LABOR PRTC. EXM.

(Figure: Change in Market Graphs) The popularity of smartphones led app developers to be more highly valued in the labor market than their desktop computer programming colleagues. Which of the following graphs best represents what would happen in the market for desktop computer programmers as smartphones became popular?

***NOT*** BOTH with the DUAL (2) BLUE LINES & SINGLE (1) RED LINE on the graph are WRONG. focus on the ***YES*** DUAL (2) RED LINES & SINGLE (1) BLUE LINE on the graph

Which of these will NOT happen when the wages of pharmacists fall?

***NOT*** Fewer people will enter the workforce to become pharmacists. AND Existing pharmacists will work fewer hours.

After a year delivering pizzas, you get a raise, and you cut back on your hours. For you:

***NOT*** both leisure and labor are normal goods. AND the substitution effect is stronger than the income effect.

During the summer, you work with a service that stocks vacation homes on a lake to save the owner's time. After your boss cuts your hourly wage by 10%, you service more homes, working more hours. This means that:

***NOT*** you are not following the Rational Rule for Workers. AND the income effect is smaller than the substitution effect.

(Figure: Labor Supply) Which graph shows the income effect dominating labor supply decisions at high but not low wages?

Graph with the almost HALF OVAL

The marginal revenue product is calculated as:

MPL × P

Suppose that the government increases the child tax credit, which increases the after-tax income of families with children. How will this decision affect the amount of labor supplied by parents, assuming that leisure is a normal good?

We don't know what will happen to the quantity of labor supplied, since we don't know whether the income effect or substitution effect will dominate.

Alena manages a small theme park. She hires one more custodian at $450 per week, making her park cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

Yes, it was a good move because it added more to revenue than to cost.

You apply for a job, using a 3-D printer to make coffee mugs, that pays $15 an hour. The mugs sell for $4 each. Part of the hiring process is to demonstrate how good you are at making the mugs. You make an average of five acceptable mugs per hour. Will you get the job?

Yes, since your marginal revenue product is at least as large as your marginal cost.

A firm's demand curve for labor will shift because of:

a change in the demand for a firm's product.

Since the advent of the digital age, the demand for in-person telephone operators has fallen dramatically. Which factor would account for this development?

an increase in the number of automated answering services

Diminishing returns to an input occur when:

at least one input is fixed.

In the labor market for computer programmers, the labor demand curve represents:

employers looking to hire programmers.

You decide to start a house-painting business next summer. When you hire employees, you are involved in a(n) _____ market, and when you and your employees paint the houses, you are involved in a(n) _____ market.

factor; output

When wages _____, if the substitution effect dominates, the quantity of labor supplied will _____.

increase; increase

As a rule, a profit-maximizing dance studio owner employs labor up to the point at which the marginal revenue product of the _____ unit of labor is _____ that factor's price (wage).

last; equal to

The less work people do, all other things equal, the:

more leisure they have.

The _____ measures how people respond to a change in relative prices when the wage rises.

substitution effect

Thomas works 55 hours per week as a legal-aid lawyer for the city of Chicago, and his wage is $35 per hour. If his wage increases to $70 per hour:

the substitution effect implies that he will work more.

(Table: The Market for Power Tools) Use Table: The Market for Power Tools. In the table, the total product of labor is shown for the hourly production of power tools. Assume that the market for power tools is perfectly competitive. If the price of a power tool is $2, and the wage rate is $90 per hour, the profit-maximizing quantity of labor is _____ workers. The Market for Power Tools Quantity of Labor | Total Product 0 | 0 1 | 20 2 | 50 3 | 90 4 | 120 5 | 140 6 | 150 7 | 150 8 | 140

zero