Econ 102 Final Exam PSUGA

Table 30.1) Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. The marginal revenue product of the second worker hired is Multiple Choice: $4 per hour. $6 per hour. $24 per hour. $40 per hour.

$24 per hour

Figure 30.2) Unemployed labor at the equilibrium wage is equal to Multiple Choice: 34 workers. 28 workers. 0 workers. 10 workers.

0 workers.

If Janella increases her supply of labor by 6 percent in response to a 5 percent increase in the wage rate, her elasticity of labor supply must be Multiple Choice 5.0. 6.0. 1.2. 0.83.

1.2

If the elasticity of labor is 0.50, a 10 percent decrease in the wage rate will induce a Multiple Choice; 5.0 percent increase in the quantity of labor supplied. 10.0 percent decrease in the quantity of labor supplied .5.0 percent decrease in the quantity of labor supplied. 10.0 percent increase in the quantity of labor supplied.

5.0 percent decrease in the quantity of labor supplied.

As an individual earns additional income, the marginal utility of income tends to Multiple Choice: increase. decrease. remain constant. shift toward the origin.

decrease.

As labor productivity increases, which of the following shifts in the labor market should occur? Multiple Choice: Supply of labor should shift to the left. Demand for labor should shift to the left. Supply of labor should shift to the right. Demand for labor should shift to the right.

Demand for labor should shift to the right.

Marginal physical product diminishes as additional workers are hired because Multiple Choice: each worker has an increasingly smaller amount of other factors with which to work. each worker has an increasingly larger amount of other factors with which to work. later hires are not as skilled as earlier hires. later hires do not work as hard as earlier hires.

each worker has an increasingly smaller amount of other factors with which to work.

If the elasticity of labor is 0.60, a 15 percent increase in the wage rate will induce a Multiple Choice: 9.0 percent decrease in the quantity of labor supplied. 9.0 percent increase in the quantity of labor supplied. 4.0 percent decrease in the quantity of labor supplied. 4.0 percent increase in the quantity of labor supplied.

9.0 percent increase in the quantity of labor supplied.

If the number of employers for a particular type of labor increases, which of the following shifts should occur in the labor market for the particular type of labor? Multiple Choice Demand for labor should shift to the left. Supply of labor should shift to the left. Demand for labor should shift to the right. Supply of labor should shift to the right.

Demand for labor should shift to the right.

As marginal physical product diminishes, the marginal revenue product Multiple Choice also diminishes. is not affected. rises at a diminishing rate and eventually falls. rises.

also diminishes.

The opportunity cost of working is the Multiple Choice: wage rate. earnings that could be made in an alternative job. amount of leisure time that must be given up in the process. amount of consumption that is made possible.

amount of leisure time that must be given up in the process.

Cost efficiency refers to the Multiple Choice: amount of output associated with an additional dollar spent on input. effectiveness of labor in reducing production costs. MPP of labor divided by the product price. ability to produce at a level of output where the wage rate is equal to or less than the MRP.

amount of output associated with an additional dollar spent on input.

Republicans argue that labor demand is _______, so ________ jobs will be lost when the minimum wage is raised. Multiple Choice inelastic; few inelastic; many elastic; few elastic; many

elastic; many

The substitution effect of wages states that a decreased wage rate Multiple Choice: encourages people to consume less leisure. will shift the labor supply curve rightward. will lead to a movement up along the existing supply curve. encourages people to work fewer hours.

encourages people to work fewer hours.

The market supply of labor is Multiple Choice: the sum of all jobs created in the economy each year. different for each individual based on training and education levels. the total of all goods produced in the economy each year. the total quantity of labor that workers are willing and able to supply at alternative wage rates in a given period.

the total quantity of labor that workers are willing and able to supply at alternative wage rates in a given period.

Which of the following would not shift the market demand for labor, ceteris paribus? Multiple Choice: the wage paid to labor the demand for final products the productivity of labor the number of employers

the wage paid to labor

Other things being equal, which of the following would increase the market demand for labor? Multiple Choice: a fall in the wage rate an increase in the marginal productivity of labor a decrease in the cost-effectiveness of labor relative to other inputs a decrease in the market demand for the firm's output

an increase in the marginal productivity of labor

The marginal revenue product establishes Multiple Choice: an upper limit to the wage rate an employer is willing and able to pay. a lower limit to profit on the sale of a unit of output. a lower limit to the productivity of a worker. a lower limit to the wage rate demands of laborers.

an upper limit to the wage rate an employer is willing and able to pay.

If wages are relatively high, the individual labor supply curve may Multiple Choice: become horizontal. bend backward. bend outward. become vertical.

bend backwards.

When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending portion is Multiple Choice: negative. positive but less than 1. greater than 1. zero.

negative.

(Figure 30.2) A minimum wage of $12 will result in Multiple Choice: a shortage of 32 workers a shortage of 44 workers. a surplus of 20 workers. no shortage or surplus of workers.

no shortage or surplus of workers.

If a chair can be sold for $20 and it takes a worker two hours to make a chair, the marginal revenue product of this worker is Multiple Choice: $5 per hour. $10 per hour. $20 per hour. $2 per hour.

$10 per hour

(Table 30.2) The table shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hair stylist charges $60 per appointment. Suppose a hairstylist is paid $700 per week. How many hairstylists should a profit-maximizing salon hire? Multiple Choice: 1 2 3 4

2

Table 30.2) The table shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hair stylist charges $60 per appointment. Suppose a hairstylist is paid $600 per week. How many hairstylists should a profit-maximizing salon hire? Multiple Choice: 1 2 3 4

3

(Table 30.1) Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. How many workers should be hired? Multiple Choice: 2 3 4 5

5

(Table 30.3) Assume the cost of labor is $4 per unit and the cost of capital is $6 per unit. What is the cost efficiency of the second unit of capital? Multiple Choice: 6 units per $1 of cost 36 units per $1 of cost 56 units per $1 of cost9 .33 units per $1 of cost

6 units per $1 of cost

If the price of the output produced by a particular type of labor decreases, which of the following shifts should occur in the labor market for the particular type of labor? Multiple Choice Demand for labor should shift to the left. Supply of labor should shift to the left. Demand for labor should shift to the right. Supply of labor should shift to the right.

Demand for labor should shift to the left.

Which of the following is not true about the demand for factors of production? Multiple Choice: It is derived from the demand for the goods and services the firm produces. It is a function of diminishing marginal physical product. It depends on the firm's expected sales and output. It is a function of the elasticity of supply.

It is a function of the elasticity of supply.

The willingness and ability to work specific amounts of time at alternative wage rates is known as Multiple Choice: labor supply. labor demand. derived supply. derived demand.

Labor supply

The opportunity wage is often a better measure of executive pay than Multiple Choice: MPP because executives do not have an MPP. MRP because of the difficulty in quantifying executive output. derived demand because the elasticity of supply for an individual is greater than 1.0. opportunity costs of executive leisure.

MRP because of the difficulty in quantifying executive output.

Which of the following is correct when the MPP of labor is zero, ceteris paribus? Multiple Choice: Employment can be increased only by offering a higher wage rate. No further increases in output can be achieved by using additional units of labor. The marginal revenue product (MRP) is at a maximum. Additional units of labor must be employed because other factors of production are being wasted.

No further increases in output can be achieved by using additional units of labor.

Which of the following is true when the minimum wage is raised in a competitive market, ceteris paribus? Multiple Choice: All workers are better off. All workers are worse off. Some workers are better off and some are worse off. Workers are not affected by a minimum wage increase, only by a decrease.

Some workers are better off and some are worse off.

If the price for a box of kiwis is $40, the wage rate for kiwi laborers is $10 per hour, and a laborer can pick 3 boxes of kiwis per hour, the Multiple Choice: MRP is $30 per hour. MPP is $30 per hour. cost efficiency is 3/10 of a box per dollar. wage rate will tend to fall.

cost efficiency is 3/10 of a box per dollar.

If consumers decide to buy fewer strawberries, then the Multiple Choice: demand for strawberry pickers will fall. demand for strawberry pickers will rise. quantity demanded of strawberry pickers will fall. quantity demanded of strawberry pickers will rise.

demand for strawberry pickers will fall.

The demand for labor is downward-sloping because of Multiple Choice rising MPP. falling MC. diminishing returns to labor. rising P.

diminishing returns to labor.

Suppose that Silvia's Dance Studio uses both labor and capital to teach dance lessons. Given her current mix of labor and capital, the cost efficiency of labor is 1 dance lesson per dollar and the cost efficiency of capital is 5 dance lessons per dollar. Silvia should Multiple Choice: hire less labor and use more capital. use only capital to produce the lessons. use less capital and hire more labor. use only labor to produce the lessons.

hire less labor and use more capital.

Campbell loves to work. He does not receive any enjoyment from leisure time. The last dollar that he earns each year means just as much to him as the first dollar. Which of the following best describes the shape of Campbell's labor supply curve? Multiple Choice upward-sloping to the right. vertical. downward-sloping to the right. horizontal.

horizontal.

If the demand for hair gel increases, the effect on the hair gel manufacturing job market will Multiple Choice: increase the demand for labor and increase equilibrium wages. reduce the supply of labor and increase equilibrium wages. decrease the demand for labor and reduce equilibrium wages. have no impact on equilibrium wages.

increase the demand for labor and increase equilibrium wages.

Workers typically require higher wages in order to work additional hours because of the Multiple Choice: increasing opportunity cost of labor. increasing marginal utility of income. decreasing value of leisure time forgone. constant marginal utility of income.

increasing opportunity cost of labor.

A firm's demand for labor is referred to as a derived demand because Multiple Choice: it is derived from the marginal physical product (MPP) of labor. it is derived from the demand for the product that the labor is producing. the quantity of goods and services labor can purchase is derived from the wages labor receives from the firm. it is derived from the supply of labor.

it is derived from the demand for the product that the labor is producing.

The _____ states that the marginal physical product of a variable input will decline as more of the input is employed with a given quantity of other fixed outputs. Multiple Choice: law of increasing returns labor market efficiency rule minimum wage requirement law of diminishing returns

law of diminishing returns

If payroll taxes are increased, there will be a Multiple Choice: leftward shift of the labor supply curve. rightward shift of the labor supply curve. movement up the labor supply curve to the right. movement down the labor supply curve to the left.

leftward shift of the labor supply curve.

A firm should hire an additional worker as long as the wage rate is Multiple Choice greater than the MRP. greater than the MPP. less than or equal to the MRP. less than the MPP.

less than or equal to the MRP.

The elasticity of labor supply measures the Multiple Choice: opportunity cost of labor. magnitude of the substitution effect of labor. responsiveness of the wage rate to changes in the labor supplied. responsiveness of labor supplied to changes in the wage rate.

responsiveness of labor supplied to changes in the wage rate.

The efficiency decision involves choosing the input combination or process that Multiple Choice: produces the greatest output. results in the lowest output per dollar of input. results in the least cost for a given output. has the lowest ratio of MPP to input.

results in the least cost for a given output.

If there is an increase in the number of workers who want to work as accountants, there will be a Multiple Choice: leftward shift of the labor supply curve. rightward shift of the labor supply curve. movement up the labor supply curve to the right. movement down the labor supply curve to the left.

rightward shift of the labor supply curve.

An individual's labor supply curve Multiple Choice: slopes upward initially and then may bend backward. slopes downward initially and then may bend upward. always slopes downward. always slopes upward.

slopes upward initially and then may bend backward.

The labor supply curve will be positively sloped if the substitution effect of wages is Multiple Choice: equal to the income effect of wages. stronger than the income effect of wages. weaker than the income effect of wages. negative.

stronger than the income effect of wages.

One Front Page Economics article is titled "MBA Grads Willing to Sacrifice Money for Corporate Responsibility." In the headline, which of the following determinants of labor supply is most explicitly mentioned? Multiple Choice: tastes taxes prices of consumer goods expectations regarding prices of consumer goods

tastes.

If the MPP of an additional unit of labor is 4 units per hour, product price is constant at $5 per unit, and the wage rate is $19 per hour, then Multiple Choice: the additional unit of labor should be employed. the additional unit of labor should not be employed because it costs more than it is worth. the employer should lower wages and accept less employment of labor. product price must be reduced if profits are to be made.

the additional unit of labor should be employed.

The value of an hour of leisure can best be estimated as Multiple Choice: zero since no income is earned. the hourly wage that could have been earned. total recreational expenditures divided by hours of leisure. the value of any productive work, although such a value is lower than what could have been earned.

the hourly wage that could have been earned.

Figure 30.1) The shift in the labor supply curve from S1 to S2 means that Multiple Choice: the marginal utility of labor has decreased. workers are being paid higher wage rates, given their taste for work. the marginal utility of labor relative to leisure has increased. the demand for labor has increased, and this encourages more labor force participation.

the marginal utility of labor relative to leisure has increased

Ceteris paribus, all of the following result when the minimum wage is raised and is above the equilibrium in a competitive market except Multiple Choice: some workers lose their jobs. there are fewer workers available to work. workers with a marginal revenue product below the minimum wage are worse off. there are fewer jobs available.

there are fewer workers available to work.

Which of the following is inconsistent with a minimum wage that is set above the equilibrium wage? Multiple Choice: a labor surplus will result some workers will end up with higher wages some workers will end up unemployed there will be no unemployment

there will be no unemployment

When there are more qualified applicants than job openings, this indicates that the Multiple Choice: economy must be in a recession. labor supply curve must be backward-bending. wages being offered are too high. available jobs must be very desirable and pay high wages.

wages being offered are too high.

The labor supply curve will be negatively sloped if the substitution effect of wages is Multiple Choice: weaker than the income effect of wages. stronger than the income effect of wages. equal to the income effect of wages. negative.

weaker than the income effect of wages.

Which of the following is not a reason for the long-run leftward shift in the U.S. labor supply curve? Multiple Choice: An increase in the living standards among U.S. citizens has caused a change in wealth and income. The creation and growth of wealth transfer programs such as Social Security have caused a change in expectations. The creation of new and better jobs has widened the availability of good alternatives to leisure time. The creation of new, enticing recreational activities has caused a shift in tastes.

The creation of new and better jobs has widened the availability of good alternatives to leisure time.