Question 1

If payroll taxes are increased, 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) All of the above
F) B) and C)

Question 2

A firm's demand for labor is referred to as a derived demand because

Accepted Answer

A)   It is derived from the MPP of labor.
B)   It is derived from the demand for the product that the labor is producing.
C)   The quantity of goods and services labor can purchase is derived from the wages labor receives from the firm.
D)   It is derived from the supply of labor.E) A) and B)
F) A) and C)

Question 3

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 D)
F) A) and C)

Question 4

The labor supply curve will be negatively sloped if the substitution effect of wages is

Accepted Answer

A)   Weaker than the income effect of wages.
B)   Stronger than the income effect of wages.
C)   Equal to the income effect of wages.
D)   Negative.E) All of the above
F) A) and B)

Question 5

When people are standing in line for jobs and there are more applicants than jobs, then the labor market is characterized by a

Accepted Answer

A)   Shortage of jobs from the point of view of the buyer in the labor market.
B)   Surplus of jobs from the point of view of the seller in the labor market.
C)   Surplus of labor.
D)   Shortage of labor.E) A) and B)
F) None of the above

Question 6

The value of an hour of leisure can best be estimated as

Accepted Answer

A)   Zero since no income is earned.
B)   The hourly wage that could have been earned.
C)   Total recreational expenditures divided by hours of leisure.
D)   The value of any productive work, although such a value is lower than what could have been earned. The value of any activity will be at least the value of the opportunity cost. Therefore, the best estimate of the value of an hour of leisure is the hourly wage that could have been earned.E) B) and D)
F) B) and C)

Question 7

The demand for labor and other factors of production typically decline in a recession because those factors

Accepted Answer

A)   Have become relatively scarcer than before the recession.
B)   Are no longer offered for sale in factor markets.
C)   Are derived from the demand for final output, which also declines in a recession.
D)   Have become more expensive than before the recession.E) All of the above
F) C) and D)

Question 8

In Figure 30.2, the equilibrium wage rate is

Accepted Answer

A)   $24 per hour.
B)   $20 per hour.
C)   $16 per hour.
D)   $12 per hour.E) All of the above
F) C) and D)

Question 9

Number of worker (per hour)        total output(per hour)        marginal physical product (output per worker)        total revenue(dollars per hour)        marginal revenue product (dollars per worker)               1      4      ......       ______       ........              2      10        ______        ______       ______              3      15        ______        ______        ______              4      19        ______        ______        ______              5      22        ______        ______        ______      
Table 30.3
 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 30.3, the marginal revenue product of the second worker hired is

Accepted Answer

A)   $4 per hour.
B)   $6 per hour.
C)   $24 per hour.
D)   $40 per hour.E) A) and B)
F) B) and C)

Question 10

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) All of the above
F) A) and B)

Question 11

The marginal physical product of a factor is equal to the additional revenue generated from employing one additional unit of the factor.

Accepted Answer

A) True 
 B)False

Question 12

An effective minimum wage creates a surplus of labor and increases the level of unemployment.

Accepted Answer

A) True 
 B)False

Question 13

A production process is a specific combination of resources used to produce a good or service.

Accepted Answer

A) True 
 B)False

Question 14

Number of workers (per hour)        total output(per hour)        marginal physical product (output per worker)        total revenue(dollars per hour)        marginal revenue product (output per worker)                1       4      ......       ______        ........              2       10        ______        ______       ______               3       15        ______        ______        ______               4       19        ______        ______        ______               5       22        ______        ______        ______      Table  30.130.130.1  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 marginal revenue product of the second worker hired is

Accepted Answer

A)   $4 per hour.
B)   $6 per hour.
C)   $24 per hour.
D)   $40 per hour. E) None of the above
F) A) and C)

Question 15

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 16

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 D)
F) C) and D)

Question 17

If the marginal revenue product of labor improves, which of the following shifts in the labor market should occur?

Accepted Answer

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

Question 18

When the MPP of labor is zero, ceteris paribus,

Accepted Answer

A)   Employment can be increased only by offering a higher wage rate.
B)   No further increases in output can be achieved by using additional units of labor.
C)   MRP is at a maximum.
D)   Additional units of labor must be employed because other factors of production are being wasted. Marginal physical product (MPP)  is equal to the change in total output associated with one additional unit of input. If the MPP is zero, the last worker hired does not contribute any additional output.E) C) and D)
F) None of the above

Question 19

The intersection of the labor market supply and market demand curves establishes the minimum wage.

Accepted Answer

A) True 
 B)False

Question 20

For a minimum wage to have any impact on a labor market, it must be set at a level

Accepted Answer

A)   Higher than the equilibrium wage.
B)   Higher than MPP.
C)   Higher than MRP.
D)   Consistent with economic growth.E) A) and C)
F) B) and C)

Exam 16: The Labor Market

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 Answer
verified

The determinants of labor demand include

Correct Answer
verified

The intersection of the labor market supply and market demand curves establishes the minimum wage.

Correct Answer
verified

The demand for labor and other factors of production typically decline in a recession because those factors

Correct Answer
verified

The value of an hour of leisure can best be estimated as

Correct Answer
verified

A firm's demand for labor is referred to as a derived demand because

Correct Answer
verified

When people are standing in line for jobs and there are more applicants than jobs, then the labor market is characterized by a

Correct Answer
verified

The marginal physical product of a factor is equal to the additional revenue generated from employing one additional unit of the factor.

Correct Answer
verified

An effective minimum wage creates a surplus of labor and increases the level of unemployment.

Correct Answer
verified

The cost efficiency of labor is equal to the

Correct Answer
verified

A production process is a specific combination of resources used to produce a good or service.

Correct Answer
verified

Correct Answer
verified

In Figure 30.2, the equilibrium wage rate is

Correct Answer
verified

When the MPP of labor is zero, ceteris paribus,

Correct Answer
verified

If payroll taxes are increased, there will be a

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

For a minimum wage to have any impact on a labor market, it must be set at a level

Correct Answer
verified

The labor supply curve will be negatively sloped if the substitution effect of wages is

Correct Answer
verified

If the marginal revenue product of labor improves, which of the following shifts in the labor market should occur?

Correct Answer
verified

Number of workers (per hour)	total output(per hour)	marginal physical product (output per worker)	total revenue(dollars per hour)	marginal revenue product (output per worker)
1	4	......	______	........
2	10	______	______	______
3	15	______	______	______
4	19	______	______	______
5	22	______	______	______

Number of worker (per hour)	total output(per hour)	marginal physical product (output per worker)	total revenue(dollars per hour)	marginal revenue product (dollars per worker)
1	4	......	______	........
2	10	______	______	______
3	15	______	______	______
4	19	______	______	______
5	22	______	______	______

Exam 16: The Labor Market

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

The determinants of labor demand include

Correct AnswerverifiedShow Answer

The intersection of the labor market supply and market demand curves establishes the minimum wage.

Correct AnswerverifiedShow Answer

The demand for labor and other factors of production typically decline in a recession because those factors

Correct AnswerverifiedShow Answer

The value of an hour of leisure can best be estimated as

Correct AnswerverifiedShow Answer

A firm's demand for labor is referred to as a derived demand because

Correct AnswerverifiedShow Answer

When people are standing in line for jobs and there are more applicants than jobs, then the labor market is characterized by a

Correct AnswerverifiedShow Answer

The marginal physical product of a factor is equal to the additional revenue generated from employing one additional unit of the factor.

Correct AnswerverifiedShow Answer

An effective minimum wage creates a surplus of labor and increases the level of unemployment.

Correct AnswerverifiedShow Answer

The cost efficiency of labor is equal to the

Correct AnswerverifiedShow Answer

A production process is a specific combination of resources used to produce a good or service.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In Figure 30.2, the equilibrium wage rate is

Correct AnswerverifiedShow Answer

When the MPP of labor is zero, ceteris paribus,

Correct AnswerverifiedShow Answer

If payroll taxes are increased, there will be a

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a minimum wage to have any impact on a labor market, it must be set at a level

Correct AnswerverifiedShow Answer

The labor supply curve will be negatively sloped if the substitution effect of wages is

Correct AnswerverifiedShow Answer

If the marginal revenue product of labor improves, which of the following shifts in the labor market should occur?

Correct AnswerverifiedShow Answer

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