Question 1

Discrimination that results in minorities being paid less than whites for identical work would be an example of what explanation for wage differentials?

Accepted Answer

A)   Noncompeting groups
B)   Compensating differences
C)   Market imperfections
D)   Principal-agent problemsE) B) and C)
F) A) and B)

Question 2

Why is the demand for labor referred to as a "derived" demand?

Accepted Answer

A)   It stems from the drive to minimize production costs to achieve economic efficiency.
B)   It is based on the demand for the output labor produces.
C)   It results from decreases in the supply of labor.
D)   It arises from the shortages in labor markets.E) All of the above
F) None of the above

Question 3

Craft unions have typically been most effective in raising wage rates by:

Accepted Answer

A)   increasing the supply of labor.
B)   increasing the demand for labor.
C)   decreasing the supply of labor.
D)   decreasing the demand for labor.E) B) and D)
F) None of the above

Question 4

If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire 12 workers,its marginal resource cost of hiring the 12th worker is $40.

Accepted Answer

A) True 
 B)False

Question 5

A computer manufacturer's elasticity of demand for labor is not likely to be affected by the:

Accepted Answer

A)   supply of computers.
B)   price elasticity of demand for computers.
C)   ratio of labor cost to other resource costs in the firm.
D)   ease of substituting capital for labor in producing computers.E) B) and D)
F) A) and D)

Question 6

The demand for a resource will increase if the:

Accepted Answer

A)   price of the resource increases.
B)   quantity of the resource decreases.
C)   price of the output the firm is producing increases.
D)   price of the output the firm is producing decreases.E) All of the above
F) None of the above

Question 7

The price of a resource is not directly a determinant of the price elasticity of demand for the resource.

Accepted Answer

A) True 
 B)False

Question 8

If the wage rate in a purely competitive labor market decreases,it will cause the:

Accepted Answer

A)   labor supply curve for the industry to shift rightward.
B)   labor supply curve for a single competitive firm to shift leftward.
C)   marginal resource cost for a single competitive firm in the industry to decrease.
D)   marginal resource cost for a single competitive firm in the industry to increase.E) A) and B)
F) B) and C)

Question 9

Which would result in a decrease in the elasticity of demand for a particular resource?

Accepted Answer

A)   A decrease in the rate at which the marginal product of that resource declines.
B)   An increase in the elasticity of demand for the product that the resource helps to produce.
C)   A decrease in the percentage of the firm's total costs accounted for by the resource.
D)   An increase in the substitutability of other resources for the particular resource.E) All of the above
F) None of the above

Question 10

If the supply of labor in a purely competitive labor market decreases,the labor:

Accepted Answer

A)   supply curve for a single employer will shift downward.
B)   supply curve for a single employer will shift upward.
C)   demand curve for a single employer will shift upward.
D)   demand curve for a single employer will shift downward.E) A) and D)
F) None of the above

Question 11

On average,unionized workers realize wage rates 5 percent lower than those of comparable nonunion workers.

Accepted Answer

A) True 
 B)False

Question 12

The individual firm that hires labor under competitive conditions faces a labor supply curve that:

Accepted Answer

A)   slopes downward to the right.
B)   is perfectly elastic.
C)   is perfectly inelastic.
D)   is of unit elasticity.E) All of the above
F) C) and D)

Question 13

An industrial union:

Accepted Answer

A)   is most concerned with decreasing the supply of workers in an industry.
B)   organizes workers with similar skills or jobs in an industry.
C)   organizes skilled and unskilled workers in an industry.
D)   is most effective in a purely competitive industry.E) A) and B)
F) A) and C)

Question 14

Other things being equal,the demand for a factor of production will be less elastic if the demand for the final product it produces is:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unitary elastic.
D)   perfectly elastic.E) A) and B)
F) None of the above

Question 15

The more inelastic the demand for a resource,the:

Accepted Answer

A)   less elastic its marginal revenue product curve.
B)   more elastic its marginal revenue product curve.
C)   greater the potential for resource substitution.
D)   greater the productivity of the resource.E) All of the above
F) B) and D)

Question 16

Education is a form of human capital if it increases productivity.

Accepted Answer

A) True 
 B)False

Question 17

Monopsonists hire more workers than would be hired if the same industries were competitive.

Accepted Answer

A) True 
 B)False

Question 18

If labor costs are 60 percent of production costs,then a 15 percent increase in wage rates would increase production costs by:

Accepted Answer

A)   60 percent.
B)   45 percent.
C)   15 percent.
D)   9 percent.If total production costs are $100,labor's share is $60.If wages go up 15 percent,the wage bill becomes $60 * 1.15 = $69.Total production costs rise to $109,which is a 9 percent increase.E) A) and D)
F) B) and C)

Question 19

Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day.On the basis of this information we can say that the:

Accepted Answer

A)   marginal product of each of the first two workers is 23.
B)   marginal revenue product of each of the first two workers is $23.
C)   marginal revenue product of the third worker is $14.
D)   third worker should not be hired.E) All of the above
F) B) and C)

Question 20

Geographic immobility in the labor force results in:

Accepted Answer

A)   homogeneous wage rates.
B)   homogeneous unemployment rates.
C)   local labor markets that reach equilibrium quickly and efficiently.
D)   persistent wage and unemployment differentials in different regions of the country.E) A) and B)
F) A) and C)

Exam 10: Wage Determination

Craft unions have typically been most effective in raising wage rates by:

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If the supply of labor in a purely competitive labor market decreases,the labor:

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Discrimination that results in minorities being paid less than whites for identical work would be an example of what explanation for wage differentials?

Correct AnswerverifiedShow Answer

The price of a resource is not directly a determinant of the price elasticity of demand for the resource.

Correct AnswerverifiedShow Answer

On average,unionized workers realize wage rates 5 percent lower than those of comparable nonunion workers.

Correct AnswerverifiedShow Answer

Which would result in a decrease in the elasticity of demand for a particular resource?

Correct AnswerverifiedShow Answer

Suppose two workers can harvest $46 and three workers can harvest $60 worth of apples per day.On the basis of this information we can say that the:

Correct AnswerverifiedShow Answer

If labor costs are 60 percent of production costs,then a 15 percent increase in wage rates would increase production costs by:

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Geographic immobility in the labor force results in:

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An industrial union:

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If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire 12 workers,its marginal resource cost of hiring the 12th worker is $40.

Correct AnswerverifiedShow Answer

Other things being equal,the demand for a factor of production will be less elastic if the demand for the final product it produces is:

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If the wage rate in a purely competitive labor market decreases,it will cause the:

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The more inelastic the demand for a resource,the:

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The demand for a resource will increase if the:

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The individual firm that hires labor under competitive conditions faces a labor supply curve that:

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A computer manufacturer's elasticity of demand for labor is not likely to be affected by the:

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Education is a form of human capital if it increases productivity.

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Monopsonists hire more workers than would be hired if the same industries were competitive.

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Why is the demand for labor referred to as a "derived" demand?

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