Economics 2307 Exam 3
The value of marginal product of the tenth worker hired by a firm is $50. What is the maximum wage that should be paid to the worker
$50
if the number of unemployed workers in an economy is 4 million, and the size of the labor force in the economy is 16 million, the unemployment rate in the economy is
(4/16 = .25) 25%
If there are 48 million people in a country's labor force, and the number of potential adult workers in the country is 80 million, the labor force participation rate in the economy is
(48/80) = 60%
If the labor force participation rate in an economy is 50%, and there are 100 million potential adult workers in the economy, the size of the labor force in the economy will equal
(x/100 = .50) 50 million
The number of adults not in the work force of a country equals 6 million and the number of individuals employed is 5 million. If there are 12 million potential adult workers in the economy, what is the current unemployment rate in this country?
12 - 5 = 7 unemployed/ 12-6=6 workforce = 16.67 percent
If the number of employed workers in an economy is 8 million, the number of potential workers in the economy is 12 million, and the number of adults not in the labor force is 1 million, the number of unemployed people in the economy will equal
12 - 8 - 1 = 3 million
if the number of potential workers in a country is 25 million, and the size of the labor force in the country is 17 million, the number of adults not in the labor force will equal
25 - 17 = 8
If the number of employed people in a country is 21 million, and the number of unemployed workers in a country is 10 million. The size of the labor force is
31 million
Which of the following groups of people will be considered as unemployed
agricultural workers who are unemployed and have been looking for jobs for the last four weeks
Which of the following is likely to shift the demand curve for workers in rice farms to the right, assuming all else equal
an increase in the price of rice
Which of the following is likely to shift the demand curve for engineers rightward, assuming all else equal
an increase in the productivity of engineers
The impact of an increase in the wage rate on labor supply will be represented by
an upward movement along the labor supply curve
which of the following explains why frictional unemployment exists in an economy
it arises because it takes time for an unemployed worker to find a firm with a well-matched job vacancy
What will happen to the demand curve for workers in steel mills if some technology that increases their productivity is introduced, assuming all else equal
it may cause a rightward shift in the demand curve for the workers
Any change that causes a decrease in the demand for labor at a given wage rate will be represented by a ________ assuming all else equal
leftward shift in the labor demand curve
recessions are periods of
leftward shifts in labor demand
The size of the labor force in a country is equal to the
number of employed workers plus the number of unemployed workers in the country
Which of the following groups of people is included in the labor force of a country?
part-time paid workers
the unemployment rate is defined as
percentage of the labor force that is unemployed
Any change that affects the entire schedule relating the quantity of labor and the value of the marginal product of labor will ________ assuming all else equal
shift the labor demand curve
unemployment that arises when there is a mismatch between the quantity of labor demanded and supplied is referred to as
structural unemployment
If there is an increase in the number of discouraged workers in a country
the unemployment rate will decrease
As a firm hires more and more workers
the value of marginal product of the additional worker eventually decreases
a profit-maximizing firm will pay a worker
the value of the worker's marginal product
An implication of the fact that the labor market is perfectly competitive is that
there is always some unemployment
If a firm introduces some technology that substitutes capital for labor, ________, assuming all else equal
there will be a leftward shift in the labor demand curve of the firm
If the opportunity cost of working outside the home decreases then it is likely that
there will be a rightward shift in the labor supply curve
which of the following statements correctly differentiates between unemployed workers and discouraged workers
unemployed workers are counted in the labor force, but discouraged workers are excluded from the labor force
which of the following statements is true
unemployment will be higher if there is a leftward shift in the labor demand curve and there is downward wage rigidity in the labor market, everything else remaining unchanged
_________ refers to any factor that keeps the market wage above the level that would clear the labor market
wage rigidity
which of the following statements is true
wage rigidity can cause unemployment
Which of the following equations is true of a profit-maximizing firm?
wage= value of worker's marginal product
unemployment normally arises when
wages are below the market clearing wage level
Which of the following is likely to shift the demand curve for coffee workers to the left, assuming all else equal?
a decrease in the price of coffee
The impact of a decrease in the wage rate on labor supply will be represented by
a downward movement along the labor supply curve
which of the following is likely to shift the demand curve for corn farmers leftward, assuming all else equal
a fall in the productivity of farmers due to increased pest attacks
which of the following is likely to shift the labor supply curve to the right
a rise in the immigration of workers in search of better work opportunities
Which of the following is likely to cause an upward movement along the labor supply curve assuming all else equal
a rise in the wage rate
which of the following is likely to shift the labor supply curve to the left
a social change that discourages women to participate in the labor force
Which of the following statements is true?
as an economy experiences growth in GDP, the rate of unemployment is expected to decrease
Which of the following statements is true?
at wages above the equilibrium wage rate, quantity demanded of labor exceeds the quantity supplied of labor
which of the following statements is true?
at wages below the equilibrium wage rate, quantity supplied of labor exceeds the quantity demanded of labor
Contract negotiations between an employer and a labor union representing workers are referred to as
collective bargaining
workers who are underemployed are
considered as employed
The labor demand curve represents the relationship between the quantity of labor demanded at
different wage rates
If a firm hires a worker by paying him a wage higher than his value of marginal product
firing the worker will increase the firm's profits
frictional unemployment exists because
firms and workers have imperfect information about each other and the state of the economy
which of the following statements is true?
firms usually tend to lay off workers than cut wages to reduce costs
unemployment arising from job search is called
frictional unemployment
In a perfectly competitive labor market, at the equilibrium wage rate
frictional unemployment is zero
An employed individual is one who
has a full-time or part-time job
minimum wage laws
help in equating the quantity of labor demanded and supplied
at a fixed level of worker productivity
higher wages reduce profits
which of the following groups of people will not be considered as employed
housewives raising kids at home
Which of the following statements is true?
in the last thirty years, the unemployment rate in the US has never gone below 3%
Which of the following statements is true of the unemployment rate in a country?
is normally decreases during periods of economic expansion and increases during periods of economic contraction
the natural rate of unemployment
is the average of the unemployment rate in a country over time
which of the following statements is true
job search refers to the activities that workers undertake to find appropriate jobs
a reduction in wage is most likely to
lower worker productivity
which of the following statements is true of minimum wages?
minimum wages are normally set above the labor market clearing wage rate
As the wage rate increases, _______ assuming all else equal
quantity supplied of labor increases
Any change that causes an increase in the demand for labor at a given wage rate will be represented by an _________ assuming all else equal
rightward shift of the labor demand curve
Which of the following statements is true?
some people seeking paid jobs may not be able to find employment
which of the following statements is true?
technological innovation-----
which of the following statements is true?
technological innovation.....
everything else unchanged, following an adverse shift in the labor demand curve
the fall in employment will be greater if there is downward wage rigidity
If a firm hires a worker by paying him a wage lower than his value of marginal product
the firm should hire more workers to increase profits
If the number of potential workers in an economy increases while the size of the labor force remains unchanged
the labor force participation rate will fall
Which of the following statements is true when wages are above the market clearing wage?
the larger the gap between the current market wage and the market clearing wage, greater will be the amount of unemployment
Which of the following is true of the natural rate of unemployment
the natural rate of unemployment
Which of the following statements is true of unemployment
the rate of unemployment is positive in any well-functioning economy
in a frictionless labor market
the wage adjusts instantly to clear the market
A downward movement along the demand curve occurs when __________, assuming all else equal
the wage rate decreases
If at a given wage, the quantity supplied of labor exceeds the quantity demanded of labor
the wage rate will fall
which of the following statements is true?
there always exists some amount of unemployment in an economy
If the opportunity cost of working outside the home increases then it is likely that
there will be a leftward shift in the labor supply curve
Collective bargaining between unions and employers often lead
to wages that are higher than what workers would have received at equilibrium
Which of the following statements is true?
unemployment rate is higher among groups with lower educational attainment
The impact of an increase in the wage rate on labor demand is represented by _________, assuming all else equal
upward movement along the demand curve for labor
The labor supply curve is
upward slopping
downward wage rigidity arises when
workers and firms resist to wage cuts
if the natural rate of unemployment in a country is 6% and the unemployment rate in the country is 8%, the cyclical unemployment in the country must be
8-6= 2%
Which of the following statements is true?
All else equal, the incentives to look for a job is lower for an individual with a lower opportunity cost of time
The potential adult work force includes:
Civilian non-institutional population 16 years or older
If unemployment rate among workers with no high school diploma is represented by NS, unemployment rate among workers with a high school diploma is represented by HS, and unemployment rate among workers with a bachelor's degree is represented by BS, then which of the following statements is true?
NS>HS>BS
Which of the following equations is correct?
adults not in the labor force = potential adult workers - employed workers - unemployed
Which of the following equations is correct?
adults not in the labor force = potential workers - labor force
If the number of employed workers in an economy is 4 million, the number of unemployed people in the economy is 2 million, and the number of adults not in the labor force is 1 million, the potential adult workers in the economy is
7 million (1 = x - 4 - 2)
Which of the following statements is true?
Both employees and employers have complete information about each other in a frictionless labor market
Which of the following statements is true of the US economy in 2014, as per the records of the BLS
Number of employed workers > number of adults in the workforce > number of unemployed workers
What will happen to the demand curve for workers in cotton farms if the price of cotton falls, assuming all else equal
There will be a leftward shift in the demand curve for these workers
What will happen to the demand curve for tea workers if the price of tea increases, assuming all else equal
There will be a rightward shift in the demand curve for tea workers
which of the following statements is true
a higher wage can raise profits if productivity of workers is fixed.
Which of the following is likely to shift the demand curve for carpenters leftwards, assuming all else equal
a rise in the price of the tools used by carpenters
Which of the following is likely to shift the demand curve for carpenters rightward, assuming all else equal
a rise in the price of wood
which of the following statements is true
both efficiency wages and minimum wages increase unemployment
minimum wages:
can increase unemployment
efficiency wages
can lead to wage rigidity
any change that increases the quantity of labor supplied at all wage rates will
cause an upward movement along the labor supply curve
downward wage rigidity
causes the wage to be above the market clearing wage
Which of the following is a part of the potential work force of a country?
civilian non-institutionalized people ages 16 years and older
Which of the following is true of cyclical unemployment
cyclical unemployment is the deviation of unemployment from its natural rate
The slope of the labor demand curve can be attributed to the law of
diminishing marginal productivity of labor
Workers who are unemployed but are not actively looking for jobs are referred to as
discouraged workers
wages that are higher than the current market wage
dissuade workers from shirking
A worker is unemployed if he
does not have a job and has been actively looking for one in the prior four weeks and is available for work
everything else remaining unchanged, a sudden increase in the price of oil is likely to cause a
downward movement along the demand curve of labor
The labor demand curve is
downward sloping
wages that are above the wage that workers would accept, where the premium is paid to increase worker productivity, are referred to as
efficiency wages
Which of the following statements is true of a frictionless labor market
firms can instantly hire and fire workers
Which of the following groups of people will be considered as unemployed?
housewives who do not have a job but have been actively looking for jobs for the last two months
collective bargaining can
increase profitability of firms
downward rigidity is likely to
increase unemployment
