply is equal to:

Correct AnswerverifiedShow Answer

If a union gains significant monopoly power in a competitive market, employment:

Correct AnswerverifiedShow Answer

When wages rise, the opportunity cost of:

Correct AnswerverifiedShow Answer

Historically, technology has:

Correct AnswerverifiedShow Answer

Labor demand is less elastic when:

Correct AnswerverifiedShow Answer

If the law of diminishing marginal product holds true and workers emigrate from Haiti, the marginal product of the workers remaining in Haiti will:

Correct AnswerverifiedShow Answer

The focal point phenomenon:

Correct AnswerverifiedShow Answer

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