Question 1

0 as shown. Suddenly, the price of the output it produces increases. If other things remain the same, the short-run effect of this change in price would be to: A)  increase the firm's demand for labor from MRP1 to MRP3. B)  decrease the firm's demand for labor from MRP1 to MRP2. C)  increase the market wage rate to W1 and decrease the quantity of labor the firm demands to point A. D)  decrease the market wage rate to W2 and increase the quantity of labor the firm demands to point B." class="answers-bank-image d-inline" rel="preload" >
- Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W0 as shown. Suddenly, the price of the output it produces increases. If other things remain the same, the short-run effect of this change in price would be to:

Accepted Answer

A)   increase the firm's demand for labor from MRP1 to MRP3.
B)   decrease the firm's demand for labor from MRP1 to MRP2.
C)   increase the market wage rate to W1 and decrease the quantity of labor the firm demands to point A.
D)   decrease the market wage rate to W2 and increase the quantity of labor the firm demands to point B.E) A) and C)
F) B) and D)

Question 2

Which is an example of a change in product demand that increases labor demand?

Accepted Answer

A)   Access to computers increases the productivity of mail-order businesses, thus increasing the demand for their workers.
B)   Tourism increases in popularity, increasing the demand for workers at tourist resorts.
C)   A decrease in the price of trucks decreases the cost of transporting goods, thus increasing the demand for truckers.
D)   A change in work rules increases output per worker in the auto industry, thus increasing the demand for auto workers.E) A) and D)
F) C) and D)

Question 3

Which is an example of a change in the price of another resource that increases labor demand?

Accepted Answer

A)   Software sales rise, thus increasing the demand for software developers.
B)   Snowboarding increases in popularity, thus increasing the demand for the workers who make snowboards.
C)   A decrease in the price of wood decreases the cost of furniture, thus increasing the demand for furniture workers.
D)   A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers.E) All of the above
F) A) and D)

Question 4

1 and Q1 workers will be hired. B)  W2 and Q2 workers will be hired. C)  W2 and Q1 workers will be hired. D)  W3 and Q1 workers will be hired." class="answers-bank-image d-inline" rel="preload" > Refer to the above graph. Under monopsony in the hiring of labor services, the wage rate will be:

Accepted Answer

A)   W1 and Q1 workers will be hired.
B)   W2 and Q2 workers will be hired.
C)   W2 and Q1 workers will be hired.
D)   W3 and Q1 workers will be hired.E) A) and B)
F) C) and D) D

Question 5

m, it will cause: A)  employment to decrease from C to A. B)  employment to decrease from C to B. C)  employment to decrease from B to A. D)  BC workers to be hired." class="answers-bank-image d-inline" rel="preload" >  In the labor market shown above, if a minimum wage level is set at Wm, it will cause:

Accepted Answer

A)   employment to decrease from C to A.
B)   employment to decrease from C to B.
C)   employment to decrease from B to A.
D)   BC workers to be hired.E) A) and D)
F) None of the above

Question 6

In the above graph, unemployment created by the minimum wage is:

Accepted Answer

A)   B - A.
B)   B - 0.
C)   B - E.
D)   0.E) C) and D)
F) A) and B)

Question 7

-Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers increase, this situation is depicted in graph:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) All of the above

Question 8

- Refer to the above graphs. The formation of an exclusive or craft union, with no change in demand, is depicted by situation:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and C)
F) A) and B)

Question 9

The level of employment in the monopsony labor market shown above will be:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) All of the above
F) A) and C)

Question 10

- Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers decrease, this situation is depicted in graph:

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) A) and C)

Question 11

min, stating:  Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall.  Senator Approxmire is: A)  correct because the law of demand states that as the wage rises, the firm demands less labor. B)  incorrect because the monopsonist would offer a wage of WA, which is higher than Wmin, and maintain its employment at L1. C)  incorrect because the monopsonist's effective MRC curve becomes ABCD, which means that it would choose to hire more workers, from L1 to L2, following the imposition of the minimum wage. D)  correct because the graph indicates that at the wage of Wmin, the monopsonist would not make a profit from hiring labor and so would not hire any at all." class="answers-bank-image d-inline" rel="preload" > Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least Wmin, stating: "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall."
Senator Approxmire is:

Accepted Answer

A)   correct because the law of demand states that as the wage rises, the firm demands less labor.
B)   incorrect because the monopsonist would offer a wage of WA, which is higher than Wmin, and maintain its employment at L1.
C)   incorrect because the monopsonist's effective MRC curve becomes ABCD, which means that it would choose to hire more workers, from L1 to L2, following the imposition of the minimum wage.
D)   correct because the graph indicates that at the wage of Wmin, the monopsonist would not make a profit from hiring labor and so would not hire any at all.E) C) and D)
F) B) and C) C

Question 12

Which is an example of a change in the price of another resource that decreases labor demand?

Accepted Answer

A)   A decline in the demand for computers in Europe reduces the demand for workers in the domestic computer industry.
B)   The rise of hair salons for both men and women reduces the demand for barbers.
C)   A decrease in the educational skills of manufacturing workers decreases the demand for such workers.
D)   An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer.E) C) and D)
F) All of the above

Question 13

Which is an example of a change in productivity that increases labor demand?

Accepted Answer

A)   Mail-order catalog sales rise, thus increasing the demand for workers in the mail-order business.
B)   Sport utility vehicles increase in popularity, thus increasing the demand for the workers who make them.
C)   A decrease in the price of lumber decreases the cost of building homes, thus increasing the demand for construction workers.
D)   A technological change increases output per worker in the computer industry, thus increasing the demand for computer workers.E) B) and D)
F) None of the above D

Question 14

Which of the following is a characteristic of a purely competitive labor market?

Accepted Answer

A)   Individual employers and individual workers are "wage makers."
B)   The good or service workers produce is sold in a purely competitive product market.
C)   Many workers with identical skills supplying a particular type of labor.
D)   All of these are characteristics of a purely competitive labor market.E) B) and C)
F) A) and D)

Question 15

Which is an example of a change in productivity that decreases labor demand?

Accepted Answer

A)   A financial crisis in Asian nations reduces the demand for exports to Asia, thus decreasing the demand for domestic workers in the computer industry.
B)   Tattoos fade in popularity, thus decreasing the demand for tattoo artists.
C)   More government regulation decreases output per worker in the fast food industry, thus decreasing demand for fast food workers.
D)   An increase in the price of construction equipment reduces the demand for construction equipment operators.E) B) and C)
F) A) and D)

Question 16

0 as shown. Suddenly, the price of the product it produces decreases. If other things remain the same, the short-run effect of this change in price would be to: A)  increase the firm's demand for labor from MRP1 to MRP3. B)  decrease the firm's demand for labor from MRP1 to MRP2. C)  increase the market wage rate to W1 and decrease the quantity of labor the firm demands to point A. D)  decrease the market wage rate to W2 and increase the quantity of labor the firm demands to point B." class="answers-bank-image d-inline" rel="preload" > 
-Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W0 as shown. Suddenly, the price of the product it produces decreases. If other things remain the same, the short-run effect of this change in price would be to:

Accepted Answer

A)   increase the firm's demand for labor from MRP1 to MRP3.
B)   decrease the firm's demand for labor from MRP1 to MRP2.
C)   increase the market wage rate to W1 and decrease the quantity of labor the firm demands to point A.
D)   decrease the market wage rate to W2 and increase the quantity of labor the firm demands to point B.E) A) and B)
F) B) and C)

Question 17

Which is an example of a change in product demand that decreases labor demand?

Accepted Answer

A)   An increase in the price of paper increases the cost of making books, thus decreasing the demand for bookbinders.
B)   The widespread availability of self-serve gas pumps reduces the demand for workers pumping gas.
C)   An increase in the price of steel increases the cost of producing cars and trucks, thus decreasing the demand for automobile workers.
D)   A decline in productivity in retailing decreases the demand for retail sales workers.E) B) and C)
F) A) and D)

Exam 17: Wage Determination

- Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W₀ as shown. Suddenly, the price of the output it produces increases. If other things remain the same, the short-run effect of this change in price would be to:

Correct Answer
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Which is an example of a change in product demand that increases labor demand?

Correct Answer
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Which is an example of a change in the price of another resource that increases labor demand?

Correct Answer
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Refer to the above graph. Under monopsony in the hiring of labor services, the wage rate will be:

Correct Answer
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D

In the labor market shown above, if a minimum wage level is set at W_m, it will cause:

Correct Answer
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In the above graph, unemployment created by the minimum wage is:

Correct Answer
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-Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers increase, this situation is depicted in graph:

Correct Answer
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- Refer to the above graphs. The formation of an exclusive or craft union, with no change in demand, is depicted by situation:

Correct Answer
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The level of employment in the monopsony labor market shown above will be:

Correct Answer
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- Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers decrease, this situation is depicted in graph:

Correct Answer
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Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least W_min, stating: "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

Correct Answer
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C

Which is an example of a change in the price of another resource that decreases labor demand?

Correct Answer
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Which is an example of a change in productivity that increases labor demand?

Correct Answer
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D

Which of the following is a characteristic of a purely competitive labor market?

Correct Answer
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Which is an example of a change in productivity that decreases labor demand?

Correct Answer
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-Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W₀ as shown. Suddenly, the price of the product it produces decreases. If other things remain the same, the short-run effect of this change in price would be to:

Correct Answer
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Which is an example of a change in product demand that decreases labor demand?

Correct Answer
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Exam 17: Wage Determination

- Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W0 as shown. Suddenly, the price of the output it produces increases. If other things remain the same, the short-run effect of this change in price would be to:

Correct AnswerverifiedShow Answer

Which is an example of a change in product demand that increases labor demand?

Correct AnswerverifiedShow Answer

Which is an example of a change in the price of another resource that increases labor demand?

Correct AnswerverifiedShow Answer

Refer to the above graph. Under monopsony in the hiring of labor services, the wage rate will be:

Correct AnswerverifiedD

In the labor market shown above, if a minimum wage level is set at Wm, it will cause:

Correct AnswerverifiedShow Answer

In the above graph, unemployment created by the minimum wage is:

Correct AnswerverifiedShow Answer

-Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers increase, this situation is depicted in graph:

Correct AnswerverifiedShow Answer

- Refer to the above graphs. The formation of an exclusive or craft union, with no change in demand, is depicted by situation:

Correct AnswerverifiedShow Answer

The level of employment in the monopsony labor market shown above will be:

Correct AnswerverifiedShow Answer

- Refer to the above graphs. If union workers decide to take more leisure, while the prices of the products produced by union workers decrease, this situation is depicted in graph:

Correct AnswerverifiedShow Answer

Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least Wmin, stating: "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

Correct AnswerverifiedC

Which is an example of a change in the price of another resource that decreases labor demand?

Correct AnswerverifiedShow Answer

Which is an example of a change in productivity that increases labor demand?

Correct AnswerverifiedD

Which of the following is a characteristic of a purely competitive labor market?

Correct AnswerverifiedShow Answer

Which is an example of a change in productivity that decreases labor demand?

Correct AnswerverifiedShow Answer

-Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W0 as shown. Suddenly, the price of the product it produces decreases. If other things remain the same, the short-run effect of this change in price would be to:

Correct AnswerverifiedShow Answer

Which is an example of a change in product demand that decreases labor demand?

Correct AnswerverifiedShow Answer

- Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W₀ as shown. Suddenly, the price of the output it produces increases. If other things remain the same, the short-run effect of this change in price would be to:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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D

In the labor market shown above, if a minimum wage level is set at W_m, it will cause:

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of at least W_min, stating: "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimum wage causes employment to fall." Senator Approxmire is:

Correct Answer
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C

Correct Answer
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Correct Answer
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D

Correct Answer
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Correct Answer
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-Refer to the above graph. Suppose that a competitive firm in long-run equilibrium faces a market wage W₀ as shown. Suddenly, the price of the product it produces decreases. If other things remain the same, the short-run effect of this change in price would be to:

Correct Answer
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Correct Answer
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