ECN 150: Chapter 17

If the marginal product of labor is $10 an hour, the firm should hire the worker so long as the wage (including fringe benefits) exceeds $10 an hour. True False

False

If the market in this figure is in equilibrium, the hourly wage paid to plumbers is ______ and the marginal product of a plumber is ______. $40; $20 $30; $50 $40; $40 $20; $30

$40; $40

An individual's labor supply curve might be backward bending. True False

True

College graduates are paid more, on average, partly because the act of finishing college signals that they are more likely to be a good employee. True False

True

Refer to the figure. Which of the following would represent the wage and number of workers of unionized jobs? W1; N1 W1; N2 W2; N1 W2; N2

W2; N1

Refer to the figure. How many workers will this firm hire at a wage of $29? 0 1 2 3

2

The firm in this figure will hire ______ worker(s) at a wage of $10 and 2 workers at a wage of _______. 4; $18 3; $15 1; $6 3; $17

3; $15

A compensating differential is: a wage premium for more talented workers. the difference in wages between India and the United States. a difference in the marginal product of labor. a difference in wages that offsets differences in working conditions.

a difference in wages that offsets differences in working conditions.

In general, wages are determined: by the skills of the worker, regardless of the country he or she works in. by the skills of the worker and the productivity of the entire economy. based on the average wage for all individuals in a particular country. based on the average marginal product of labor of workers in similar countries.

by the skills of the worker and the productivity of the entire economy.

An individual's labor supply curve: is always upward sloping. is always perfectly inelastic. can be either positively or negatively sloped, or perfectly inelastic. is negatively sloped.

can be either positively or negatively sloped, or perfectly inelastic.

An individual labor supply curve: is always positively sloped. is always negatively sloped. is always vertical. can be positively sloped, vertical, or negatively sloped at different ranges.

can be positively sloped, vertical, or negatively sloped at different ranges.

A union can lower wages by: raising the supply of labor. raising the demand for labor. not going on strike very often. causing work stoppages, which slow down the entire economy.

causing work stoppages, which slow down the entire economy.

A newly imposed binding minimum wage: increases employment. decreases employment. maintains employment. leads to full employment.

decreases employment.

Good-looking people: earn more than otherwise comparable less attractive people. earn less than otherwise comparable less attractive people. earn the same amount as otherwise comparable less attractive people. don't compete for the same jobs as less attractive people.

earn more than otherwise comparable less attractive people.

Customer-based discrimination is weakened by: higher wages. country clubs. segregation. economic growth.

economic growth.

If the marginal product of labor is constant in labor, then a market labor demand curve is: positively sloped. negatively sloped. flat. varied.

flat.

A firm is willing to hire a worker when the marginal product of labor is: greater than the wage. less than the wage. equal to or less than the wage. efficient.

greater than the wage.

A firm will hire workers as long as the marginal product of labor is: greater than the wage. equal to the wage. less than the wage. either greater than or less than the wage.

greater than the wage.

A firm will hire a worker whenever that worker's marginal product of labor is: greater than the marginal product of labor for the next best worker. less than the marginal product of labor for the next best worker. greater than the worker's wage. less than the worker's wage.

greater than the worker's wage.

In a market economy discrimination by employers will NOT: causes the wages of the discriminated group to fall because of decreased demand for their services. reduces the firm's profits. tends to disappear over time because of the profit motive. increases the firm's profits.

increases the firm's profits.

Discrimination by employees: will not lead to segregated businesses or workplaces. will not persist because the employer faces little profit incentive to hire the disfavored group. is a situation in which one group of workers doesn't want to work with another group of workers. is a situation in which all groups of workers want to work with all other groups of workers.

is a situation in which one group of workers doesn't want to work with another group of workers.

A market labor supply curve: is always positively sloped. is always negatively sloped. is always vertical. can be positively sloped, vertical, or negatively sloped at different ranges.

is always positively sloped.

Which idea was Smith describing? labor market issues market discrimination supply of labor marginal product of labor

labor market issues

Evidence suggests that résumés with names closely associated with African Americans received: more than average number of interview requests. less than average number of interview requests. about the same as the average number of interview requests. sometimes more than, sometimes less than, the average number of interview requests.

less than average number of interview requests.

An individual's labor supply curve: may be backward bending if the wage is high enough. is always upward sloping. is typically vertical. is identical to the market labor supply curve.

may be backward bending if the wage is high enough.

Discrimination by customers: means that there will not be wage differences by race. becomes more common with economic growth. means that some customers might not want to do business with firms that hire certain workers. increases with falling costs of production.

means that some customers might not want to do business with firms that hire certain workers.

A compensating differential is mainly a cause of a difference in wages because: of differences in working conditions. of differences in human capital. of differences in productivity. all workers should be paid the same wage rate.

of differences in working conditions.

A binding minimum wage is a(n) ______ for labor. price floor price ceiling equilibrium price subsidy

price floor

A union can raise wages by: increasing the demand for labor. reducing the supply of labor. promoting a smoother labor market. demanding better working conditions.

reducing the supply of labor.

In a world of perfect information: statistical discrimination would not exist. employers, but not employees, would practice statistical discrimination. employees, but not employers, would practice statistical discrimination statistical discrimination would be even more important.

statistical discrimination would not exist.

Discrimination by employers: tends to break down quickly because employers are always looking to hire the most productive workers at the lowest wages in order to maximize profits. tends to break down slowly because employers have many other options when hiring workers that will still maximize profits. results in higher wages. is the worst kind of discrimination for minorities, as employers are able to restrict employment in these underrepresented groups the most.

tends to break down quickly because employers are always looking to hire the most productive workers at the lowest wages in order to maximize profits.

A firm will hire a worker as long as: the marginal product of labor is greater than or equal to the wage earned by the worker. the wage earned is greater than the marginal product of labor. the worker is not unionized. the worker does not demand OSHA safety regulations.

the marginal product of labor is greater than or equal to the wage earned by the worker.

A firm will continue to hire workers as long as: the marginal product of labor is greater than the wage. the marginal product of labor is less than the wage. the value of labor exceeds the firm's production costs. the value of labor exceeds the firm's fixed costs of labor.

the marginal product of labor is greater than the wage.

Firms will hire additional workers as long as: the marginal revenue of that worker is greater than the worker's wage. the total revenue is greater than the total cost. the marginal cost of that worker is greater than the marginal revenue. the marginal revenue of that worker is equal to the marginal product of labor.

the marginal revenue of that worker is greater than the worker's wage.

A single person's supply curve for labor slopes down when: the person starts taking part of their income as leisure. labor market issues increases beyond physical capital. the marginal product of labor exceeds the wage. the demand curve for labor starts sloping up.

the person starts taking part of their income as leisure.

Discrimination is: using information about group averages to make conclusions about individuals. the illegal practice of judging someone because of their characteristics. a tool that economists use to determine the significance of statistical regressions. always malicious.

using information about group averages to make conclusions about individuals.