ECON 202 Module 11.1-11.6

a. the extra revenue the firm realizes from hiring that worker.

A firm's primary interest when it hires an additional worker is a. the extra revenue the firm realizes from hiring that worker. b. the cost of hiring the additional worker. c. how the average output of the firm will be affected by this new worker. d. whether or not the new worker gets along with the firm's existing workers.

a. human capital.

A person's stock of skills to produce economic value is referred to as: a. human capital. b. personal wealth. c. personal capital. d. fixed capital.

c. an increase in the demand for labor.

An increase in the supply of capital, which is a complement to labor, will lead to a. an increase in the quantity of labor demanded. b. a decrease in the quantity of labor demanded. c. an increase in the demand for labor. d. a decrease in the demand for labor.

a. true

An increase in the supply of capital, which is a substitute to labor, will lead to a decrease in the demand for labor. a. true b. false

a. true

An increase in wages raises the opportunity cost of leisure and leads to an increase in the quantity of labor supplied. a. true b. false

b. the relationship between wages and the quantity of labor that she is willing to supply.

An individual's labor supply curve shows a. the relationship between wages and the quantity of labor that a firm is willing to employ. b. the relationship between wages and the quantity of labor that she is willing to supply. c. the relationship between the quantity of hours worked and total income earned by that individual. d. the maximum wage rates offered to that individual by various potential employers.

a. because of the law of diminishing returns.

As more output is produced, the marginal product of labor declines a. because of the law of diminishing returns. b. because the firm's marginal revenue declines. c. if firms reduce the wage paid to labor. d. if the firm's output supply curve is inelastic.

a. as wages increase the opportunity cost of leisure increases.

At low wages, the labor supply curve for most people slopes upward because a. as wages increase the opportunity cost of leisure increases. b. the demand for labor is perfectly elastic at low wages. c. as wages increase income also increases unless hours worked decrease. d. the supply of labor is perfectly inelastic at low wages.

marginal product of labor

the additional output a firm produces as a result of hiring one more worker

d. higher wages that compensate workers for unpleasant aspects of a job.

Compensating differentials are a. wages paid to workers where the supply of labor is great relative to demand. b. higher wages that compensate the more experienced workers in a field. c. non-monetary benefits from being employed, such as health-care benefits. d. higher wages that compensate workers for unpleasant aspects of a job.

a. hazardous jobs

Compensating differentials are associated most closely with which of the following? a. hazardous jobs b. differences in education c. comparable worth d. economic discrimination

b. customers refuse to buy products produced by a racially diverse workforce.

Customer discrimination occurs when a. customers refuse to buy products they believe to be of poor quality. b. customers refuse to buy products produced by a racially diverse workforce. c. workers refuse to serve customers of a different race. d. a firm pays workers different wages based on irrelevant factors.

b. how many workers to hire at each wage rate.

Firms use information on labor's marginal revenue product to determine a. how much to produce at each output price. b. how many workers to hire at each wage rate. c. how much marginal product to produce at each wage rate. d. how much labor services to supply at each wage rate.

a. true

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials. a. true b. false

b. The demand for labor will increase and the equilibrium wage and quantity of labor will increase.

How will an increase in labor productivity affect equilibrium in the labor market? a. The demand for labor will decrease because fewer workers will be needed to produce the same output. The equilibrium wage and quantity of labor will decrease. b. The demand for labor will increase and the equilibrium wage and quantity of labor will increase. c. The supply of labor will increase and the equilibrium wage and quantity of labor will increase. d. The demand for jobs will increase and the equilibrium wage and quantity of labor will increase.

a. shift to the left.

If an industry introduces a labor-saving technology in production, the demand curve for labor in that industry is likely to: a. shift to the left. b. become vertical. c. become horizontal. d. shift to the right.

a. true

Increases in population shift the market supply curve for labor to the right. a. true b. false

marginal revenue product of labor

the change in a firm's revenue as a result of hiring one more worker

derived demand

the demand for a factor of production; it depends on the demand for the good the factor produces

income effect

the higher our wages get, the more leisure we'll buy and the less we'll work

wage

the opportunity cost of leisure is _______.

substitution effect

when wages go up, leisure has become more expensive

b. statistical discrimination

Employers engaging in ________ try to enhance their profits. a. moral discrimination b. statistical discrimination c. taste-based discrimination d. psychological bias

b. taste-based discrimination.

Discrimination that occurs when people's preferences cause them to discriminate against a certain group is referred to as: a. cultural discrimination. b. taste-based discrimination. c. group discrimination. d. special interest group discrimination.

c. the substitution effect of the wage increase outweighs the income effect.

If Molly Bee increases her work hours when her wage increases, then a. the income effect of the wage increase outweighs the substitution effect. b. leisure is an inferior good to Molly. c. the substitution effect of the wage increase outweighs the income effect. d. Molly is spending beyond her means.

c. $80

If a worker can produce 20 units of output which can be sold for $4 per unit, what is the maximum wage that firm should pay to hire this worker? a. $80 minus the firm's profit markup b. It depends on what the going wage rate is in the labor market. c. $80 d. There is insufficient information to answer the question.

d. an increase in the quantity of labor demanded and a decrease in the equilibrium wage.

If the demand for labor is unchanged, an increase in the supply of labor will lead to a. a decrease in the quantity of labor demanded and an increase in the equilibrium wage. b. an increase in the quantity of labor demanded and an increase in the equilibrium wage. c. a decrease in the quantity of labor demanded and a decrease in the equilibrium wage. d. an increase in the quantity of labor demanded and a decrease in the equilibrium wage.

b. false

If the demand for labor is unchanged, population growth will increase the supply of labor and increase the equilibrium wage. a. true b. false

b. increase; an increase

In situations where new technologies are considered complementary to workers, demand for these workers will ________, resulting in ________ in the equilibrium wage. a. decrease; a decrease b. increase; an increase c. decrease; an increase d. increase; a decrease

b. The demand for lawyers shifts to the left.

In the legal sector, some practice areas have declined in recent years. For example, personal-injury and medical-malpractice cases have been undercut by state laws limiting class-action suits, out-of-state plaintiffs, and payouts on damages, and securities class-action litigation has declined in part because of a buoyant stock market. How does this affect the market for lawyers? a. The supply of lawyers shifts to the left. b. The demand for lawyers shifts to the left. c. The quantity of lawyers demanded decreases and this is represented by a movement along the demand curve. d. Both the demand and supply curves decrease.

c. a compensating differential.

Larry and Mike are equally skilled construction workers employed by the Brown and Root Company. Larry's job is riskier because he typically works on a scaffold 1,000 feet above ground. Larry's higher wage rate is the result of a. economic discrimination. b. a negative feedback loop. c. a compensating differential. d. a higher marginal revenue product.

c. the change in total revenue that results from hiring another worker.

Marginal revenue product for a perfectly competitive seller is equal to a. the output price multiplied by the number workers hired. b. the output price multiplied by the total product of labor. c. the change in total revenue that results from hiring another worker. d. the marginal cost of production.

d. equal to the marginal product of labor multiplied by the output price.

Marginal revenue product of labor for a competitive seller is a. the marginal revenue of the product multiplied by the output price. b. the change in total product from hiring one more worker. c. the output price multiplied by the quantity sold. d. equal to the marginal product of labor multiplied by the output price.

d. geographic location

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination. Which of the following factors is not another factor that explains part of this gap? a. differences in experience b. differing preferences for jobs c. differences in education d. geographic location

b. the marginal revenue product of baseball players is greater than the marginal revenue product of college professors.

One reason why the average salary of Major League Baseball players is higher than the average salary of college professors is a. college professors accept lower salaries in exchange for better working conditions. b. the marginal revenue product of baseball players is greater than the marginal revenue product of college professors. c. competition among baseball club owners forces player salaries to be much higher than the players' marginal revenue products. d. the careers of most baseball players are much shorter than the careers of most college professors.

c. There will be a fall in the wage rate in the country and an increase in the employment level.

Other things remaining the same, which of the following is likely to happen if all homemakers in an economy start working as paid labor? a. There will be an increase in both the wage rate and the employment level. b. There will be a fall in both the wage rate and the employment level. c. There will be a fall in the wage rate in the country and an increase in the employment level. d. There will be an increase in the wage rate in the country and a fall in the employment level.

d. There will be a decrease in both the wage rate and the employment levels in the flour industry.

Other things remaining the same, which of the following is likely to happen if there is a decrease in the price of flour products? a. There will be an increase in both the wage rate and the employment levels in the flour industry. b. There will be a decrease in the wage rate and an increase in the employment levels in the flour industry. c. There will be an increase in the wage rate and a decrease in the employment levels in the flour industry. d. There will be a decrease in both the wage rate and the employment levels in the flour industry.

b. painting water towers is more risky than painting houses.

Painters who paint water towers earn higher wages relative to painters who paint houses because a. the tower painters' union is probably more powerful than the house painters' union. b. painting water towers is more risky than painting houses. c. the supply of water tower painters exceeds the supply of house painters. d. the demand for tower painters is greater than the demand for residential painters.

a. by demonstrating to your manager the marginal revenue product your employment contributes to the sandwich shop

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise. How can you convince your manager that you are worth more money than you are currently being paid? a. by demonstrating to your manager the marginal revenue product your employment contributes to the sandwich shop b. by threatening to quit if he refuses to give you a raise c. by explaining to him how difficult it is for you to save enough money to go to college d. by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop

b. false

Technological advancements that increase labor's productivity shift the labor supply curve to the right. a. true b. false

b. if the substitution effect outweighs the income effect, the labor supply curve slopes upward, but if the income effect outweighs the substitution effect, the labor supply curve is backward bending.

The combined effect (both income and substitution) of a wage increase is that a. the substitution effect always dominates, leading to more work at a higher wage. b. if the substitution effect outweighs the income effect, the labor supply curve slopes upward, but if the income effect outweighs the substitution effect, the labor supply curve is backward bending. c. if the substitution effect outweighs the income effect, the labor supply curve is backward bending, but if the income effect outweighs the substitution effect, the labor supply curve slopes upward. d. the income effect always dominates, leading to less work at a higher wage.

a. marginal product of the worker should be equal to or greater than the wage rate.

The decision rule for a profit-maximizing firm operating in a competitive market to hire an additional worker is the value of the: a. marginal product of the worker should be equal to or greater than the wage rate. b. average product of the worker being hired should be equal to the wage rate. c. average product of the worker being hired should be lower than the wage rate. d. marginal product of the worker should be equal to or lower than the wage rate.

d. the additional revenue received from selling the output produced as a result of hiring an additional worker.

The demand for labor depends primarily on the additional output produced as a result of hiring an additional worker and a. the payment made to the worker for producing the additional output. b. the elasticity of demand for the output produced by the worker. c. the number of workers willing to produce the additional output. d. the additional revenue received from selling the output produced as a result of hiring an additional worker.

d. it is derived from the demand for products that use labor in the production process.

The demand for labor is described as a derived demand because a. it is derived by producers seeking to make profits by starting new businesses. b. it is derived from government institutions which rely on labor markets for the purpose of raising tax revenue. c. it is derived by workers seeking to earn income to fund the consumption of goods and services. d. it is derived from the demand for products that use labor in the production process.

b. Technological advances in the entertainment industry increase the revenue that successful movies can earn. This has increased the movie studios' willingness to pay high salaries to movie stars.

The difference between the salaries paid to movie stars and to actors who play supporting roles is much greater today than it was in the 1930s and 1940s. What factor explains this increase in relative salaries over time? a. Agents of movies stars are effective in obtaining large salaries for their clients today. Few movie stars had agents to negotiate for them in the 1930s and 1940s. b. Technological advances in the entertainment industry increase the revenue that successful movies can earn. This has increased the movie studios' willingness to pay high salaries to movie stars. c. There was no actors' union in the 1930s and 1940s. The rise of strong actors' unions has caused salaries of movies stars to be greater today than in previous years. d. The studio system that dominated the industry in the 1930s and 1940s no longer exists. The studio system allowed movie studios to sign actors to long-term contracts that kept salaries down.

d. contribution of an additional unit of labor to a firm's revenue.

The dollar value of the marginal product of labor is the: a. amount of output produced by the first unit of labor hired by a firm. b. extra output that is produced by hiring an additional unit of labor. c. value of the output produced by all the workers in a firm. d. contribution of an additional unit of labor to a firm's revenue.

c. the difference between marginal revenue product and the wage of the worker.

The firm's gain in profit from hiring another worker is a. the marginal revenue product of the extra worker. b. the reduction in costs from hiring another worker. c. the difference between marginal revenue product and the wage of the worker. d. the extra output of the extra worker.

d. the higher wage income causes workers to take more leisure and work less.

The income effect of a wage increase is observed when a. leisure's higher opportunity cost causes workers to take less leisure and work more. b. leisure's higher opportunity cost causes workers to take more leisure and work less. c. the higher wage income causes workers to take less leisure and work more. d. the higher wage income causes workers to take more leisure and work less.

a. the percentage of the population from age 16 to 65 decreases.

The labor supply for an industry would decrease if a. the percentage of the population from age 16 to 65 decreases. b. a greater percentage of women want to work outside the home. c. the wage rate falls. d. the government welcomes foreign workers into the country.

a. true

The most important factor contributing to wage differences in the labor market is differences in the level of education and training among workers. a. true b. false

b. false

The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services. a. true b. false

c. the demand for a factor of production that is derived from the demand for the good the factor produces.

The term "derived demand" refers to a. the demand for financial products called derivatives. b. a firm's estimated demand curve derived from sales data. c. the demand for a factor of production that is derived from the demand for the good the factor produces. d. a demand curve that derives from the availability of resources.

d. The equilibrium wage and the equilibrium quantity of labor rise.

What happens to the equilibrium wage and quantity of labor if output price rises? a. The equilibrium wage falls and the equilibrium quantity of labor rises. b. The equilibrium wage rises and the equilibrium quantity of labor falls. c. The equilibrium wage and the equilibrium quantity of labor fall. d. The equilibrium wage and the equilibrium quantity of labor rise.

a. The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue.

What is the difference between labor's marginal product and marginal revenue product? a. The marginal product of labor is the additional labor's contribution to the firm's total output while the marginal revenue product is the additional labor's contribution to the firm's total sales revenue. b. Labor's marginal product is a measure of labor's productivity while labor's marginal revenue product is a measure of labor's ability to sell the firm's products. c. The marginal revenue product of labor is the dollar value of hiring an additional worker while the marginal product of labor is the increase in the firm's physical output as a result of hiring an additional worker. d. The marginal product of labor is the increase in output as a result of hiring an additional worker while the marginal revenue product of labor is the increase in profit as a result of hiring an additional worker.

a. statistical discrimination.

When expectations cause people to discriminate against a certain group, it is referred to as: a. statistical discrimination. b. preferential bias. c. taste-based discrimination. d. implicit discrimination.

d. Employers engaging in taste-based discrimination are willing to forego profits, whereas employers engaging in statistical discrimination are trying to enhance profits.

Which of the following correctly identifies a difference between taste-based discrimination and statistical discrimination? a. Taste-based discrimination is observed in the service sector, whereas statistical discrimination is observed in the manufacturing sector. b. Taste-based discrimination is observed in the manufacturing sector, whereas statistical discrimination is observed in the service sector. c. Employers engaging in statistical discrimination are willing to forego profit, whereas employers engaging in taste-based discrimination are trying to enhance profits. d. Employers engaging in taste-based discrimination are willing to forego profits, whereas employers engaging in statistical discrimination are trying to enhance profits.

b. The demand for labor is derived from the demand for final goods, whereas the demand for final goods is independent of the demand for labor.

Which of the following correctly identifies the difference between the demand for labor and the demand for final goods? a. The demand for labor is fixed over time, whereas the demand for final goods changes according to changes in tastes and preferences. b. The demand for labor is derived from the demand for final goods, whereas the demand for final goods is independent of the demand for labor. c. The demand for final goods is derived from the demand for labor, whereas the demand for labor is independent of the demand for final goods. d. The demand for final goods is fixed over time, whereas the demand for labor changes according to the changes in tastes and preferences.

d. because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon.

Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons? a. because it takes far more skill and training to be a major league baseball player than to be a neurosurgeon b. because the total value of baseball games is much higher than the total value of neurosurgery c. because the supply of talented major league baseball players is relatively low compared to the supply of neurosurgeons. Therefore, major league baseball players exert far more market power than neurosurgeons. d. because the supply of talented major league baseball players is low relative to its demand compared to the supply of neurosurgeons. Therefore, adding another player yields far greater marginal benefit than adding another neurosurgeon.

c. the wage rate

Which of the following factors will not cause the labor demand curve to shift? a. changes in technology b. increases in human capital c. the wage rate d. a change in the price of the product produced with labor

a. Women tend to spend more time out of the labor force as compared to men.

Which of the following is a likely reason for wage inequality between men and women? a. Women tend to spend more time out of the labor force as compared to men. b. Men tend to spend more time out of the labor force as compared to women. c. Women generally tend to have higher educational qualifications than men. d. Men generally tend to have higher education qualifications than women.

a. Differences in wages can be attributed to many other factors as well, such as differences in productivity and preferences.

Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labor market? a. Differences in wages can be attributed to many other factors as well, such as differences in productivity and preferences. b. Employers who discriminate pay an economic penalty. c. Employers who discriminate are likely to do so in overt ways such as awarding some workers with benefits-in-kind. d. Ultimately, employers who discriminate cannot remain profitable.

d. A right shift in the supply curve for labor, without any change in the demand curve for labor

Which of the following is likely to cause a decrease in the wage rate and an increase in the employment level of a country? a. A left shift in the demand curve for labor, without any change in the supply curve for labor b. A left shift in the supply curve for labor, without any change in the demand curve for labor c. A right shift in the demand curve for labor, without any change in the supply curve for labor d. A right shift in the supply curve for labor, without any change in the demand curve for labor

c. A left shift in the supply curve for labor, without any change in the demand curve for labor

Which of the following is likely to cause an increase in the wage rate and a fall in the employment level in a country? a. A left shift in the demand curve for labor, without any change in the supply curve for labor b. A right shift in the supply curve for labor, without any change in the demand curve for labor c. A left shift in the supply curve for labor, without any change in the demand curve for labor d. A right shift in the demand curve for labor, without any change in the supply curve for labor

a. Employers are willing to forego profits when engaging in taste-based discrimination.

Which of the following statements is true? a. Employers are willing to forego profits when engaging in taste-based discrimination. b. Employers are willing to forego profits when engaging in special interest group discrimination. c. Employers are willing to forego profits when engaging in statistical discrimination. d. Employers are willing to forego profits when engaging in cultural discrimination.

d. The income effect and the substitution effect of a wage rate change work in opposite directions.

Which of the following statements is true? a. The slope of the labor supply curve depends only on the substitution effect of a wage rate change. b. The slope of the labor supply curve depends only on the income effect of a wage rate change. c. The income effect and the substitution effect of a wage rate change work in the same direction. d. The income effect and the substitution effect of a wage rate change work in opposite directions.

d. Women have, on average, less workforce experience than men of the same age.

Women typically earn less than men, even in the same occupation. Which of the following is an explanation for this discrepancy? a. Women do not work as hard as men because of cultural influences. b. Women are, on average, less motivated than men and therefore tend to avoid taking on more responsibilities. c. Women tend to take riskier jobs and earn compensating wage differentials. d. Women have, on average, less workforce experience than men of the same age.

statistical discrimination

is using information about a group to draw conclusions about individuals

taste-based discrimination

occurs when people's preferences cause them to discriminate against a certain group

law of diminishing returns

the principle that, at some point, adding more of a variable input, such as labor, to the same amount of a fixed input, such as capital, will cause the marginal product of the variable input to decline

"ban the box"

where employers are legally forbidden from asking about criminal records until much later