ECON 315 Concept Quiz 1

If the salaries of accountants increase and other conditions remain the same, then

a firm will move to the left along its labor demand curve for accountants

Which of the following events will cause a surplus of workers?

a wage above the market-clearing wage

the labor force is made up of

all members of society who are at least 16 years old and are either employed or unemployed

Which of the following events will cause the labor demand curve to shift up and to the right?

an increase in product demand

When the price of capital increases, the quantity of ________ demanded will ________, but the effect on ________ is ambiguous]

capital; decrease; labor

When wages increase, the substitution effect implies that employment will ________ and the scale effect implies that employment will ________.

decrease; decrease

A worker's total compensation consists of

earnings + in-kind benefits plus deferred benefits

a worker's income is equal to his/her...

earnings plus employee benefits plus unearned income

Workers in an industry are probably underpaid if

employers have difficulty hiring and retaining qualified workers

It has been said that CEOs (Chief Executive Officers who are in charge of their firms) are overpaid. Which of the following would be evidence (if true) that they are, in fact, overpaid?

firms find that they can find equal qualified persons for a lower salary

If every worker wants ten dollars more per hour to work, then wages will

go up by less than $10

Which of the following is not one of the questions answered by rational choice models?

is pareto efficiency equitable?

Which of the following occurs if a firm pays workers more than the market wage?

its quit rate will be lower than usual, it will have a surplus of labor, its application rate will be higher than usual

If a single small firm's demand for secretaries increases, then

its wage rate will remain the same and its employment level will increase

When the price of labor falls, the quantity of ________ demanded will ________, but the effect on ________ is ambiguous.

labor; increase, capital

Students are classified as

not a part of the labor force

If unions raise wages above their market clearing level, then

persistently high rates of unemployment will result

vWhich type of economics is concerned with questions of "What is?"

positive economics

It has been said that teaching assistants to professors are underpaid. Which of the following would be evidence (if true) that they are underpaid?

professors have a hard time finding qualified teaching assistants

If an increase in the cost of capital increases the demand for relatively cheaper labor and lowers the demand for relatively more expensive capital, which effect dominates the relationship between K and L?

substitution effect

economic rent is

the amount by which a worker's wage exceeds his/her reservation wage

Which of the following events could explain why wages and employment could fall in a competitive labor market?

the demand curve shifts left and down

If the price of a product decreases due to a decrease in demand, then

the labor demand curves shifts to the left

The labor force is equal to:

the number of people employed and unemployed

If more people enter the labor market for architects, then

the wage rate will decrease and the employment level will increase

If the wage rate is above W*,

there is an excess in supply of labor, and the wage rate will fall

If a union negotiates an industry-wide agreement to set wages above the equilibrium level

there will be a surplus of labor in the industry

From 1950 to 2009 the U.S. labor force

tripled

If the price of capital increases in an industry and the scale effect dominates then

wages and employment levels will both decrease

If the price of capital increases in an industry and the scale effect dominates,

wages and employment levels will both decrease

Ceteris paribus literally means

"all else equal"

With some exceptions, the unemployment rate has tended to hover between which approximate values?

4% and 7%

Which of these persons is officially classified as being "not in the labor force"?

Meredith, who would start looking for work if she thought she could get a good job