ECON 305
Which of the following circumstances will increase the likelihood of an individual being a non-participant in the labor market?
Availability of substantial non-wage income
Which of the following equalities holds when the profit-maximizing quantity of labor is employed in the short run?
MRP = MWC
Steven's reservation wage is $12 and his market wage is $11. We can conclude that:
Steven will be a non-participant in the labor market
The optimal work-leisure position is achieved where
The MRS L, Y is equal to the wage rate
Human capital theory predicts that the proportion of people attending college will decrease if:
The age at which retirement benefits are received is lowered to 59
Labor economics is studied as a distinct subfield of economics because
The bulk of national income is received by labor The concepts of supply and demand must be revised somewhat when applied to labor markets Labor economics can be used to analyze major socioeconomic trends such as the surge in the number of women workers
The higher the individual's wage rate
The steeper the budget constraint
Skilled labor will benefit from an increase in the wage rate paid to unskilled labor if:
The substitution effect outweighs the output effect
Mary's employer is considering her for a firm-specific training program that will cost $3 per hour. Her current marginal revenue product is $15 per hour and will rise to $20 upon completion of the program. Of the following, Mary's training and post-training wage, respectively, will most likely be:
$15; $17
Given the following data, what is the labor force participation rate? Population 100 million Non-institutionalized population, age 16 and over 75 million Persons employed or seeking employment 50 million Unemployed persons 5 million
67%
Which one of the following will tend to increase the likelihood of participation in the labor force for a current non-participant?
A decrease in the spouse's wage
A household will tend to substitute goods for time in the production of commodities if
A household member's market wage increases
Of the following, which one would most likely cause this person to supply H1 hours of work at W3 rather than the current H3 hours?
An increase in income received by this person's spouse
Which of the following can be predicted to increase the demand for labor?
An increase in product demand
Which of the following can be predicted to increase the demand for labor?
An increase in the price of a gross substitute for labor
In the context of the basic work-leisure model, "leisure" time includes
Any time not devoted to a paying job
Which of the following best describes the "law of diminishing marginal returns"?
As more labor is added to a fixed stock of capital, labor's marginal product must eventually fall
The long-run labor demand curve incorporates
Both the substitution effect and the output effect
In comparing two otherwise identical industries X and Y, an economist finds that labor demand is less elastic in industry X. Which of the following would support this finding?
Capital and labor are less easily substituted for one another in X than in Y
Assume that skilled labor and energy are substitutes in production. An increase in energy prices is then predicted to:
Decrease the demand for skilled labor if the output effect outweighs the substitution effect
The total economic cost of formal education typically does not include
Expenditures for room and board
Compared to an otherwise identical competitive firm, a firm with monopoly power will hire:
Fewer workers, reflecting its decision to produce less output
If a worker's wage rate rises
Household production will shift away from time-intensive commodities towards goods-intensive commodities
Compared to workers with less education, people who have more education tend to earn higher wages and have higher pensions upon retirement. Given this observation, which of the following statements best explains why those persons with more education also retire at a later age?
If tastes for leisure are the same, the effects of the higher wages must outweigh the effects of the higher pensions
Which one of the following circumstances would most likely lead to increased investment in education by women?
Improved employment opportunities for women
The Earned Income Tax Credit, which effectively reduces the tax rate on low income earners:
Increases the labor force participation rate
The short-run labor demand curve of a competitive firm is:
Its marginal revenue product curve, provided marginal product is below average product
Which one of the following most closely approximates pure specific training?
Learning a management information system that is unique to your firm
The slope of an indifference curve at any point reflects the
Rate at which a person is willing to substitute leisure for income
Which one of the following is not predicted to increase the labor force participation rate of married women?
Rising wage rates for husbands
On a standard income-leisure diagram, Sara has steeper indifference curves than John. This likely reflects the fact that
Sara values leisure more highly compared to income than John does
The concept of demand must be modified when applied to labor markets to reflect the fact that:
The demand for labor is derived from the demand for the various products that labor produces
Which of the following best describes the output effect of a wage increase?
The firm's marginal cost increases, the firm desires to produce less output, and therefore less labor is required
An increase in the wage rate will increase desired hours of work if
The substitution effect dominates the income effect
"For married women, the substitution effect of rising wage rates has apparently outweighed the income effect." Empirical evidence suggests this statement is:
True because the labor force participation rate of women has been increasing
"The extra output, measured in dollars, that accrues to society when an additional unit of labor is employed" best describes
Value of marginal product
General training
Will be paid for by the employee in the form of a reduced wage
The convex shape of a standard indifference curve reflects:
a diminishing marginal rate of substitution of leisure for income
For a firm selling output in an imperfectly competitive market, its labor demand curve will
decline because of diminishing marginal productivity and because product price declines as output increases
In the textile industry, industrial robots and assembly line workers are gross substitutes. Accordingly, the drop in the price of robots has:
decreased the demand for assembly line workers
Which of the following best exemplifies the Becker substitution effect? An increase in wages leads a family to:
eat more meals at restaurants
The labor force participation rate
is the fraction of a potential labor force that is classified either as employed or unemployed
The short-run labor demand curve of a competitive firm is
its marginal revenue product curve, provided marginal product is below average product
Compared to a high-wage worker, a low-wage worker will tend to
pursue more time-intensive activities
Since 1970, the labor force participation rate of women has _____ and the participation rate of men has _____, so the aggregate participation rate has _____.
risen; fallen; increased slightly
Suppose an individual worker is on the upsloping portion of her labor supply curve. Then for a wage increase the
substitution effect is stronger than the income effect
The income effect is:
that part of the total change in desired work hours that is due to the change in real income resulting from a change in the wage rate
The concept of demand must be modified when applied to labor markets to reflect the fact that
the demand for labor is derived from the demand for the various products that labor produces
The optimal work-leisure position is achieved where:
the marginal rate of substitution of leisure for income (MRS) is equal to the wage rate
In the context of the basic work-leisure model, "work" is defined as:
time devoted to a paying job
The extra output, measured in dollars, which accrues to society when an additional unit of labor is employed" best describes:
value of marginal product
