Question 1

Suppose that Silvia's Dance Studio uses both labor and capital to teach dance lessons.Given her current mix of labor and capital,the cost efficiency of labor is 1 dance lesson per dollar,and the cost efficiency of capital is 5 dance lessons per dollar.Silvia should

Accepted Answer

A)  Hire less labor and use more capital.
B)  Use only capital to produce the lessons.
C)  Use less capital and hire more labor.
D)  Use only labor to produce the lessons.E) A) and C)
F) A) and B)

Question 2

When an individual's MRP is not measurable,his or her market wage is usually determined by

Accepted Answer

A)  The individual's MPP.
B)  His or her opportunity wage.
C)  The selling price of his or her output.
D)  The individual's comparable worth.E) B) and C)
F) None of the above

Question 3

Institutional constraints,such as immigration policies,affect the shape and location of the labor supply curve.

Accepted Answer

A) True 
 B)False

Question 4

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 C)
F) A) and D)

Question 5

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) A) and B)
F) B) and C)

Question 6

Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

Accepted Answer

A)  A labor surplus will result.
B)  Some workers will end up with higher wages.
C)  Some workers will end up unemployed.
D)  There will be no unemployment.E) B) and C)
F) A) and C)

Question 7

The demand for labor is derived from the demand for the goods and services labor can produce.

Accepted Answer

A) True 
 B)False

Question 8

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) B) and C)
F) A) and D)

Question 9

As an individual earns additional income,the marginal utility of income tends to

Accepted Answer

A)  Increase.
B)  Decrease.
C)  Remain constant.
D)  Shift toward the origin.E) C) and D)
F) A) and C)

Question 10

When the minimum wage is raised in a competitive market,ceteris paribus,

Accepted Answer

A)  All workers are better off.
B)  All workers are worse off.
C)  Some workers are better off and some are worse off.
D)  Workers are not affected by a minimum wage increase,only by decreases.E) A) and B)
F) A) and C)

Question 11

If the cost efficiency of labor equals 2,then

Accepted Answer

A)  Labor costs 100 percent more than the revenue it generates.
B)  The wage rate is 100 percent more than the product price.
C)  Each extra dollar spent on wages returns 2 units of additional output.
D)  The product price is 200 percent of the wage rate.E) A) and B)
F) None of the above

Question 12

As we work fewer hours and our leisure time increases,the opportunity cost of labor

Accepted Answer

A)  Falls and the marginal utility of income falls.
B)  Rises and the marginal utility of income falls.
C)  Falls and the marginal utility of income rises.
D)  Rises and the marginal utility of income rises.E) All of the above
F) None of the above

Question 13

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

Accepted Answer

A)  The wage rate.
B)  The value of leisure time.
C)  Payroll taxes.
D)  The derived demand for labor.E) A) and D)
F) All of the above

Question 14

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) A) and B)
F) A) and C)

Question 15

If the income effect dominates the substitution effect,the labor supply curve will be backward-bending.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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

Question 18

As marginal physical product diminishes,marginal revenue product

Accepted Answer

A)  Also diminishes.
B)  Is not affected.
C)  Rises at a diminishing rate and eventually falls.
D)  Rises.E) A) and B)
F) A) and D)

Question 19

The marginal physical product of labor is equal to

Accepted Answer

A)  Total output divided by the quantity of labor.
B)  The percentage change in total output divided by the percentage change in quantity of labor.
C)  The change in total output associated with one additional unit of labor.
D)  The change in total revenue associated with one additional unit of input.E) B) and D)
F) A) and B)

Question 20

If the price for a box of kiwis is $40,the wage rate for kiwi laborers is $10 per hour,and a laborer can pick 3 boxes of kiwis per hour,the

Accepted Answer

A)  MRP is $30 per hour.
B)  MPP is $30 per hour.
C)  Cost efficiency is 3/10 of a box per dollar.
D)  Wage rate will tend to fall.E) B) and C)
F) A) and D)

Exam 30: The Labor Market

As marginal physical product diminishes,marginal revenue product

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Institutional constraints,such as immigration policies,affect the shape and location of the labor supply curve.

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As we work fewer hours and our leisure time increases,the opportunity cost of labor

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When the minimum wage is raised in a competitive market,ceteris paribus,

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In Figure 30.2,the equilibrium wage rate is

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Which of the following is not consistent with a minimum wage that is set above the equilibrium wage?

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

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When an individual's MRP is not measurable,his or her market wage is usually determined by

Correct AnswerverifiedShow Answer

If the wage rate increases,there will be a

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The demand for labor is derived from the demand for the goods and services labor can produce.

Correct AnswerverifiedShow Answer

If the income effect dominates the substitution effect,the labor supply curve will be backward-bending.

Correct AnswerverifiedShow Answer

As an individual earns additional income,the marginal utility of income tends to

Correct AnswerverifiedShow Answer

If the price for a box of kiwis is $40,the wage rate for kiwi laborers is $10 per hour,and a laborer can pick 3 boxes of kiwis per hour,the

Correct AnswerverifiedShow Answer

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

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Suppose that Silvia's Dance Studio uses both labor and capital to teach dance lessons.Given her current mix of labor and capital,the cost efficiency of labor is 1 dance lesson per dollar,and the cost efficiency of capital is 5 dance lessons per dollar.Silvia should

Correct AnswerverifiedShow Answer

The marginal physical product of labor is equal to

Correct AnswerverifiedShow Answer

For an upward-sloping labor supply curve,the quantity of labor supplied varies directly,ceteris paribus,with

Correct AnswerverifiedShow Answer

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

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If the cost efficiency of labor equals 2,then

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