13

Which of the following is not a reason why union firms can successfully compete with nonunion firms? A. Employee morale may be higher at union firms. B. Communication between management and workers is more formal and hence improved at union firms. C. Labor turnover is lower at union firms. D. Union firms are legally protected from price competition from nonunion firms.

D

Espresso Yourself Coffee Shop hires workers in a competitive labor market to make coffee. The ingredients required to make each cup of coffee cost 50 cents. The coffee shop's hourly output of coffee varies with the number of workers hired, as shown in the table. Each cup of coffee sells for $2.00. Number of workers Coffee (cups/hour) 0 0 1 25 2 45 3 60 4 70 5 75 The most the coffee shop would be willing pay the third worker is ______ per hour.

$22.50 2x15 = 30 30 - (15 x .50) = 22.5

Consider the accompanying figure representing the labor market below. Suppose the government passes a minimum wage requiring employers to pay at least $8.00 per hour. As a result of the imposition of the minimum wage, total economic surplus falls by ______ per day

12,000

Suppose the Tasty Taco Company produces tacos. The number of tacos it can produce each hour depends on the number of workers it hires, as shown in the accompanying table. In addition, each taco can be sold for 50 cents more than the cost of the ingredients needed to produce it. Number of workers per hour Number of tacos per hour 0 0 1 25 2 45 3 60 4 70 5 75 If the hourly wage for people who make tacos is $8, then how many workers should the Tasty Taco Company hire each hour?

2 Firms should expand employment as long as the VMPL is greater than the market wage. The VMPL of the first worker is $12.50, the second is $10.00, and the third is $7.50. Knowing this, the Tasty Taco Company should hire 2 workers per hour.

The marginal product of the 14th worker is 8 and the firm sells its output for $4 per unit. If labor is the only variable cost, then the value of the 14th worker's marginal product is

32 The value of the marginal product of the 14th worker is found by multiplying the marginal product of the 14th worker (8) by the output price ($4).

Matt is offered a job driving the campus shuttle bus from 4 p.m. to 6 p.m. each Monday. His reservation wage for this job is $7 per hour. If the campus transportation director offers Matt $50 per hour, how much economic surplus will Matt enjoy as a result of accepting the job?

43

According to the textbook, the real mean income of the top 5 percent of families increased by ______ percent from 1980 to 2016.

75

A firm is unlikely to hire a worker if: the additional revenue generated by hiring the worker is less than his or her wage. the additional output a firms gets by hiring the worker is greater than his or her wage. there are diminishing marginal returns to labor. the minimum wage set by law is less than the equilibrium wage in the market.

a

In a perfectly competitive labor market, if the value of marginal product of the last worker hired is $20 and the wage rate is $25, then the firm should: hire fewer workers. hire more workers. not change the number of workers it hires. either hire more or fewer workers, depending on the price of the firm's output.

a. hire fewer workers.

Suppose it is observed that the equilibrium wage and employment level have both risen in a competitive labor market. One can infer that the: Multiple Choice supply of labor has increased. demand for labor has decreased. demand for labor has increased. supply of labor has decreased.

c

Assume that the average male wage rate is 20% higher than the average female wage rate. One can infer that A. this is evidence of discrimination. B. employers undervalue female employees. C. customers overvalue male employers. D. this is evidence of discrimination only if all factors affecting productivity are equal.

d

Balanced, across the board U.S. income growth characterizes the period of the: Select one: a. 1980's to the present. b. entire 20th century. c. 1960's to 1990's. d. mid 1940's to the early 1970's.

d

Which of the following factors is not part of an individual's stock of human capital? Intelligence Years of education Employment status Initiative

employment status

Leo is a welfare recipient who qualifies for two means-tested cash benefit programs. If he does not earn any income, he receives $225 from each program. For each dollar he earns (which his employer is required to report to the welfare agency), his benefit from each program is reduced by 75 cents until the benefit equals zero. When Leo's earnings are less than $300, each extra dollar he earns causes his total income (earnings plus benefits) to:

fall by 50 cents. For each dollar he earns, Leo loses $0.75 from each program, so his total income will fall by 50 cents (= $1.00 - (2 × $0.75)).

In competitive labor markets, _____ demand labor and ______ supply labor.

firms; workers

Inga and Ron both work for the same firm on the same career ladder. Each has the same stock of human capital except for one difference: Inga has worked at the firm for 10 continuous years but Ron has had two leaves of absence mixed in with his 10 years of experience with the firm. One should expect:

inga should earn more than Ron

In 1996, the Personal Responsibility Act:

placed a five-year lifetime limit on welfare payments to any given recipient.

Those who do not favor programs aimed at reducing inequality argue that these programs:

reduce peoples incentive to work hard

Suppose the market wage for cashiers increases from $7 per hour to $9 per hour. As a result, Pat, who is a cashier, now works five more hours per week. On the other hand Chris, who is also a cashier, now works five fewer hours per week. Pat's behavior illustrates the ______ effect of a wage increase.

substitution The increase in the wage made leisure relatively more expensive for Pat, leading Pat to consume less of it.

Suppose that this graph describes the current labor market for high school teachers: Suppose supply of labor decreases. At the new equilibrium, wages would be ______ and ______ teachers would be hired.

Higher; Fewer

A firm's demand for labor will increase if the: price of the firm's output increases. price of the firm's output decreases. marginal product of labor decreases. wage rate rises.

a

According to the textbook, the best possible solution to the problem of poverty is: a combination of a negative income tax and public employment. to maintain the current system. a negative income tax with the tax credit equal to the poverty threshold. the complete elimination of all efforts to assist the poor.

a

If the elasticity of labor demand is greater than one, then imposing a minimum wage above the equilibrium wage will cause: the firms' total wage bill to fall. employment to rise. the firms' total wage bill to rise. no adverse employment effects.

a

If workers in one part of the labor market unionize, then all else equal, we would expect the wages of unionized workers to ______, and the wages of nonunionized workers to ______. Select one: a. rise; fall b. rise; remain unchanged c. remain unchanged; fall d. fall; remain the same

a

If demand for the product you make were to suddenly decline, you would expect the equilibrium price of the product to fall, which would lead to: Multiple Choice an increase in the VMP of each worker. a decrease in the VMP of each worker. no change the VMP of each worker because product prices don't affect worker productivity. a decrease in the marginal productivity of each worker

b

Matt is offered a job driving the campus shuttle bus from 4 p.m. to 6 p.m. each Monday. His reservation wage for this job is $7 per hour. Now suppose the director offers Matt $50 per hour, but also announces that the earnings from the job will be divided equally among Matt and four other students. Will Matt accept this job? No, because the other students are free riders. No, because it is not fair for Matt to do the work and then have to share the wage. Yes, because $50 divided by five is greater than Matt's reservation wage. Yes, because Matt believes in the Rawlsian theory of justice.

c

The reason nonunion firms do not always drive the union firms out of business is A. markets are not competitive. B. consumers look for the union label. C. union firms hire more selectively, employing workers with greater human capital. D. union firms cut corners in other areas.

c

to derive the labor demand curve for a particular market, one should ______for all the firms in the market. Multiple Choice vertically sum the value of the marginal product of labor curves vertically sum the marginal product of labor curves horizontally sum the value of the marginal product of labor curves horizontally sum the marginal product of labor curves

c

Differences in wage rates associated with differences in working conditions are called: compensating income differentials. equalizing wage ratios. conditional differentials. compensating wage differentials.

d

The optimal number of workers for a perfectly competitive firm to hire occurs when total labor cost equals total revenue. diminishing marginal productivity is first experienced. the wage rate equals the marginal product of the last worker. the wage rate equals the value of marginal product of the last worker.

d

Why might the supply curve in this market shift to the left? Multiple Choice Distance learning and computer technology replace human teachers Women enter the workforce in greater numbers Immigration by families with children increases the need for teachers More attractive employment opportunities become available in other professions

d

If technological developments increase the marginal product of labor, then the: supply of labor will increase. demand for labor will decrease. the equilibrium wage rate will decrease. demand for labor will increase

d demand for labor will increase An increase in the marginal product of labor will increase the VMP and, thus, labor demand.