Question 1

Despite the probable decrease in jobs and higher prices, President Obama wanted to increase the federal minimum wage.

Accepted Answer

A) True 
 B)False

Question 2

If the number of available workers of a particular type increases, which of the following shifts should occur in the labor market for the particular type of labor?

Accepted Answer

A)   Demand for labor should shift to the left.
B)   Supply of labor should shift to the left.
C)   Demand for labor should shift to the right.
D)   Supply of labor should shift to the right.E) None of the above
F) B) and C)

Question 3

If you have an increasing marginal utility for leisure, then as you work more to make greater income, your

Accepted Answer

A)   Total utility for leisure decreases.
B)   Marginal utility for income decreases.
C)   Marginal utility of income varies positively with the money you earn.
D)   Marginal revenue product decreases.E) A) and B)
F) A) and C)

Question 4

Why is the demand curve for labor downward-sloping? What causes the labor demand curve for a firm to shift?

Accepted Answer

The marginal revenue product curve is th...

Question 5

In Figure 30.2, a minimum wage of $20 will result in a

Accepted Answer

A)   Shortage of 160 workers.
B)   Shortage of 180 hours.
C)   Surplus of 32 workers.
D)   Surplus of 20 workers.E) A) and B)
F) A) and C)

Question 6

The determinants of labor demand include

Accepted Answer

A)   Marginal physical productivity.
B)   Labor expectations.
C)   Labor shortages.
D)   The leisure-labor trade-off.E) A) and B)
F) None of the above

Question 7

The elasticity of labor supply measures the

Accepted Answer

A)   Opportunity cost of labor.
B)   Magnitude of the substitution effect of labor.
C)   Responsiveness of the wage rate to changes in the labor supplied.
D)   Responsiveness of labor supplied to changes in the wage rate.E) A) and D)
F) B) and C)

Question 8

Republicans argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised

Accepted Answer

A)   inelastic; few
B)   inelastic; many
C)   elastic; few
D)   elastic; manyE) C) and D)
F) A) and C)

Question 9

The cost efficiency of labor is equal to the

Accepted Answer

A)   Marginal cost of output.
B)   MPP of labor times the wage rate.
C)   MPP of labor divided by the wage rate.
D)   MRP of labor divided by the unit price of labor.E) B) and C)
F) A) and D)

Question 10

If the wage rate increases, there will be a

Accepted Answer

A)   Leftward shift of the labor supply curve.
B)   Rightward shift of the labor supply curve.
C)   Movement up the labor supply curve to the right.
D)   Movement down the labor supply curve to the left.E) B) and D)
F) C) and D)

Question 11

In competitive markets, the marginal revenue product curve and marginal physical product curve have similar shapes because

Accepted Answer

A)   The demand curve for the product slopes downward in accordance with the law of diminishing returns.
B)   MRP = P × MPP.
C)   The law of diminishing marginal utility and the law of diminishing returns imply a downward-sloping demand curve in the product market.
D)   The demand curve for labor is the same for both the individual firm and the market as a whole.E) All of the above
F) B) and D)

Question 12

In Figure 30.2, a minimum wage of $12 will result in

Accepted Answer

A)   A shortage of 32 workers.
B)   A shortage of 44 workers.
C)   A surplus of 20 workers.
D)   No shortage or surplus of workers.E) C) and D)
F) All of the above

Question 13

When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending portion is

Accepted Answer

A)   Negative.
B)   Positive but less than 1.
C)   Greater than 1.
D)   Zero.E) None of the above
F) C) and D)

Question 14

The opportunity wage is often a better measure of executive pay than

Accepted Answer

A)   MPP because executives do not have an MPP.
B)   MRP because of the difficulty in quantifying executive output.
C)   Derived demand because the elasticity of supply for an individual is greater than 1.0.
D)   Opportunity costs of executive leisure.E) A) and C)
F) None of the above

Question 15

Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1, the contribution to total revenue of the fourth worker hired is

Accepted Answer

A)   $76 per hour.
B)   $16 per hour.
C)   $4 per hour.
D)   $12 per hour.E) A) and D)
F) B) and C)

Question 16

Opportunity wage refers to the

Accepted Answer

A)   Income an individual loses when he or she quits a job.
B)   Highest wage an individual would earn in his or her best alternative job.
C)   Value of goods and services that could be purchased with a certain individual's income.
D)   Income equivalent of a volunteer worker.E) B) and D)
F) All of the above

Question 17

The argument is sometimes made that the United States should not trade with low-wage countries. The reasoning is that more highly paid U.S. workers cannot compete, and U.S. jobs are lost. What is wrong with this argument?

Accepted Answer

The argument is based on the False premi...

Question 18

A firm should hire an additional worker as long as the wage rate is

Accepted Answer

A)   Greater than the MRP.
B)   Greater than the MPP.
C)   Less than the MRP.
D)   Less than the MPP.E) A) and C)
F) B) and D)

Question 19

Which of the following is true about the equilibrium market wage?

Accepted Answer

A)   All workers are satisfied with the wage.
B)   All employers are satisfied with the wage.
C)   There is no unemployment in the market at the equilibrium wage.
D)   Competitive employers have market power with respect to the equilibrium wage.E) B) and C)
F) All of the above

Question 20

The law of diminishing returns means that marginal costs will eventually rise as a firm produces more.

Accepted Answer

A) True 
 B)False

Exam 16: Supply-Side Policy: Short-Run Options

The opportunity wage is often a better measure of executive pay than

Correct AnswerverifiedShow Answer

Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1, the contribution to total revenue of the fourth worker hired is

Correct AnswerverifiedShow Answer

Why is the demand curve for labor downward-sloping? What causes the labor demand curve for a firm to shift?

Correct AnswerverifiedThe marginal revenue product curve is th...View AnswerShow Answer

The elasticity of labor supply measures the

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In Figure 30.2, a minimum wage of $20 will result in a

Correct AnswerverifiedShow Answer

When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending portion is

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Which of the following is true about the equilibrium market wage?

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The cost efficiency of labor is equal to the

Correct AnswerverifiedShow Answer

If you have an increasing marginal utility for leisure, then as you work more to make greater income, your

Correct AnswerverifiedShow Answer

In competitive markets, the marginal revenue product curve and marginal physical product curve have similar shapes because

Correct AnswerverifiedShow Answer

Despite the probable decrease in jobs and higher prices, President Obama wanted to increase the federal minimum wage.

Correct AnswerverifiedShow Answer

Republicans argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised

Correct AnswerverifiedShow Answer

In Figure 30.2, a minimum wage of $12 will result in

Correct AnswerverifiedShow Answer

If the wage rate increases, there will be a

Correct AnswerverifiedShow Answer

The law of diminishing returns means that marginal costs will eventually rise as a firm produces more.

Correct AnswerverifiedShow Answer

If the number of available workers of a particular type increases, which of the following shifts should occur in the labor market for the particular type of labor?

Correct AnswerverifiedShow Answer

Opportunity wage refers to the

Correct AnswerverifiedShow Answer

A firm should hire an additional worker as long as the wage rate is

Correct AnswerverifiedShow Answer

The determinants of labor demand include

Correct AnswerverifiedShow Answer

The argument is sometimes made that the United States should not trade with low-wage countries. The reasoning is that more highly paid U.S. workers cannot compete, and U.S. jobs are lost. What is wrong with this argument?

Correct AnswerverifiedThe argument is based on the False premi...View AnswerShow Answer

Correct Answer
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The marginal revenue product curve is th...
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Republicans argue that labor demand is _, so __ jobs will be lost when the minimum wage is raised

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The argument is based on the False premi...
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