Labor Economics Ch 2 & 3 Quiz
d
(World of Work 2-3) One disadvantage of computer-assisted scheduling of more flexible work schedules for retail workers is that: a. stores are less likely to have enough personnel to meet customer demand b. labor costs will likely rise c. manager time devoted to scheduling will rise d. unusual work shifts make childcare harder to schedule
b
(World of Work 2-4) The Earned Income Tax Credit: a. reduces desired hours of work for those already in the labor force b.* increases the labor force participation rate c. always increases with increases in earnings d. is phased out as the number of children increases
c
A 10% increase in the wage induces Margy to increase her desired work hours by 2%. Over this range of wages, Margy's wage elasticity of labor supply is: a. elastic b. unit elastic c. inelastic d. negative
c
An increase in the wage rate will increase desired hours of work if: a. the income effect and substitution effect cancel one another b. the income effect dominates the substitution effect c. the substitution effect dominates the income effect d. accompanied by an increase in nonwage income p.25
b
An individual whose MRS L,Y exceeds the wage at her current combination of leisure and income could increase utility by: a. working more hours b. working fewer hours c. increasing her income d. none of the above; her utility is maximized
b
Assume under an income maintenance program that the basic benefit (income guarantee) is $9000 and the benefit-reduction rate is 50%. If a family has an earned income of $3000 per year, its subsidy payment will be: a. $6000 b. $7500 c. $9000 d. $0
d
Assume under an income maintenance program that the basic benefit (income guarantee) is $9000 and the benefit-reduction rate is 50%. The break-even level of income is: a. $4500 b. $6000 c. $9000 d. $18,000
b
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? a. If tastes for leisure are the same, the effect of the higher pension must outweigh the effects of the higher wages b. If tastes for leisure are the same, the effects of the higher wages must outweigh the effects of the higher pensions c. Since higher wages and pensions both suggest a lower retirement age, those with more education must value leisure less d. Regardless of the tastes for leisure, the higher wages and pensions would both suggest a higher retirement age
d
Consider the impact of a general increase in real wages. Empirical evidence suggests that men will tend to work _____ hours and women will tend to work _____ hours. a. more; fewer b. more; about the same c. fewer; fewer d. about the same; more
d
Empirical evidence indicates that inheritances _____ labor force participation; further, persons receiving inheritances tend to be _____ likely to work in the years preceding the inheritance. a. have no impact on; less b. reduce; more c. reduce; equally d. reduce; less
d
For Jenny, the income effect of a wage increase dominates the substitution effect. Jenny's wage elasticity of labor supply is: a. elastic c. inelastic b. unit elastic d. negative
c
For income and leisure time, a higher level of utility is achieved by moving to the _____ on an indifference _____. a. northeast; curve b. southwest; curve c. northeast; map d. southwest; map
b
If this person's wage rate falls as illustrated in the diagram, then: a. the substitution effect is stronger than the income effect b. the income effect is stronger than the substitution effect c. this person's non-wage income will fall as well d. the substitution effect causes desired work hours to increase
c
In an income-leisure diagram, the wage rate is graphically represented by the: a. slope of the indifference curves b. curvature of the indifference curves c. slope of the budget line d. tangency of the budget line with an indifference curve
d
In the context of the basic work-leisure model, "leisure" time includes: a. only time devoted to rest and relaxation b. any time not devoted to either a paying job or household work c. any time devoted to anything desirable d. any time not devoted to a paying job
b
In the context of the basic work-leisure model, "work" is defined as: a. time devoted to a paying job or household work b. time devoted to a paying job c. time devoted to any "undesirable" activity d. all time not devoted to rest and relaxation
c
In the years following enactment of welfare reform in 1996, welfare case loads: a. dropped slightly b. increased slightly c. dropped by more than 50% d. increased by almost 50%
b
Indifference curves are convex to the origin because: a. at a lower income, a person is more willing to sacrifice income for additional leisure b. at a lower income, a person is less willing to sacrifice income for additional leisure c. at any income level, a person is willing to sacrifice the same amount of income for additional leisure d. the marginal rate of substitution of leisure for income is negative
c
On a standard income-leisure diagram, Sara has steeper indifference curves than John. This likely reflects the fact that: a. Sara likes leisure but dislikes income while John likes both b. Sara likes income but dislikes leisure while John likes both c. Sara values leisure more highly compared to income than John does d. John values leisure more highly compared to income than Sara does
c
On an indifference map reflecting the tradeoff between income and leisure, higher levels of utility are achieved by moving: a. from left to right along a given indifference curve b. from right to left along a given indifference curve c. to an indifference curve further from the origin d. to an indifference curve closer to the origin
c
Sammy is required by her employer to work a standard eight-hour workday. Suppose her marginal rate of substitution of leisure for income exceeds the wage rate at this level of work effort. We can conclude that Sammy will: a feel underemployed b. desire to find a second job c. feel overemployed d. desire to work voluntary overtime
a
Shanita is required by her employer to work a standard eight-hour workday. Suppose her marginal rate of substitution of leisure for income is less than the wage rate at this level of work effort. We can conclude that Shanita will: a feel underemployed b. probably have a higher than average absenteeism rate c. feel overemployed d. prefer to work part-time, if such a job is available at the same wage rate
b
Steven's reservation wage is $12 and his market wage is $11. We can conclude that: a. Steven's marginal rate of substitution of leisure for income is less than his reservation wage b. Steven will be a nonparticipant in the labor market c. Steven's subjective valuation of nonmarket time is less than the value of work d. Steven has no nonwage sources of income
b
Suppose a working mother is currently ineligible for any government assistance. If she were then to become eligible for an income maintenance program that incorporates both a basic benefit and a positive benefit-reduction rate: a. both the income and substitution effect will cause her to increase her work effort b. both the income and substitution effect will cause her to decrease her work effort c. her work effort will increase if the substitution effect is stronger than the income effect d. her work effort will decrease if the substitution effect is stronger than the income effect
d
Suppose an income maintenance program offers a basic benefit of $7500 per year and the benefit-reduction rate is 33 1/3%. The break-even level of income is then: a. $2500 b. $7500 c. $15,000 d. $22,500
c
Suppose an individual worker is on the backward-bending portion of her labor supply curve. Then, for a wage increase, the: a. income and substitution effects both increase desired work hours b. income and substitution effects are equal c. income effect is stronger than the substitution effect d. substitution effect is stronger than the income effect
d
Suppose an individual worker is on the upsloping portion of her labor supply curve. Then for a wage increase the: a. income and substitution effects both increase desired work hours b. income and substitution effects are equal c. income effect dominates the substitution effect d. substitution effect dominates the income effect
c
The Personal Responsibility and Work Opportunity Act of 1996: a. moved control over welfare spending from states to the federal government b. removed lifetime limits on welfare eligibility c. with few exceptions, requires welfare recipients to work after two years of receiving assistance d. provided immediate welfare benefits to qualified immigrants
a
The convex shape of a standard indifference curve reflects: a. a diminishing marginal rate of substitution of leisure for income b. an increasing marginal rate of substitution of leisure for income c. a constant marginal rate of substitution of leisure for income d. the wage rate
a
The higher the individual's wage rate: a. the steeper the budget constraint b. the lower the marginal rate of substitution of leisure for income c. the greater the desired number of hours of work d. the greater the desired number of hours of leisure
b
The income effect is: a. the combination of leisure and wage rate that maximizes one's income b. the 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 c. the part of the total change in desired work hours that is due to a change in the wage rate, with real income or utility constant d. always dominated by the substitution effect p.24
a
The optimal work-leisure position is achieved where: a. the MRS L,Y is equal to the wage rate b. the difference between the MRS L,Y and the wage is greatest c. the wage rate is greatest d. the MRS L,Y is greatest
d
The slope of a standard budget constraint reflects: a. a diminishing marginal rate of substitution of leisure for income b. an increasing marginal rate of substitution of leisure for income c. a constant marginal rate of substitution of leisure for income d. the wage rate
a
The slope of an indifference curve at any point reflects the: a. rate at which a person is willing to substitute leisure for income b. wage rate c. income effect d. substitution effect
c
The substitution effect is: a. the combination of leisure and wage rate that maximizes one's income b. the 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 c. the part of the total change in desired work hours that is due to a change in the wage rate, with real income or utility constant d. always dominated by the income effect p.25
d
Which of the following circumstances will increase the likelihood of an individual being a non-participant in the labor market? a. High earnings capacity in the labor market b. The absence of non-wage income c. A potential market wage that exceeds the individual's reservation wage d Availability of substantial non-wage income
a
Which of the following would unambiguously predict a decrease in desired hours of work? a. The substitution effect of a wage decrease b. The income effect of a wage decrease c. A wage increase d. The substitution effect of a decline in income tax rates
c
Which one of the following would be most likely to shift the labor supply curve to the right? a. A decrease in the wage rate b. A change in the indifference map following deterioration of working conditions c. A change in the indifference map following an improvement in working conditions d. A significant increase in dividend and interest income
