Question 1

Craft unions typically attempt to increase wage rates by:

Accepted Answer

A)   imposing an above-equilibrium wage rate on employers.
B)   increasing the demand for labor.
C)   decreasing the supply of labor.
D)   forming a bilateral monopoly.E) A) and C)
F) B) and D)

Question 2

The marginal cost of a productive resource is equal to the price of the resource if a firm is:

Accepted Answer

A)   a price taker in the output market.
B)   a price taker in the resource market.
C)   able to influence the price of the product by producing more or less of it.
D)   able to influence the price of the factor by buying more or less of it.E) B) and D)
F) A) and D)

Question 3

A firm's labor input,total output of labor,and product price schedules are given below.Labor is the only variable input.  Refer to the above table and information.How many workers will the firm hire if the wage rate is $8 per day?

Accepted Answer

A)   3
B)   4
C)   5
D)   6The marginal revenue product is the change in revenue earned due to the hiring of one more input.In this case,the fifth worker adds 4 units of output and $9 of revenue because revenue rises from $152 to $161,but the worker only costs $8.At higher levels of workers,the marginal revenue product is less than $8.E) All of the above
F) A) and C)

Question 4

Which is characteristic of monopsony?

Accepted Answer

A)   The type of labor employed is relatively mobile.
B)   The supply curve for labor lies above the marginal resource cost curve.
C)   The wage rate it must pay workers varies directly with the number of workers it employs.
D)   The firm's employment is a small portion of the total employment of that type of labor.E) C) and D)
F) A) and B)

Question 5

In pure competition,a profit-maximizing firm will equate the marginal revenue product of labor with the:

Accepted Answer

A)   wage rate.
B)   profits produced by the employment of an extra worker.
C)   cost of producing one extra unit of output.
D)   price received from selling one extra unit of output.E) B) and D)
F) All of the above

Question 6

A firm's demand curve for labor:

Accepted Answer

A)   is its marginal product curve.
B)   will shift to the left if the price of the output the labor is producing should fall.
C)   is perfectly elastic if the firm is selling its product in a purely competitive market.
D)   reflects a direct (positive) relationship between the number of workers hired and the money wage rate.E) A) and B)
F) All of the above

Question 7

What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?

Accepted Answer

A)   0.63
B)   1.60
C)   2.90
D)   4.00Elasticity of resource demand is the absolute value of the percentage change in quantity of workers divided by the percentage change in resource price.In this case,elasticity is |0.05/-0.08| =0.63.E) A) and B)
F) A) and C)

Question 8

From 2008 to 2018,it is estimated that there will be a fall in demand for:

Accepted Answer

A)   sewing machine operators.
B)   medical assistants.
C)   desktop publishers.
D)   personal care aides.E) A) and B)
F) B) and C)

Question 9

The labor market for teachers in a small,isolated community that has one school district would be best described as a(n) :

Accepted Answer

A)   natural monopoly.
B)   bilateral monopoly.
C)   monopsony.
D)   oligopsony.E) A) and B)
F) None of the above

Question 10

A union representative observed that if the union members' wages were increased by some proportion,the workers would eventually suffer a greater than proportional decline in employment.This statement could best be explained if:

Accepted Answer

A)   the new wages are to take effect immediately.
B)   union labor can easily be replaced with capital.
C)   union labor is an insignificant portion of the total cost of production.
D)   the demand for the final product the workers produce is relatively inelastic.E) A) and B)
F) A) and C)

Question 11

0. B)  zero. C)  lower than L0. D)  higher than L0." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph.It shows a firm that buys its inputs and sells its output in competitive markets.If labor productivity decreases,the equilibrium level of employment for this firm is expected to be:

Accepted Answer

A)   L0.
B)   zero.
C)   lower than L0.
D)   higher than L0.E) None of the above
F) All of the above

Question 12

Of the 10 fastest-growing occupations in percentage terms,it is estimated for 2008-2018 that the top seven will be related to:

Accepted Answer

A)   energy and mining.
B)   banking and finance.
C)   health and computers.
D)   government.E) A) and D)
F) B) and C)

Question 13

If the price of labor increases relative to the price of capital,and as a result the quantity of capital hired decreases,the output effect of the price increase is greater than the substitution effect.

Accepted Answer

A) True 
 B)False

Question 14

When the supply curve of labor is upward sloping,the marginal cost curve of labor facing the monopsonist:

Accepted Answer

A)   lies above the supply curve of labor.
B)   is the supply curve of labor that it faces.
C)   lies below and parallel to the supply curve of labor.
D)   lies above and parallel to the supply curve of labor.E) A) and C)
F) B) and C)

Question 15

The greater relative scarcity of heart surgeons as compared with clerical workers could be partly accounted for by all of the following except:

Accepted Answer

A)   a heart surgeon's job requires more specialized skill.
B)   a heart surgeon derives a greater level of job satisfaction.
C)   a heart surgeon's entry to the medical profession is more restricted.
D)   heart surgeons have more education.E) A) and C)
F) None of the above

Question 16

In a purely competitive industry,a decrease in a firm's marginal revenue product for an economic resource could result from a(n) :

Accepted Answer

A)   decrease in demand for the firm's final product.
B)   decrease in the price of the economic resource.
C)   decrease in the supply of the economic resource.
D)   increase in the marginal productivity of the resource.E) A) and D)
F) All of the above

Question 17

Which factor leads to wage differentials?

Accepted Answer

A)   Homogeneous workers
B)   Purely competitive labor markets
C)   Investments in human capital by some workers
D)   Workers who are indifferent about which jobs they might holdE) C) and D)
F) A) and D)

Question 18

A firm operating in a purely competitive labor market has the following marginal revenue product schedule.  If the wage rate decreases from $17 to $13,by how much will the firm expand employment? Refer To: 10-69

Accepted Answer

A)   5 workers
B)   4 workers
C)   3 workers
D)   2 workersAt the wage rate of $17 the firm hires 4 workers.At the lower wage rate of $13 the firm hires 6 workers.In both cases the wage rate is below (or equal to) the MRP.E) C) and D)
F) None of the above

Question 19

The elasticity of demand for labor varies:

Accepted Answer

A)   directly with changes in the interest rate.
B)   directly with labor's share of the total cost of the product.
C)   inversely with the elasticity of demand for the final product.
D)   inversely with the ease of substituting labor for other productive factors.E) C) and D)
F) B) and D)

Question 20

Compared to a purely competitive firm,a monopsonist will pay:

Accepted Answer

A)   a higher wage rate to its workers.
B)   lower wages but hire more workers than the purely competitive firm.
C)   lower wage rates and hire fewer workers than the purely competitive firm.
D)   lower wages while hiring the same quantity of workers as the purely competitive firm.E) A) and B)
F) A) and C)

Exam 10: Wage Determination

In pure competition,a profit-maximizing firm will equate the marginal revenue product of labor with the:

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A firm's demand curve for labor:

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Craft unions typically attempt to increase wage rates by:

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The greater relative scarcity of heart surgeons as compared with clerical workers could be partly accounted for by all of the following except:

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From 2008 to 2018,it is estimated that there will be a fall in demand for:

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When the supply curve of labor is upward sloping,the marginal cost curve of labor facing the monopsonist:

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Refer to the above graph.It shows a firm that buys its inputs and sells its output in competitive markets.If labor productivity decreases,the equilibrium level of employment for this firm is expected to be:

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Compared to a purely competitive firm,a monopsonist will pay:

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The marginal cost of a productive resource is equal to the price of the resource if a firm is:

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A union representative observed that if the union members' wages were increased by some proportion,the workers would eventually suffer a greater than proportional decline in employment.This statement could best be explained if:

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The elasticity of demand for labor varies:

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In a purely competitive industry,a decrease in a firm's marginal revenue product for an economic resource could result from a(n) :

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A firm's labor input,total output of labor,and product price schedules are given below.Labor is the only variable input. Refer to the above table and information.How many workers will the firm hire if the wage rate is $8 per day?

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The labor market for teachers in a small,isolated community that has one school district would be best described as a(n) :

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A firm operating in a purely competitive labor market has the following marginal revenue product schedule. If the wage rate decreases from $17 to $13,by how much will the firm expand employment? Refer To: 10-69

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Which factor leads to wage differentials?

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Of the 10 fastest-growing occupations in percentage terms,it is estimated for 2008-2018 that the top seven will be related to:

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Which is characteristic of monopsony?

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If the price of labor increases relative to the price of capital,and as a result the quantity of capital hired decreases,the output effect of the price increase is greater than the substitution effect.

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What will the elasticity of resource demand be if unit wages rise by 8 percent and the number of employed workers falls by 5 percent?

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