Chapter 4: Market Equilibrium
Which of the following statements regarding immigration is true?
Consumers benefit from immigration via lower prices
Suppose a law firm negotiates a very low price for each of its 1,000 employees to be members at the athletic club that is located next to the law firm. Which of the following is NOT likely to be true?
If the typical individual gym membership costs $50 per month, the law firm should expect to save $50,000 per month in wages
Assuming a country has a constant return to scale Cobb-Douglas production function, what effect will immigration have on native labor that has a high degree of substitutability with immigrant labor?
Immigration has no long-run effect on native wages
Many immigrants and many American high school drop outs possess very few skills. What impact will these low-skilled immigrants likely have on the labor market opportunities of American high school dropouts?
Immigration of low-skilled workers is associated with lower wages paid to American high school dropouts
If immigrant workers are complementary to native workers then____
native workers will be better off with open borders
The equilibrium of a competitive labor market is associated with____
no unemployment as everyone who wants a job at the equilibrium wage has one
A perfectly discriminating monopsonist____
pays each worker his or her reservation wage
The standard cobweb model makes the following two assumptions____
workers are myopic, and job adjustments take time
The general consensus is that wages in the stricken area increase substantially in the months immediately following a natural disaster. This is most likely a result of what?
A decrease in labor supply as some workers leave the affiliated area
Compared to the labor market outcome when there are no payroll taxes, imposing a payroll tax on labor will typically result in____
ALL OF THESE ARE POSSIBLE OUTCOMES (E)
Which of the following would result in a short-time increase in the wage rate in a competitive labor market?
An increase in the output price
When the government imposes a payroll tax on employers (and NOT on workers), which of the following effects will not come about?
Real wages will remain fixed if the labor market is competitive
Which of the following statements regarding the Affordable Care Act (ACA) is true?
The ACA could have negative employment effects as some firms will not expand above having 50 workers in order to avoid the mandate
If unskilled domestic labor and unskilled immigrant labor are substitutes in the production process, then a more open immigration policy will likely result in all but which of the following?
The demand curve for unskilled labor shifts up (out)
Which of the following does NOT characterize a perfectly discriminating monopsonist?
The firm hires more workers than it would if it were a competitive firm
Which of the following does NOT describe a perfectly discriminating monopsonist?
The firm uses fewer hours of labor than it would if it were in a competitive market
Which of the following is NOT an accurate summary of the equilibrium associated with a single competitive labor market?
Total firm surplus equals total worker surplus
Which is the distinguishing feature of the standard cobweb model?
Wages and employment levels adjust slowly over time
Standard economic theory suggests which of the following in terms of labor migration across states in the U.S?
Workers are likely to migrate from low-wage states to high-wage states
Which of the following would prevent a single equilibrium wage existing across all labor markets?
Workers having various skills and preferences
A monopsonist is____
a firm that is the single purchaser of a factor of production
A profit-maximizing monopsonist____
hires fewer workers and pays its workers less than it would if it were operating in a competitive labor market
If native workers and immigrants are substitutes, then____
immigration will shift the labor supply curve to the right
If labor is supplied perfectly inelastic, the imposition of a payroll tax legislated to be paid by firms will do all the following except____
reduce total output
When the government imposes a payroll tax on workers____
the effects are identical to the effects had the government imposed the tax on employers
The assumption that a firm operates in a competitive market means that____
the firm faces a constant wage regardless of how much labor it employs
A perfectly discriminating monopsonist pays each worker his or her reservation wage. This results in____
the firm receiving all of the surplus
If labor supply of unskilled workers is perfectly inelastic, then____
the labor supply curve of unskilled workers is vertical at the total number of unskilled workers in the market
In a noncompetitive labor market, the firm pays a wage that is less than the workers' value of marginal product because____
the marginal cost of labor curve is above the labor supply curve
When the government mandates that firms supply a particular benefit, it is usually the case that____
the wage will decrease by less than the cost of providing the benefit
