Econ of Labor Multiple Choice

Capital on the Aldinger farm is fixed for the season. The Aldinger farm produces 1000 bushels of wheat per season with 2 workers and 1500 bushels per season with 3 workers. Over this range, the marginal product of labor in the farm is _____ bushels per workers

500 1000/2 = 500 1500/3 = 500

Which of the following is a positive statement? A. The minimum wage reduces employment of unskilled workers B. The government should limit the pay of chief executive officers C. Reducing income inequality would be a good thing D. The government should punish firms that violate ...

A. The minimum wage reduces employment of unskilled workers

Firms faced with high hiring and training costs may

ALL THE ABOVE: - pay workers substantially less than their marginal product while they are in training - Use statistical distribution in hiring - use internal labor markets

A backward bending labor supply curve occurs when

BOTH A AND B - leisure is a normal good and the substitution effect dominated at low wage levels - leisure is a normal good and the income effect dominates at high wage levels

When wages increase, the scale effect implies that the quantity of capital demanded will _________ and the substitution effect implies that quantity of capital demanded will _________.

DECREASE, INCREASE D>I

As a typical firm employs more workers, its marginal product of labor eventually

DECREASES

In a competitive labor market, workers are paid _______ the value of their contribution to production, at the margin

EXACTLY

Consider a monopsony market. An inward shift of the supply curve will lead to a wage that is ____ and employment that is _____.

HIGHER, LOWER

In the context of leisure and money income, which of the following properties of indifference curves (for a single person) is NOT true?

Indifference curves slope UP at their ends

Which of the following events will likely make indifference curves (between income on the vertical axis and household time on the horizontal axis) flatter?

New inventions that make it easier to substitute market goods for household time

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 workers are aware of the general path that their wage will take over their lifetime, what will happen when an anticipated increase in the wage occurs?

There will be a substitution effect but no income effect

Pareto efficiency implies that

all mutually beneficial transactions have taken place

Ceteris paribus, an industry dominated by a monopolist hires _____ if the industry were competitive

fewer workers than

Economic rationality

implies that people have an objective and pursue it in a consistent fashion

The elimination of mandated increase in overtime pay would

likely lead to an INCREASE in employment if lower costs cause a large scale effect.

In the context of Joe's labor supply, the budget line (or constraint) collects pairs of money income and leisure

that Joe is able to purchase, given his wage rate and how much time he has

In our simple model of labor supply, Walt participates in the labor market is and only of

the best wage offer he receives from employers exceeds his reservation wage

If more people enter the labor market for paralegals, then

the paralegal wage rate will DECREASE and the employment level will INCREASE

When the mobility costs are high

the supply of labor is less elastic