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