LESSON1 CONCEPT Chapters 1 and 2 from Modern Labor Economics

The labor force is equal to:

The number of people employed and unemployed

The labor force is made up of

all members of society who are at least 16 years old and are either employed or unemployed

If the salaries of accountants increase and other conditions remain the same, then

a firm will move to the left along its labor demand curve for accountants

Which of the following events will cause a surplus of workers?

a wage above the market-clearing wage

When wages increase, the substitution effect implies that employment will ________ and the scale effect implies that employment will ________.

decrease; decrease

A worker's total compensation consists of

earnings plus in-kind benefits plus deferred benefits

Workers in an industry are probably underpaid if

employers have difficulty hiring and retaining qualified workers.

The labor market does NOT

ensure that all workers are hired

If every worker wants ten dollars more per hour to work, then wages will

go up by less than $10.

If a single small firm's demand for secretaries increases, then

its wage rate will remain the same and its employment level will increase

When the price of labor falls, the quantity of ________ demanded will ________, but the effect on ________ is ambiguous.

labor; increase; capital

Students are classified as

not a part of the labor force.

If unions raise wages above their market clearing level, then

persistently high rates of unemployment will result.

Which type of economics is concerned with questions of "What is?"

positive economics

Economic rent is

the amount by which a worker's wage exceeds his or her reservation wage.

If the price of a product decreases due to a decrease in demand, then

the labor demand curve shifts to the left

If more people enter the labor market for architects, then

the wage rate will decrease and the employment level will increase.

If the wage rate is above W*,

there is an excess supply of labor, and the wage rate will fall.

If a union negotiates an industry-wide agreement to set wages above the equilibrium level,

there will be a surplus of labor in the industry.

From 1950 to 2009 the U.S. labor force

tripled.

If the price of capital increases in an industry and the scale effect dominates,

wages and employment levels will both decrease

If the price of capital increases in an industry and the scale effect dominates

wages and employment levels will both decrease.

Which of the following events will cause the labor demand curve to shift up and to the right? Its application rate will be higher than usual Its quit rate will be lower than usual. an increase in product demand

All of above occur.

Ceteris paribus literally means

"all else equal"

With some exceptions, the unemployment rate has tended to hover between which approximate values?

4% and 7%

Which of these persons is officially classified as being "not in the labor force"?

Meredith, who would start looking for work if he thought he could get a good job.

It has been said that teaching assistants to professors are underpaid. Which of the following would be evidence (if true) that they are underpaid?

Professors have a hard time finding qualified teaching assistants.

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.

Which of the following is not one of the questions answered by rational choice models?

Is Pareto efficiency equitable?

Which of the following occurs if a firm pays workers more than the market wage?

It will have a surplus of labor.