EC 201 - For a business firm that takes the wage rate as given, the demand curve for labor

Question 1 (1 point)

For a business firm that takes the wage rate as given, the demand curve for labor is given by its

Question 1 options:

a) marginal-utility curve.

b) marginal-revenue curve.

c) marginal-cost curve.

d) average-variable-cost curve.

e) marginal-revenue-product curve.

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Question 2 (1 point)

If Widget Corporation hires one worker, the firm can produce 10 widgets per hour. If it hires a second worker, it can produce a total of 19 widgets per hour. If it hires a third worker, it can produce a total of 27 widgets per hour. If it hires a fourth worker, it can produce a total of 34 widgets per hour. If it hires a fifth worker, it can produce a total of 40 widgets per hour. The price of a widget is $2. The wage rate for widget makers is $14 per hour. How many workers should Widget Corporation hire?

Question 2 options:

a) 1

b) 2

c) 3

d) 4

e) 5

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Question 3 (1 point)

Albert's wage rate increases. In response to this increase in the wage rate, the substitution effect would cause Albert to work ________, and the income effect would cause him to work _________.

Question 3 options:

a) more, more

b) more, less

c) less, more

d) less, less

e) People in Liechtenstein are the only ones who can figure out a question like this.

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Question 4 (1 point)

Celeste receives an unexpected gift of $500,000 from her long-lost uncle. Which of the following statements is the best description of the response that we would expect from Celeste, in terms of her labor-supply behavior?

Question 4 options:

a) The income effect would cause her to reduce her quantity of labor supplied.

b) The income effect would cause her to increase her quantity of labor supplied.

c) The substitution effect would cause her to reduce her quantity of labor supplied.

d) The substitution effect would cause her to increase her quantity of labor supplied.

e) People in Vanuatu are the only ones who have ever heard of an income effect or a substitution effect.

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Question 5 (1 point)

Ezekiel has a backward-bending labor-supply curve. This means that

Question 5 options:

a) for Ezekiel, the income effect is larger than the substitution effect.

b) for Ezekiel, the substitution effect is larger than the income effect.

c) Ezekiel’s labor-supply elasticity is negative.

d) (a) and (c) are both correct.

e) (b) and (c) are both correct.

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Question 6 (1 point)

For Miranda, the labor-supply elasticity is positive. This means that

Question 6 options:

a) Miranda’s labor-supply curve slopes upward as we move from left to right.

b) for Miranda, the substitution effect is larger than the income effect.

c) if her wage rate were to increase, Miranda would want to work more.

d) all of the above are correct.

e) only (a) and (b) are correct.

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Question 7 (1 point)

In the United States, as in many countries, the median woman earns less than the median man. Since the 1970s, the percentage difference between the earnings of the median woman and the median man has

Question 7 options:

a) increased.

b) decreased.

c) stayed the same.

d) bounced around wildly, in a completely random fashion.

e) increased on Mondays and Tuesdays, but decreased on the other days of the week.

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Question 8 (1 point)

The price of a widget increases by 90%. What effect would we expect this to have on the equilibrium wage rate of workers who make widgets?

Question 8 options:

a) The wage rate would increase.

b) The wage rate would decrease.

c) The wage rate would stay the same.

d) All of the above would occur!!!!!

e) Not enough information has been given to answer the question.

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Question 9 (1 point)

Half of the workers in the gizmo industry suddenly disappear. (There is speculation that they were kidnapped by an alien spaceship, but no one is sure of this.) What effect would we expect this to have on the equilibrium wage rate of the other workers in the gizmo industry (i.e., those who did not disappear)?

Question 9 options:

a) The wage rate would increase.

b) The wage rate would decrease.

c) The wage rate would stay the same.

d) All of the above would occur!!!!!

e) Not enough information has been given to answer the question.

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Question 10 (1 point)

Which of the following is an example of a compensating wage-rate differential?

Question 10 options:

a) Workers who are represented by unions earn more than workers with comparable skills who are not represented by unions.

b) College-educated workers earn more than high-school dropouts.

c) The median man earns more than the median woman.

d) The median white man earns more than the median black man.

e) Lumberjacks earn more than workers with comparable skills in other industries, because of the high rate of on-the-job injuries and deaths among lumberjacks.

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Question 11 (1 point)

A minimum-wage law is instituted. The minimum wage is higher than the equilibrium wage for workers in the thingamabob industry. Assume that the minimum-wage law is enforced. This will lead to a decrease in the number of workers who are actually hired in the thingamabob industry. This reduction will be larger if

Question 11 options:

a) the elasticity of demand for workers in the thingamabob industry is larger.

b) the elasticity of demand for workers in the thingamabob industry is smaller.

c) the elasticity of supply of workers in the thingamabob industry is larger.

d) the elasticity of supply of workers in the thingamabob industry is smaller.

e) climate change leads to melting of the ice in Greenland.

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Question 12 (1 point)

If a minimum-wage law is above the equilibrium wage, and if the law is enforced, there will be a decrease in the number of workers in the affected group who are employed. On the other hand, the workers in the affected group who are able to keep their jobs will earn more than they would have earned without the minimum-wage law. The net effect on the total number of dollars paid to the affected group of workers will depend on the elasticity of demand for these workers. Assume that the demand for these workers is inelastic. What will happen to the total number of dollars paid to the affected group of workers?

Question 12 options:

a) The total number of dollars paid will increase.

b) The total number of dollars paid will decrease.

c) The total number of dollars paid will stay the same.

d) The total number of dollars paid will decrease every summer, stay the same every fall, and increase every winter.

e) Not enough information has been given to answer the question.

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Question 13 (1 point)

The union spillover effect will tend to ­_________ the wages of non-union workers, and the union threat effect will tend to _________ the wages of non-union workers.

Question 13 options:

a) increase, increase

b) increase, decrease

c) decrease, increase

d) decrease, decrease

e) rinse, spin

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Question 14 (1 point)

If a labor market has a monopsony, workers will earn _______ they would have earned in a competitive labor market.

Question 14 options:

a) more than

b) less than

c) the same as

d) sometimes more than, sometimes less than, and sometimes the same as

e) an amount that is beyond human comprehension

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Question 15 (1 point)

In the United States, the median black man earns less than the median white man, and the median black woman earns less than the median white woman. Since the 1970s, the gap between black men and white men has ­­­­_______, and the gap between black women and white women has _______.

Question 15 options:

a) increased, increased.

b) increased, decreased.

c) decreased, increased.

d) decreased, decreased.

e) wiggled, wobbled.

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Question 16 (1 point)

Since the 1950s, the fraction of the U.S. labor force that is a member of a labor union has

Question 16 options:

a) increased.

b) decreased.

c) stayed about the same.

d) increased in odd-numbered years, but decreased in even-numbered years.

e) changed in completely random ways that cannot be described.