Economics 2307 Exam 3

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The value of marginal product of the tenth worker hired by a firm is $50. What is the maximum wage that should be paid to the worker

$50

if the number of unemployed workers in an economy is 4 million, and the size of the labor force in the economy is 16 million, the unemployment rate in the economy is

(4/16 = .25) 25%

If there are 48 million people in a country's labor force, and the number of potential adult workers in the country is 80 million, the labor force participation rate in the economy is

(48/80) = 60%

If the labor force participation rate in an economy is 50%, and there are 100 million potential adult workers in the economy, the size of the labor force in the economy will equal

(x/100 = .50) 50 million

The number of adults not in the work force of a country equals 6 million and the number of individuals employed is 5 million. If there are 12 million potential adult workers in the economy, what is the current unemployment rate in this country?

12 - 5 = 7 unemployed/ 12-6=6 workforce = 16.67 percent

If the number of employed workers in an economy is 8 million, the number of potential workers in the economy is 12 million, and the number of adults not in the labor force is 1 million, the number of unemployed people in the economy will equal

12 - 8 - 1 = 3 million

if the number of potential workers in a country is 25 million, and the size of the labor force in the country is 17 million, the number of adults not in the labor force will equal

25 - 17 = 8

If the number of employed people in a country is 21 million, and the number of unemployed workers in a country is 10 million. The size of the labor force is

31 million

Which of the following groups of people will be considered as unemployed

agricultural workers who are unemployed and have been looking for jobs for the last four weeks

Which of the following is likely to shift the demand curve for workers in rice farms to the right, assuming all else equal

an increase in the price of rice

Which of the following is likely to shift the demand curve for engineers rightward, assuming all else equal

an increase in the productivity of engineers

The impact of an increase in the wage rate on labor supply will be represented by

an upward movement along the labor supply curve

which of the following explains why frictional unemployment exists in an economy

it arises because it takes time for an unemployed worker to find a firm with a well-matched job vacancy

What will happen to the demand curve for workers in steel mills if some technology that increases their productivity is introduced, assuming all else equal

it may cause a rightward shift in the demand curve for the workers

Any change that causes a decrease in the demand for labor at a given wage rate will be represented by a ________ assuming all else equal

leftward shift in the labor demand curve

recessions are periods of

leftward shifts in labor demand

The size of the labor force in a country is equal to the

number of employed workers plus the number of unemployed workers in the country

Which of the following groups of people is included in the labor force of a country?

part-time paid workers

the unemployment rate is defined as

percentage of the labor force that is unemployed

Any change that affects the entire schedule relating the quantity of labor and the value of the marginal product of labor will ________ assuming all else equal

shift the labor demand curve

unemployment that arises when there is a mismatch between the quantity of labor demanded and supplied is referred to as

structural unemployment

If there is an increase in the number of discouraged workers in a country

the unemployment rate will decrease

As a firm hires more and more workers

the value of marginal product of the additional worker eventually decreases

a profit-maximizing firm will pay a worker

the value of the worker's marginal product

An implication of the fact that the labor market is perfectly competitive is that

there is always some unemployment

If a firm introduces some technology that substitutes capital for labor, ________, assuming all else equal

there will be a leftward shift in the labor demand curve of the firm

If the opportunity cost of working outside the home decreases then it is likely that

there will be a rightward shift in the labor supply curve

which of the following statements correctly differentiates between unemployed workers and discouraged workers

unemployed workers are counted in the labor force, but discouraged workers are excluded from the labor force

which of the following statements is true

unemployment will be higher if there is a leftward shift in the labor demand curve and there is downward wage rigidity in the labor market, everything else remaining unchanged

_________ refers to any factor that keeps the market wage above the level that would clear the labor market

wage rigidity

which of the following statements is true

wage rigidity can cause unemployment

Which of the following equations is true of a profit-maximizing firm?

wage= value of worker's marginal product

unemployment normally arises when

wages are below the market clearing wage level

Which of the following is likely to shift the demand curve for coffee workers to the left, assuming all else equal?

a decrease in the price of coffee

The impact of a decrease in the wage rate on labor supply will be represented by

a downward movement along the labor supply curve

which of the following is likely to shift the demand curve for corn farmers leftward, assuming all else equal

a fall in the productivity of farmers due to increased pest attacks

which of the following is likely to shift the labor supply curve to the right

a rise in the immigration of workers in search of better work opportunities

Which of the following is likely to cause an upward movement along the labor supply curve assuming all else equal

a rise in the wage rate

which of the following is likely to shift the labor supply curve to the left

a social change that discourages women to participate in the labor force

Which of the following statements is true?

as an economy experiences growth in GDP, the rate of unemployment is expected to decrease

Which of the following statements is true?

at wages above the equilibrium wage rate, quantity demanded of labor exceeds the quantity supplied of labor

which of the following statements is true?

at wages below the equilibrium wage rate, quantity supplied of labor exceeds the quantity demanded of labor

Contract negotiations between an employer and a labor union representing workers are referred to as

collective bargaining

workers who are underemployed are

considered as employed

The labor demand curve represents the relationship between the quantity of labor demanded at

different wage rates

If a firm hires a worker by paying him a wage higher than his value of marginal product

firing the worker will increase the firm's profits

frictional unemployment exists because

firms and workers have imperfect information about each other and the state of the economy

which of the following statements is true?

firms usually tend to lay off workers than cut wages to reduce costs

unemployment arising from job search is called

frictional unemployment

In a perfectly competitive labor market, at the equilibrium wage rate

frictional unemployment is zero

An employed individual is one who

has a full-time or part-time job

minimum wage laws

help in equating the quantity of labor demanded and supplied

at a fixed level of worker productivity

higher wages reduce profits

which of the following groups of people will not be considered as employed

housewives raising kids at home

Which of the following statements is true?

in the last thirty years, the unemployment rate in the US has never gone below 3%

Which of the following statements is true of the unemployment rate in a country?

is normally decreases during periods of economic expansion and increases during periods of economic contraction

the natural rate of unemployment

is the average of the unemployment rate in a country over time

which of the following statements is true

job search refers to the activities that workers undertake to find appropriate jobs

a reduction in wage is most likely to

lower worker productivity

which of the following statements is true of minimum wages?

minimum wages are normally set above the labor market clearing wage rate

As the wage rate increases, _______ assuming all else equal

quantity supplied of labor increases

Any change that causes an increase in the demand for labor at a given wage rate will be represented by an _________ assuming all else equal

rightward shift of the labor demand curve

Which of the following statements is true?

some people seeking paid jobs may not be able to find employment

which of the following statements is true?

technological innovation-----

which of the following statements is true?

technological innovation.....

everything else unchanged, following an adverse shift in the labor demand curve

the fall in employment will be greater if there is downward wage rigidity

If a firm hires a worker by paying him a wage lower than his value of marginal product

the firm should hire more workers to increase profits

If the number of potential workers in an economy increases while the size of the labor force remains unchanged

the labor force participation rate will fall

Which of the following statements is true when wages are above the market clearing wage?

the larger the gap between the current market wage and the market clearing wage, greater will be the amount of unemployment

Which of the following is true of the natural rate of unemployment

the natural rate of unemployment

Which of the following statements is true of unemployment

the rate of unemployment is positive in any well-functioning economy

in a frictionless labor market

the wage adjusts instantly to clear the market

A downward movement along the demand curve occurs when __________, assuming all else equal

the wage rate decreases

If at a given wage, the quantity supplied of labor exceeds the quantity demanded of labor

the wage rate will fall

which of the following statements is true?

there always exists some amount of unemployment in an economy

If the opportunity cost of working outside the home increases then it is likely that

there will be a leftward shift in the labor supply curve

Collective bargaining between unions and employers often lead

to wages that are higher than what workers would have received at equilibrium

Which of the following statements is true?

unemployment rate is higher among groups with lower educational attainment

The impact of an increase in the wage rate on labor demand is represented by _________, assuming all else equal

upward movement along the demand curve for labor

The labor supply curve is

upward slopping

downward wage rigidity arises when

workers and firms resist to wage cuts

if the natural rate of unemployment in a country is 6% and the unemployment rate in the country is 8%, the cyclical unemployment in the country must be

8-6= 2%

Which of the following statements is true?

All else equal, the incentives to look for a job is lower for an individual with a lower opportunity cost of time

The potential adult work force includes:

Civilian non-institutional population 16 years or older

If unemployment rate among workers with no high school diploma is represented by NS, unemployment rate among workers with a high school diploma is represented by HS, and unemployment rate among workers with a bachelor's degree is represented by BS, then which of the following statements is true?

NS>HS>BS

Which of the following equations is correct?

adults not in the labor force = potential adult workers - employed workers - unemployed

Which of the following equations is correct?

adults not in the labor force = potential workers - labor force

If the number of employed workers in an economy is 4 million, the number of unemployed people in the economy is 2 million, and the number of adults not in the labor force is 1 million, the potential adult workers in the economy is

7 million (1 = x - 4 - 2)

Which of the following statements is true?

Both employees and employers have complete information about each other in a frictionless labor market

Which of the following statements is true of the US economy in 2014, as per the records of the BLS

Number of employed workers > number of adults in the workforce > number of unemployed workers

What will happen to the demand curve for workers in cotton farms if the price of cotton falls, assuming all else equal

There will be a leftward shift in the demand curve for these workers

What will happen to the demand curve for tea workers if the price of tea increases, assuming all else equal

There will be a rightward shift in the demand curve for tea workers

which of the following statements is true

a higher wage can raise profits if productivity of workers is fixed.

Which of the following is likely to shift the demand curve for carpenters leftwards, assuming all else equal

a rise in the price of the tools used by carpenters

Which of the following is likely to shift the demand curve for carpenters rightward, assuming all else equal

a rise in the price of wood

which of the following statements is true

both efficiency wages and minimum wages increase unemployment

minimum wages:

can increase unemployment

efficiency wages

can lead to wage rigidity

any change that increases the quantity of labor supplied at all wage rates will

cause an upward movement along the labor supply curve

downward wage rigidity

causes the wage to be above the market clearing wage

Which of the following is a part of the potential work force of a country?

civilian non-institutionalized people ages 16 years and older

Which of the following is true of cyclical unemployment

cyclical unemployment is the deviation of unemployment from its natural rate

The slope of the labor demand curve can be attributed to the law of

diminishing marginal productivity of labor

Workers who are unemployed but are not actively looking for jobs are referred to as

discouraged workers

wages that are higher than the current market wage

dissuade workers from shirking

A worker is unemployed if he

does not have a job and has been actively looking for one in the prior four weeks and is available for work

everything else remaining unchanged, a sudden increase in the price of oil is likely to cause a

downward movement along the demand curve of labor

The labor demand curve is

downward sloping

wages that are above the wage that workers would accept, where the premium is paid to increase worker productivity, are referred to as

efficiency wages

Which of the following statements is true of a frictionless labor market

firms can instantly hire and fire workers

Which of the following groups of people will be considered as unemployed?

housewives who do not have a job but have been actively looking for jobs for the last two months

collective bargaining can

increase profitability of firms

downward rigidity is likely to

increase unemployment


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