Labor Market FlipIt Questions
Ken's Chips just hired Layla to work on the assembly line. With an extra employee, it can produce 60 more bags of chips per day. It can sell each bag of chips at the prevailing market price of $2. Since it is a competitive firm, its marginal revenue is also $2. What is the marginal revenue product of labor (MRPL)?
$120
Ken's Chips just hired Simon to work on the assembly line. With an extra employee, it can produce 30 more bags of chips per day. It can sell each bag of chips at the prevailing market price of $2. Since it is a competitive firm, its marginal revenue is also $2. What is the marginal revenue product of labor (MRPL)?
$60
Ken's Chips just hired Allison to work on the assembly line. With an extra employee, it can produce 24 more bags of chips per day. It can sell each bag of chips at the prevailing market price of $3. Since it is a competitive firm, its marginal revenue is also $3. What is the marginal revenue product of labor (MRPL)?
$72
Which of the following elasticities of demand for labor is an inelastic demand?
0.5
What is the shape of the individual labor supply curve?
A backward bending curve
Which of the following will cause a shift in the labor demand curve?
A change in the demand for the final product, a change in the productivity of labor, and a change in the price of a complementary input
Kennedy Stores is hiring more employees because of an expansion. To get the high-quality employees that it seeks, it has offered very high wages. The high wages have increased the number of applicants because people from other industries are applying for the open positions. How would this be represented on the market labor supply curve?
A movement along the supply curve to the right
What is the shape of the market labor supply curve?
An upward sloping line
At what point does an individual labor supply curve begin to bend backwards?
As soon as the income effect begins to overtake the substitution effect
If short job applicants are discriminated against in the workforce, how would this affect the demand and wages for short job applicants in the labor market?
Demand for short workers would decrease and wages would fall.
Stores like Lowe's and some supermarkets have increased their use of self-service checkout stations. Based on the factors that change labor demand, what would you expect to happen as a result?
Fewer workers would be hired, since the firm would need fewer cashiers.
In the aftermath of the 2007-2008 financial crisis, the flow of immigration into the United States from its southern border stopped and began to reverse. What effect did this have on the U.S. labor supply?
It caused the market labor supply curve to shift left.
What effect did women in the workforce in greater numbers after World War II have on labor supply in the United States?
It caused the market labor supply curve to shift right
According to the Office of Miners' Safety, 18 major coal mining accidents during the 1920s resulted in over 400 deaths. In the last decade, however, only two accidents occurred, resulting in 15 deaths. What effect did this have on the coal mining market's labor supply curve?
It caused the market labor supply curve to shift right.
Potato blights in the 1840s caused massive migration from Ireland to the United States. What effect did this have on the U.S. labor supply?
It caused the market labor supply curve to shift right.
How does population growth affect labor supply?
It causes the market labor supply curve to shift right.
If an industry has a decrease in demand for its products, what is likely to happen to that industry's labor demand curve?
It will shift to the left.
If there is a sharp increase in the price of capital that can be substituted for labor, what will likely happen to the labor demand curve?
It will shift to the right
How would stricter child labor laws affect the labor supply of a developing country where child labor is common?
It would cause the market labor supply curve to shift left.
If companies are required to offer more fringe benefits to workers, what would happen in the labor market?
Labor supply would increase.
Luigi's Pizzeria is considering hiring two more workers, Jessie and Kathy. Suppose that the market wage for another worker is $80 per day. Jessie would generate a marginal product of 10 pizzas, while Kathy would generate a marginal product of 9 pizzas. If pizzas sell for $9 each, what should Luigi do?
Luigi's should hire both workers as long as their marginal product does not change. Submit
The demand for labor is equal to the value of the _____ for competitive firms.
Marginal product of labor
An increase in the demand for a firm's product will increase:
Marginal revenue product and the firm's demand for labor
Many successful business consultants begin to value their time more by becoming more selective in the clients they serve, thereby forgoing potential earnings. These consultants are at the point on their individual labor supply curve in which it:
Starts to bend backward
Suppose you get a raise at work and decide to work fewer hours as a result. What is happening?
The income effect is dominating your labor versus leisure decision.
Suppose you get a raise at work and decide to work more hours as a result. What is happening?
The substitution effect is dominating your labor versus leisure decision
Some proclaim that Google is one of the best places in the world to work. From its gourmet cafeterias where employees eat for free to the state-of-the-art gym, the Google campus is loaded with perks. What do these amenities mean for the labor supply curve that Google faces?
They cause the market labor supply curve to shift right.
What is a possible relationship between wage rates and hours worked when the income effect dominates?
Wage rates increase and hours of work decrease.
What is the relationship between wage rates and hours worked when the substitution effect dominates?
Wage rates increase and hours of work increase.
Trish left her job in a doctor's office to stay and home and raise a family. Is this a trade-off between work and leisure?
Yes, leisure is all activities that are not paid work.
2. Suppose you get a raise at work and decide to work more hours as a result. What is happening?
You are moving to the right along the upward sloping portion of your individual labor supply curve.
Some of the factors that affect the demand for labor include:
changes in productivity.
Katherine works as a software marketer, earning $40 per hour. She currently works 45 hours per week. When her wage increases to $50 per hour, Katherine increases her work hours to 60 hours per week. Based on this information, we know that Katherine:
has a stronger substitution effect than an income effect.
Reaching the backward bending portion of the individual labor supply curve:
is more likely to occur for a professional such as a lawyer or doctor than for a lower-skilled worker.
Suppose that a state passes a bill that would severely punish those who hired undocumented immigrants. As a result, thousands of migrant farm workers fled the state. What effect did this have on the state's market labor supply?
it caused the market labor supply curve to shift left
Demand for labor is MORE elastic:
the easier it is to substitute other factors for labor.
Demand for labor will be LESS elastic.....
the harder it is to substitute other factors for labor.
Demand for labor will be MORE elastic:
the higher is the elasticity of demand for the product
