Employment and Unemployment

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The value of the 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

Scenario: Suppose that professors pay their teaching assistants​ $10 an hour to grade papers for their​ classes, and then the professors sell the graded papers back to the students in their classes for​ $.75 a paper. The following table shows the number of papers graded in a given number of hours. Hours of Labor Number of Papers Graded 1 40 2 75 3 105 4 130 5 142 6 149 7 154 What is the value of the marginal productivity of labor of the fifth hour of​ labor

$9

Structural unemployment can be caused by​ ____________

-labor unions -efficiency wages

The equation for the labor force participation rate labor force participation rate is defined as​ ____________.

100 x labor force/potential workers

which of these persons is offically unemployed?

A non-working individual who has looked for a job in the past week

Which of the following is an example of what economists refer to as job​ search?

A. An individual that engages in the job hunt by determining who is hiring and how much they pay. B. A person who applies for a​ high-paying job but does not​ qualify, so she begins searching for an appropriate position. C. People that engage in the job hunt by sending out resumes

Frictional unemployment can result when​ ____________. ​

A. firms and workers have imperfect information about each otherfirms and workers have imperfect information about each other. Your answer is correct. C. it takes time for firms to find applicants with the right skills and experienceit takes time for firms to find applicants with the right skills and experience. Your answer is correct. D. firms and workers have imperfect information about the state of the economyfirms and workers have imperfect information about the state of the economy.

Structural unemployment is the unemployment that arises​____________

B. when wage rigidity creates a persistent gap between labor supply and labor demand when wage rigidity creates a persistent gap between labor supply and labor demand.

The period from 2007 to 2009 was a time of economic contraction that came to be known as the​ "Great Recession." During periods of​ recession, most firms experience a decline in demand for their​ product, as well as a decline in the​ product's equilibrium price. All other things being​ equal, macroeconomic theory predicts that the wage of most workers should decline in recessionary periods.​ However, this was not the case in the Great​ Recession, or during many other economic downturns throughout recent history. Based on the discussion in the​ chapter, explain why this might be​ so, and what the implications are for unemployment.

During downturns workers are resistant to the lowering of wages and firms try to avoid doing so. This downward wage rigidity keeps the quantity of labor supplied greater than​ demand, causing unemployment.

Which of the following groups of people would not be considered​ employed?

Housewives raising kids at home

In February​ 2014, the United States added​ 175,000 jobs to the economy. Given this​ information, what can we say about the unemployment rate of the​ country?

It may​ increase, decrease, or not change depending on how many people started searching for jobs during the month.

Out of the following people, who is not considered a potential worker?

Joe, who is currently serving a prison sentence for robbery

What is the correct expression for calculating the Labor Force Participation Rate?

Labor Force Participation Rate = 100% * [(Employed+ Unemployed)/Potential Workers]

Which of the following people are counted as potential​ workers?

People who are already employed​ full-time

Which of the following would be classified as​ unemployed?

Someone who is not working and looked for work two weeks ago

Which of the following is not true regarding the natural rate of​ unemployment?

The natural rate of unemployment is 0 percent when the U.S. economy is not in a recession

In April​ 2012, the Bazanian​ Daily, a leading newspaper in the country of​ Bazania, carried a report titled​ "20,000 jobs added in the last​ quarter; unemployment rate shoots up from 5 percent to 6.7​ percent." How could the unemployment rate in Bazania increase even when new jobs were​ created?

The new jobs may have made discouraged workers optimistic enough to start applying for​ jobs, thus​ re-entering the labor force and being counted as​ unemployed, which causes the overall unemployment rate to increase

Suppose that in January there were 6 comma 000 comma 0006,000,000 workers in the labor​ force, with 5 comma 604 comma 0005,604,000 employed and 396 comma 000396,000 ​unemployed, implying a 6.6 percent unemployment rate. A month​ later, there were 6 comma 200 comma 0006,200,000 workers in the labor​ force, with 5 comma 779 comma 0005,779,000 employed and 421 comma 000421,000 unemployed.​ (Notice the number employed went from 5 comma 604 comma 0005,604,000 to 5 comma 779 comma 0005,779,000​, an increase of​ 175,000.)

The unemployment rate in February is 6.796.79​%. ​

Which of the following statements is​ true?

There always exists some amount of unemployment in an economy

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?

There will be a right shift of the demand curve for the workers

The graph on the right shows a labor market in equilibrium. The equilibrium wage is​ $10 per hour. At this​ wage, there are people who are not​ working, which is represented by the segment of the labor supply curve above the equilibrium wage. Why are these people not working in this​ market?

These people are only willing to work for wages above the​ market-clearing wage

What is the correct expression for calculating the unemployment rate?

Unemployment rate = 100% * [Unemployed/ (Employed+ Unemployed)]

What is the appropriate label for the yminus−​axis?

Wage rate

Let VMPL equal the value of the marginal product of labor and W equal the wage rate. When should a firm hire more workers to increase profit?

When VMPL > W

Which of the following best explains why the labor supply curve slopes​ upward

When wages​ increase, the opportunity cost of not working​ increases, leading people to seek more work hours

In a recent study for the National Bureau of Economic Research​ (NBER), four researchers looked at the effect of generous unemployment benefits on the local unemployment rate. They compared the unemployment situation in adjoining​ counties, which happened to lie in two different states that had different laws regarding the amount and duration of unemployment benefits.​ (Re-read the section on​ "A Natural Experiment of​ History" in Chapter 8 of the text to understand how the NBER research is based on a​ "natural experiment.") The authors of the NBER study found that the unemployment rate​ "rises dramatically in the border counties belonging to the states that expanded unemployment benefit​ duration" during the Great Recession. Why might this be​ so? Based on​ Hagedorn, Karahan, et​ al., "Unemployment Benefits and Unemployment in the Great​ Recession: The Role of Macro​ Effects." NBER working paper​ 19499, October 2013

With the longer duration of unemployment​ benefits, firms needed to keep wages high to attract people to work. This caused downward wage​ rigidity, leading to persistent higher unemployment.

A change in which of these factors would cause a movement along the supply curve for labor rather than a shift of the labor supply curve?

a change in the wage

Which of these factors will not cause the demand curve for labor to shift?

a change in wage

Suppose you are available for work but have not looked for a job for at least the last four weeks because you believe that no jobs are available. You would then be counted as __________.

a discouraged worker

If the current wage is above the market clearing-wage, there is __________ in the labor market.

a surpus of labor

Which of the following factors does not cause a shift in the labor demand​ curve?

changes in wage rate

The goal of a country with a healthy economy is to have​ ____________ equal to zero

cyclical unemployment

At full employment, __________.

cyclical unemployment is zero

If the labor demand is unchanged, an increase in the labor supply will __________ the equilibrium wage and __________ the number of workers employed.

decrease, increase

As the number of workers increases, the marginal product of labor __________ and the marginal revenue product of labor __________.

decreases, decreases

Which of these factors can cause the natural rate of unemployment to change?

demographic changes

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

discouraged workers

As the wage increases, the demand for labor curve:

does not shift, but the quantity demanded for labor decreases

This results in a labor demand curve that is

downward sloping

The labor market may take a long time to adjust to economic growth due to __________

excess capacity in production

When the economy is at full employment, which types of unemployment remain?

frictional and structural

The short-term unemployment that arises from workers, in the process of changing jobs, is called _________

frictional unemployment

What type of unemployment does job search lead​ to?

frictional unemployment

​Scenario: Jim,​ Pam, Michael, and Angela all worked for a paper company until the company went out of business. Jim was a​ salesman, Pam was a​ receptionist, Michael was the​ manager, and Angela was an accountant. Once the company went out of​ business, they all had to look for and consider other work opportunities. While these individuals are looking for other​ work, what type of unemployed are​ the

frictionally unemployed

The "normal or natural" underlying level of unemployment in the economy is the __________.

full employment rate of unemployment

Potential workers are classified as being unemployed when​ ____________.

hey do not have a paid​ job, have looked for work in the previous 4​ weeks, and are available for work

Unemployment statistics are measured and released by the Bureau of Labor Statistics​ (BLS), a division of the U.S. Department of Labor. The BLS officially classifies a person as being employed​ ____________.

if that person holds either a​ part-time or​ full-time paid job.

The US data on the unemployment rate since 1948 shows that the unemployment rate tends to ________during_________

increase, recessions

Government policies can help to reduce the levels of frictional and structural unemployment, but they can also help to increase them. Which of these policies can cause an increase in the levels of frictional and structural unemployment?

increasing minimum age

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

left shift of

The value of the marginal product of labor is the​ ____________.

market value of a​ worker's additional output for a firm

Explain whether each of these individuals will be counted as a part of the labor force. Alex recently retired after working for the same company for 30 yearsrecently retired after working for the same company for 30 years. John is a full minus time stay minus at minus home parent while his wife worksis a full−time stay−at−home parent while his wife works. We know that Alex is​ ____________, and we know that John is​ ____________.

not in the labor force​; not in the labor force.

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

The labor force equation is equal to the number employed________the number unemployed.

plus

Which of the following does not cause the labor supply curve to​ shift?

shifts in the labor demand curve that cause a change in the wage rate

As technology improves, the demand for labor curve:

shifts to the right

As the population increases, the labor supply curve:

shifts to the right

As the price of the final product increases, the demand for labor curve:

shifts to the right

Unemployment arising from a persistent mismatch between the skills and characteristics of workers and job requirements is called __________.

structural unemployment

Increases in the minimum wage will increase __________.

teenage unemployment

which of these groups is included in the labor force?

the unemployed

fricitional unemployment

the unemployment which exists in any economy due to people being in the process of moving from one job to another.

Which of the following is the equivalent of the demand curve for labor?

the value of marginal product of labor

A profitminus−maximizing firm will pay a worker​ ________.

the value of the​ worker's marginal product

A downward movement along the labor demand curve occurs when​ ________, assuming all else equal.

the wage rate decreases

the natural rate of unemployment is the ___________

unemployment rate that results when the economy produces the potential level of real GDP

If the minimum wage is set above the market-determined clearing wage, the __________.

unemployment rate will be higher than it would be without a minimum wage

structural unemployment

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves

Firms should hire workers until the​ ____________.

value of the marginal product of labor is at least as great as the wage paid

The labor demand curve represents the relationship between the quantity of labor demanded and the​ ________.

wage

The labor demand curve shows the quantity of labor demanded will decrease as

wages increase

Anthony owns a landscaping business that has 4 employees. His company is able to earn revenue of​ $600 per day. He knows that if he hires another​ worker, he would have to pay that worker​ $50 per day and the company would earn revenue of​ $680 per day if the new worker is hired. Determine the value of the marginal product of labor of the employee that Anthony is considering hiring

​$80

Sometimes new technology in production reduces the time that a worker takes to complete a task. Technological innovations can also completely replace a factory worker. Does this mean that technological progress will lead to​ large-scale unemployment

​No, some sectors may experience unemployment as a result of the innovations but overall productivity and incomes will​ increase, leading to more employment opportunities.

Scenario: The unemployment rate in Country Y is 6​ percent, and the labor force is equals about 200 million people. Who is considered part of the 6 percent of unemployed workers in Country​ Y?

​Peter, an engineer who became a stayminus−atminus−home husband after his startminus−up company went​ bankrupt, but he wants to find a new engineering job


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