Question 1

The income effect describes the:

Accepted Answer

A)   increase in the quantity of labor supplied in response to a higher wage.
B)   decrease in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.
C)   decrease in the quantity of labor supplied in response to a lower wage.
D)   increase in the quantity of labor supplied due to the greater demand for leisure caused by a higher income.E) B) and D)
F) C) and D)

Question 2

For any competitive labor market,changes that decrease the number of workers will:

Accepted Answer

A)   decrease the labor supply and shift the supply curve left.
B)   increase the labor supply and shift the supply curve right.
C)   decrease the labor supply and shift the supply curve right.
D)   increase the labor supply and shift the supply curve left.E) B) and C)
F) B) and D)

Question 3

If the graph shown is displaying a competitive market and the market is currently offering a wage less than P*:

Accepted Answer

A)   there would be a shortage of workers who want to work at that wage.
B)   there would not be unemployment in the market.
C)   firms would have a hard time finding employees.
D)   All of these statements are true.E) C) and D)
F) B) and D)

Question 4

In the market for labor,the monopsonist is the sole:

Accepted Answer

A)   seller and can push wages down, below the competitive wage.
B)   buyer and can keep wages up, above the competitive wage.
C)   buyer and can push wages down, below the competitive wage.
D)   seller and can keep wages up, above the competitive wage.E) None of the above
F) All of the above

Question 5

In general,the larger the membership of a union the:

Accepted Answer

A)   more power it has to keep wages above equilibrium.
B)   less power it has to keep wages above equilibrium.
C)   more likely the distribution of power within the organization will make it less effective.
D)   greater the chance that it abuses its power.E) A) and C)
F) B) and C)

Question 6

If Donald receives a pay raise and the income effect outweighs the price effect on his labor supply decisions,he will work:

Accepted Answer

A)   more hours.
B)   less hours.
C)   the same amount.
D)   less hours initially but eventually work more.E) A) and C)
F) B) and C)

Question 7

Sadie works at a factory for $15 an hour and typically works 40 hours a week.Sadie gets a pay raise and now earns $20 an hour.She decides to work 45 hours a week at $20 an hour.Her response to the pay increase demonstrates the:

Accepted Answer

A)   income effect outweighing the price effect.
B)   price effect outweighing the income effect.
C)   income effect outweighing the substitution effect.
D)   labor effect outweighing the price effect.E) C) and D)
F) A) and B)

Question 8

When considering the factor distribution of income,which of the following income would go to owners of physical capital?

Accepted Answer

A)   Corporate profits
B)   Proprietor Income
C)   Taxes
D)   WagesE) C) and D)
F) B) and D)

Question 9

If the supply of another input used decreases,the marginal product of labor can:

Accepted Answer

A)   increase, decreasing the demand for labor.
B)   increase, increasing the demand for labor.
C)   decrease, increasing the demand for labor.
D)   increase, increasing the supply of labor.E) B) and C)
F) All of the above

Question 10

If the demand for baseballs increases,then as a result,it is highly likely that the demand for:

Accepted Answer

A)   leather will increase.
B)   bats will decrease.
C)   soccer balls will rise.
D)   tennis balls will increase.E) A) and B)
F) A) and D)

Question 11

If producers who hire labor in a competitive labor market decide to purchase the new automated machine that completes the work of 30 employees,we would expect the labor-demand curve to shift to the:

Accepted Answer

A)   left and wages would rise.
B)   left and wages would decrease.
C)   right and wages would rise.
D)   right and wages would decrease.E) A) and B)
F) None of the above

Question 12

If wages drop below the market equilibrium level in a competitive labor market:

Accepted Answer

A)   firms will demand more labor than workers are willing to supply.
B)   firms will have to offer higher wages to attract the workers they need.
C)   there won't be enough workers willing to work at that wage.
D)   All of these statements are true.E) A) and C)
F) A) and B)

Question 13

When labor is substitutable between two markets,we should expect:

Accepted Answer

A)   the two markets to pay the same or similar equilibrium wage.
B)   those markets to produce substitutable outputs.
C)   the workers in the two markets to commit to one at the start of their career and stick with it, despite the similarities.
D)   All of these statements are true.E) A) and B)
F) C) and D)

Question 14

In a competitive labor market,if the demand for labor decreases,labor demand will shift to the:

Accepted Answer

A)   right and wages will increase.
B)   left and wages will increase.
C)   right and wages will decrease.
D)   left and wages will decrease.E) C) and D)
F) All of the above

Question 15

A monopsony is an example of:

Accepted Answer

A)   a buyer holding market power.
B)   a seller holding market power.
C)   an efficient market with no market power.
D)   a single seller holding all market power.E) B) and C)
F) None of the above

Question 16

If we compare the Baby Boom generation of workers to the number of workers who came before and will come after them,we realize that,all other things equal,the Baby Boomer's labor:

Accepted Answer

A)   supply will be relatively greater at any wage.
B)   supply will be relatively lower at any wage.
C)   demand will be relatively greater at any wage.
D)   demand will be relatively lower at any wage.E) None of the above
F) C) and D)

Question 17

If a firm adopts a labor-augmenting piece of technology,it will:

Accepted Answer

A)   increase the marginal product of labor.
B)   decrease the marginal product of labor.
C)   increase the marginal supply of labor.
D)   decrease the marginal supply of labor.E) A) and B)
F) A) and C)

Question 18

The determinants of labor supply include:

Accepted Answer

A)   culture and other opportunities.
B)   supply of other factors and output prices.
C)   culture and technology.
D)   other opportunities and technology.E) A) and B)
F) All of the above

Question 19

The competitive firm's profit-maximizing quantity of labor is the quantity where the:

Accepted Answer

A)   quantity of the marginal product of labor is equal to the market wage.
B)   value of the marginal product of labor is equal to the market wage.
C)   quantity of the marginal product of labor is equal to zero.
D)   value of the marginal product of labor is equal to the profit.E) B) and C)
F) A) and D)

Question 20

By comparing the value of marginal product with the marginal cost per input,a firm can find the:

Accepted Answer

A)   cost-maximizing quantity to hire.
B)   profit-maximizing quantity to hire.
C)   revenue-maximizing quantity to hire.
D)   output-maximizing quantity to hire.E) A) and D)
F) None of the above

Exam 16: The Factors of Production

Sadie works at a factory for $15 an hour and typically works 40 hours a week.Sadie gets a pay raise and now earns $20 an hour.She decides to work 45 hours a week at $20 an hour.Her response to the pay increase demonstrates the:

Correct AnswerverifiedShow Answer

If the graph shown is displaying a competitive market and the market is currently offering a wage less than P*:

Correct AnswerverifiedShow Answer

By comparing the value of marginal product with the marginal cost per input,a firm can find the:

Correct AnswerverifiedShow Answer

If the demand for baseballs increases,then as a result,it is highly likely that the demand for:

Correct AnswerverifiedShow Answer

In a competitive labor market,if the demand for labor decreases,labor demand will shift to the:

Correct AnswerverifiedShow Answer

For any competitive labor market,changes that decrease the number of workers will:

Correct AnswerverifiedShow Answer

If wages drop below the market equilibrium level in a competitive labor market:

Correct AnswerverifiedShow Answer

The competitive firm's profit-maximizing quantity of labor is the quantity where the:

Correct AnswerverifiedShow Answer

If a firm adopts a labor-augmenting piece of technology,it will:

Correct AnswerverifiedShow Answer

If the supply of another input used decreases,the marginal product of labor can:

Correct AnswerverifiedShow Answer

The income effect describes the:

Correct AnswerverifiedShow Answer

A monopsony is an example of:

Correct AnswerverifiedShow Answer

In general,the larger the membership of a union the:

Correct AnswerverifiedShow Answer

When considering the factor distribution of income,which of the following income would go to owners of physical capital?

Correct AnswerverifiedShow Answer

When labor is substitutable between two markets,we should expect:

Correct AnswerverifiedShow Answer

In the market for labor,the monopsonist is the sole:

Correct AnswerverifiedShow Answer

If producers who hire labor in a competitive labor market decide to purchase the new automated machine that completes the work of 30 employees,we would expect the labor-demand curve to shift to the:

Correct AnswerverifiedShow Answer

If we compare the Baby Boom generation of workers to the number of workers who came before and will come after them,we realize that,all other things equal,the Baby Boomer's labor:

Correct AnswerverifiedShow Answer

If Donald receives a pay raise and the income effect outweighs the price effect on his labor supply decisions,he will work:

Correct AnswerverifiedShow Answer

The determinants of labor supply include:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified