ECO 101 - Workers allocate their time between work

QUESTION 1

1. Workers allocate their time between work and leisure such that
2. A.when their fun is over, they will work.
3. B.the marginal benefit of an hour spent working will be smaller than the marginal benefit of an hour spent on leisure activity.
4. C.the marginal benefit of an hour spent working will be greater than the marginal benefit of an hour spent on leisure activity.
5. D.after they have worked for 40 hours in a week, the rest of their time is spent on leisure activity.
6. E.the marginal benefit of an hour spent working will equal the marginal benefit of an hour spent on leisure activity.

10 points

QUESTION 2

1. As the wage rate increases, the quantity supplied of labor in a market will
2. A.increase.
3. B.decrease.
4. C.first increase and then decrease.
5. D.first decrease and then increase.
6. E.remain constant.

10 points

QUESTION 3

1. It is said that a wage increase can have two opposing effects. Which of the following best characterizes these two effects?
2. A.A backward-bending labor-supply curve
3. B.A perfectly elastic labor-supply curve
4. C.A perfectly inelastic labor-supply curve
5. D.The inability of average wage earners to comprehend the complexities of economic principles.
6. E.A backward-bending labor-demand curve

10 points

QUESTION 4

In the preceding figure, assume that we have labor market demand and supply curves of S₂ and D₁. What is the equilibrium wage and employment level?

A.30 workers, $5

B.50 workers, $6

C.30 workers, $7

D.10 workers, $8

E.10 workers, $5

QUESTION 5

1. An increase in the wage rate means that the opportunity cost of leisure increases; therefore, people will purchase more leisure.
2. A.True
3. B.False

10 points

QUESTION 6

1. The labor supply could decrease when wages increase only if:
2. A.the price effect outweighs the income effect.
3. B.the income effect outweighs the price effect.
4. C.the substitution effect outweighs the income effect.
5. D.the price effect outweighs the substitution effect.

QUESTION 7

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

A.there would be a surplus of workers who want to work at that wage.

B.there would be unemployment in the market.

C.firms would have more workers wanting to work for them than they need.

D.All of these statements are true.

QUESTION 8

1. The value of the marginal product of a resource is equal to
2. A.the market price of the product multiplied by the marginal product of the resource.
3. B.the marginal product of the resource divided by the market price of the product.
4. C.the market price of the product divided by the resource price.
5. D.the market price of the product divided by the marginal product of the resource.
6. E.the marginal product of the resource divided by the resource price.

10 points

QUESTION 9

1. When labor is substitutable between two markets, we should expect:
2. A.the two markets to pay the same or similar equilibrium wage.
3. B.those markets to produce substitutable outputs.
4. C.the workers in the two markets to commit to one at the start of their career and stick with it, despite the similarities.
5. D.All of these statements are true.

10 points

QUESTION 10

1. The determinants of labor demand include:
2. A.culture, population, and other opportunities.
3. B.supply of other factors and culture.
4. C.culture, supply of other factors, and technology.
5. D.None of these statements is true.

10 points

QUESTION 11

1. When comparing a firm operating in a monopsony with one operating in a perfectly competitive resource market, which of the following is nottrue?
2. A.The monopsony hires fewer workers than the perfectly competitive firm.
3. B.The monopsony pays a lower wage rate than the perfectly competitive firm.
4. C.The monopsony faces a horizontal labor supply curve.
5. D.The perfectly competitive firm faces a horizontal labor supply curve.
6. E.In the perfectly competitive firm, the wage rate to the factor is equal to the factor's marginal cost.

10 points

QUESTION 12

1. For any competitive labor market, changes that decrease the number of workers will:
2. A.decrease the labor supply and shift the supply curve left.
3. B.increase the labor supply and shift the supply curve right.
4. C.decrease the labor supply and shift the supply curve right.
5. D.increase the labor supply and shift the supply curve left.