Ch 11
When the owner of a sushi restaurant hires a second cook, customers increase their orders from 70 to 110 orders per week. He pays each cook $500 per week and charges $15 per order. If he adds one more cook, he might get 30 extra orders per week. Should he hire a third cook? Why? No, he can hire only two cooks to get the maximum profit of $650. Yes, he should hire another cook to maximize the profit, which is $600. No, he would lose $100, since the wage exceeds the marginal revenue product. Yes, his marginal revenue product exceeds the wage by $50.
No, he can hire only two cooks to get the maximum profit of $650.
As baby boomers age, more people seek in-home elder care for their aging parents. What happens to the labor market for home-health aids? Wage will decrease, and fewer jobs will be available. Wage will increase, and fewer jobs will be available. Wage will decrease, and more jobs will be available. Wage will increase, and more jobs will be available.
Wage will increase, and more jobs will be available.
How do you describe a labor market in which many employers are competing to hire from a large pool of qualified workers with similar skills? There is a shift in the labor supply curve. You describe the labor market as noncompetitive. You describe the labor market as perfectly competitive. There is an increase in labor supply.
You describe the labor market as perfectly competitive.
The three key labor market decisions that you make do NOT include what kind of work to do. how many workers to hire. whether to work. how many hours to work.
how many workers to hire
The income effect measures
how people's choices change when they have more income.
The marginal revenue from hiring an additional worker is known as labor marginal revenue. labor marginal product. marginal revenue product. marginal worker revenue.
marginal revenue product
You are a _____ of your labor in the labor market. And when you manage other workers or start your own business, you'll be a _____ of labor.
seller, buyer
The labor supply curve for social workers will shift to the right when: wages in other occupations rise. the government increases benefits for those who are not working. the wages of all workers rise. nonwage benefits increase for social workers.
nonwage benefits increase for social workers
The Rational Rule for Workers tells you to work more hours as long as the wage is at least as large as the marginal benefit of another hour of leisure. as long as possible to maximize benefits. if your employer agrees. if you can earn better health care benefits.
as long as the wage is at least as large as the marginal benefit of another hour of leisure.
Which of the following would shift the labor supply curve? Demand increases for the output produced by workers. There is more effective management at companies. Technological advancement increases worker productivity. The government increases its provision of childcare services.
government increases its provision of childcare services
With regard to labor supply, the substitution effect measures how people respond to a change in relative prices. how people's choices change when they have more income. the overall response in the quantity of labor supplied to a wage change. workers' responsiveness to changes in wages.
how people respond to a change in relative prices.
The income effect measures the change in welfare when income rises. how people's choices change when they have more income. the impact of change in relative prices. how people's choices change when they have to work more.
how people's choices change when they have more income.
Regarding the substitution effect, a higher wage _____ the returns to work relative to leisure, leading you to work _____.
increases, more
Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move. Yes, it was a good move because the ticket sales rose more than price. No, it was a bad move because price did not rise as much as ticket sales. No, it was a bad move because it added more to cost than revenue. Yes, it was a good move because it added more to revenue than to cost.
yes, added more revenue than to cost
Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move. Yes, it was a good move because the ticket sales rose more than price. No, it was a bad move because price did not rise as much as ticket sales. No, it was a bad move because it added more to cost than revenue. Yes, it was a good move because it added more to revenue than to cost.
yes, added more to revenues than to cost
Which of the following represents a labor market in which a rising opportunity cost of work results in higher wages and fewer jobs? The labor market for private teachers when there is a pay cut for public teachers. The labor market for stenographers when there are effective voice recognition software programs. The labor market for home health aides as baby-boomers are aging. The labor market for young people who enjoy playing video games.
The labor market for young people who enjoy playing video games.
The population of Japan is declining. What impact will this have on the labor market for optometrists in Japan? The optometrist labor supply curve shifts rightward. There is a movement to a smaller quantity on the optometrist labor supply curve. There is a movement to a larger quantity on the optometrist labor supply curve. The optometrist labor supply curve shifts leftward.
The optometrist labor supply curve shifts leftward.
Which of the following is NOT true about the labor supply and labor demand curves? Businesses want to hire the best workers at the lowest price possible. The labor supply curve has the hours of work on the horizontal axis. The supply curve represents the selling decisions of businesses. The labor demand curve has the price of labor on the vertical axis.
The supply curve represents the selling decisions of businesses.
Various government support programs aimed at helping people without a job have an unintended side effect because these programs decrease work incentives in the labor market. decrease the benefit of not working. decrease the opportunity cost of working. increase the opportunity cost of working.
increase the opportunity cost of working.
If a company incurs expenses to start providing childcare at work so that employees can have lunch with their preschool children, the company's demand curve for labor will shift to the left because employees are more expensive to the firm. left because workers will be more loyal. right because workers will be more loyal. right because employees are more expensive to the firm.
left because employees are more expensive to the firm.
If a company incurs expenses to start providing childcare at work so that employees can have lunch with their preschool children, the company's demand curve for labor will shift to the left because employees are more expensive to the firm. left because workers will be more loyal. right because workers will be more loyal. right because employees are more expensive to the firm.
left, employees more expensive
marginal revenue from hiring an additional worker is known as
marginal revenue product
If the demand for Ono Yo's organic frozen yogurt increases, then the _____ Ono Yo's workers will _____. marginal revenue product of; increase demand for; hold steady productivity of; rise wages of; fall
marginal revenue product of, increase
If the demand for Ono Yo's organic frozen yogurt increases, then the _____ Ono Yo's workers will _____. marginal revenue product of; increase demand for; hold steady productivity of; rise wages of; fall
marginal revenue product of; increase
The population of Japan is declining. What impact will this have on the labor market for optometrists in Japan? The optometrist labor supply curve shifts rightward. There is a movement to a smaller quantity on the optometrist labor supply curve. There is a movement to a larger quantity on the optometrist labor supply curve. The optometrist labor supply curve shifts leftward.
optometrist labor supply curve shifts leftward
From the graph, the labor supply curve is backward-bending because the substitution effect dominates at low wages and the income effect dominates at higher wages. the substitution effect dominates at lower wages and higher wages. the income effect dominates at lower wages and higher wages. the income and substitution effects offset each other at all wages.
the substitution effect dominates at low wages and the income effect dominates at higher wages.
From the graph, the labor supply curve is upward-sloping because: the substitution effect dominates. the income and substitution effects offset each other. the income effect dominates. the substitution effect dominates at low wages, but the income effect is more important at higher wages.
the substitution effect dominates.
A higher wage has two effects on your individual labor supply decisions; those are _____ and _____. the substitution effect; the income effect the scale effect; the income effect the substitution effect; the scale effect the income effect; labor demand
the substitution effect; the income effect
The opportunity cost of working is the wage you earn for the time spent working. too high to even consider not working. what you can buy because you worked. what you would have done during the time if you were not working.
what you would earn in not working
The opportunity cost of working is the wage you earn for the time spent working. too high to even consider not working. what you can buy because you worked. what you would have done during the time if you were not working.
what you would have done during the time if you were not working