FINAL EXAM
a) ignores the output effect.
"There is no substitute for an airline pilot: Someone has to fly the plane. Therefor, an increase in the wage of airline pilots will not change the number of pilots used by the airlines." This statement a) ignores the output effect. b) assumes that there are no more planes that can be used. c) ignores the input-substitution effect. d) assumes that pilots have no alternative employment opportunities.
Opportunity
A country has comparative advantage if it has a lower ____________________ cost of producing a good.
b) consumption possibilities curve
A curve showing the combinations of two goos that can be consumed when a nation specializes in a particular good and trades with another nation is the a) expected possibilities curve b) consumption possibilites curve c) production possibilities curve d) spending possibilities curve
Keep; lose; diners
A minimum wage for restaurant workers brings a good news workers who __________ their jobs, buts bad news to workers who __________ their jobs., as well as bad news for ____________________.
Wage; marginal-revenue product
A profit maximizing firm will hire the number of workers where ____________________ equals ____________________.
d) further restrictions on trade and a retaliatory response.
A restriction on imports is likely to lead to a) more open trade. b) no profits for firms in the country establishing the restriction. c) greater employment for the country establishing the restriction. d) further restrictions on trade and a retaliatory response.
Increases; output; increases
According to the input-substitution effect, a decrease in the wage (INCREASES/DECREASES) the quantity of labor per unit of (INPUT/OUTPUT), so the quantity of labor demanded (INCREASES/DECREASES).
Increase; increase
An increase in the demand for nurses will (INCREASE/DECREASE) the equilibrium wage and (INCREASE/DECREASE) the equilibrium quantity of nursing services.
Decrease; increase
An increase in the supply of nurses will (INCREASE/DECREASE) the equilibrium wage and (INCREASE/DECREASE) the equilibrium quantity of nursing services.
Below; above
If the equilibrium price under an import quota is (BELOW/ABOVE) the price that occurs with an important ban and (BELOW/ABOVE) the price that occurs with free trade.
d) up; increase
If the price of output increases, the marginal revenue product curve will shift ____________________ and the profit maximizing quantity of labor demanded will ____________________. a) up; decrease b) down; decrease c) down; increase d) up; increase
Opposite directions; decreases; increases
In the labor market, the income and substitution effects of an increase in wages operate in (OPPOSITE DIRECTIONS/ THE SAME DIRECTION). The substitution effect (INCREASES/DECREASES) the desired leisure time and the income effect (INCREASES/DECREASES) the desired leisure time.
Hurt; lose a) better off as a consumer, but worse off as a worker.
Suppose a country is about to open its market for trade. You work in an industry which has a comparative disadvantage. In the short tun, you would be (HELPED/HURT) as your Industry would (LOSE/GAIN) business. In the long run, you are a) better off as a consumer, but worse off as a worker. b) better off as a worker, but worse off as a consumer. c) no better or worse off as a consumer, but worse off as a worker. d) no better or worse as a worker, but worse off as a parameter.
Better off
Suppose a country has a comparative advantage in shirts but not computer chips. Workers in the shirt industry will be (WORSE OFF/BETTER OFF) with trade.
a) Firms hat use computer chips in production.
Suppose a country imposed tariffs on computer chips to protect its chip-making industries. What other types of firms in that economy might object to this policy? a) Firms that use computer chips in production. b) Firms that are subject to taxes. c) Firms that have products subject to tariffs. d) Firms that produce computer chips.
c) Susan quits her job
Suppose each nurse in the city of Florence initially works 36 hours per week at an hourly wage of $10 and the wage increases to $12. Reasonable responses to the higher wage do not include: a) Maureen works more hours. b) Sam works the same number of hours. c) Susan quits her job. d) Lester works fewer hours.
Imports; the government; quota; importers
T tariff-- a tax on (EXPORTS/IMPORTS)-- generate revenue for (THE GOVERNMENT/IMPORTERS), whereas an important (BAN/QUOTA) generates revenue for (THE GOVERNMENT/IMPORTERS).
Less; steeper
The demand for labor is (MORE/LESS) elastic in the short run. That means that the short-run demand curve is (STEEPER/FLATTER) than the long-run demand curve.
Decreases; decreases; increases
The logic of the income effect for leisure is that a decrease in the wages (INCREASES/DECREASES) real income, and if leisure is a normal good, this (INCREASES/DECREASES) leisure time and (INCREASES.DECREASES) labor time.
Increase; increase; decrease; decrease
The logic of the output effect is that an increase in the wage will (INCREASE/DECREASE) productions costs, so the price of output will (INCREASE/DECREASE) and the quantity of ouTput demanded will (INCREASE/DECREASE). As a result, the quantity of labor demanded will (INCREASE/DECREASE).
Decreases; increases; decreases
The logic of the substitution effect for leisure is that a decrease in the wage (DECREASES/INCREASES) the opportunity cost of leisure time, which (INCREASES/DECREASES) leisure time and (INCREASES/DECREASES) labor time.
c) the output and input-substitution effects.
The long-run demand curve for labor is negatively sloped because of a) economies of scale. b) the income and substitution effects. c) the output and input-substitution effects. d) diminishing marginal returns.
Marginal product of labor; price of the output
The marginal revenue product of labor equals ____________________ times ____________________.
Positively; wage
The market supply curve for labor is (NEGATIVELY/POSITIVELY) sloped, showing the relationship between the (WAGE/PRODUCTIVITY) and the quantity of labor supplied.
Decrease; increase
The minimum wage will (INCREASE/DECREASE) the quantity of labor demanded and (INCREASE/DECREASE) the quantity of labor supplied.
c) the combination of two goods that can be produced with a nation's resources
The production possibilities curve shows a) the combination of parts needed to produce two goods. b) the profit from two goods that can be produced with a nation's resources. c) the combination of two goods that can be produced with a nation's resources. d) the prices of two goods that can be produced with a nation's resources.
a) are the terms of trade
The rate at which units of one product can be exchanged for units of another product a) are the terms of trade b) is the absolute advantage c) is the marginal cost d) is the comparative advantage
Income; substitution; opposite
We cannot predict a worker's response to an increase in the wage because the ____________________ effect and the ____________________ effect work in ____________________ direction(s).
Domestic supply; domestic demand
if a country band the importation of a particular good, the market equilibrium is shown my the inter section of the ____________________ curve and the (DOMESTIC DEMAND/FOREIGN DEMAND) curve.
$200; $180
Consider the market for newspaper delivery kids in Kidsville. Each news kid receives a piece rate of $2 per subscriber per month and has a fixed territory that initially has 100 subscribers. How much is the monthly income of a typical news kid? $__________ Suppose the new city council of Kidsville passes a law that establishes a minimum piece rate of $3 per subscriber per month. As a result, the publisher increases the monthly price of a subscription by 20%. The price elasticity of demand for subscriptions is 2.0. Now, how much is the monthly income of a typical news kid? $_________
Tariff
From the perspective of the government, a (QUOTA/TARIFF) is better.
c) steeper than the long-run because the firm cannot change its production facility in the short run.
The short-run market demand curve for labor is a) flatter than the long-run demand because the change in output is unpredictable in the long run. b) flatter than the long-run because the firm cannot change its production facility in the short run. c) steeper than the long-run demand because the firm cannot change its production facility in the short run, d) steeper than the long-run demand because the change in output is unpredictable in the short run.
Exchanged
The terms of trade is the rate at which two goods can be ____________________ for one another.
Retaliatory
Threatening to impose a tariff on a country's exports if it doesn't open up to its markets to trade is an example of a (RETALIATORY/HEAVY-HANDED) policy.
d) add up the labor demands of all the firms for each wage.
To get the market demand curve for labor, a) multiply the number of firms by the wage paid by the typical firm. b) for each level of labor demand, add up the wages of all the firms. c) divide the number of firms by the quantity of labor demanded by the typical firm. d) add up the labor demands of all the firms for each wage.
True
True or false: Countries will always export the goods in which they have a comparative advantage.
False
True or false: If every worker in a particular occupation works exactly 40 hours per week, regardless of the wage, the market supply curve is vertical.
c) a decrease in supply, an increase in the price consumers have to pay for the product, and a decrease in the quantity available for them to buy.
When a country imposes an import ban on a product, there will be a) an increase in supply, a decrease in the price consumers have to pay for the product, and a decrease in the quantity available for them to buy. b) an increase in supply, a decrease in the price consumers have to pay for the product, and an increase in the quantity available for them to buy. c) a decrease in supply, an increase in the price consumers have to pay for the product, and a decrease in the quantity available for them to buy. d) a decrease in supply, a decrease in the price consumers have to pay fo the product, and an increase in the quantity available to them.
b) consumption increases in both nations.
When two countries switch from self-sufficiency to specialization and trade increases, a) all workers in both nations are worse off. b) consumption increases in both nations. c) all workers in both nations are better off. d) production decreases in both nations.
b) The marginal product of labor is the change in cost from one additional unit of labor.
Which of the following statements is false? a) The MRP curve shows the relationship between the MPLabor and the quantity of labor demanded in the short run. b) The marginal product of labor is the change in cost from one additional unit of labor. c) The MRP curve is also the firm's short-run demand curve for labor. d) The MRP is equal to the price of output times the marginal product of labor.
d) all of the above are correct
Your favorite professional team is considering hiring a new player for $6 million per year. It will be sensible (profitable) to hire the player if his ____________________ is greater than the $6 million cost. a) MRP b) extra revenue generated c) marginal-revenue product d) all of the above are correct
Less; more; downward
Your objective is to earn exactly $150 per week. If your wage increases from $8 to $11 per hour, you will respond (MORE/LESS) hours instead of (MORE/LESS) hours. In other words, your labor-supply curve is (UPWARD/DOWNWARD) sloped.
