Refer to the following table for questions 14-4 and 14-5.
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| 4 | |
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Given the four possible market situations shown above, for a given production function, which of the four cells would lead to the most labor being hired? |
| | A) | 1 |
| | B) | 2 |
| | C) | 3 |
| | D) | 4 |
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| 5 | |
With reference to the table in the previous question, Which combination of market structures leads to the least labor being hired? |
| | A) | 1 |
| | B) | 2 |
| | C) | 3 |
| | D) | 4 |
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| 6 | |
The marginal factor cost of the third laborer is _____ if the labor supply curve has the following wage-quantity coordinates.
| Quantity of Labor Supplied: | 1 | 2 | 3 | 4 | | Reservation Wage Rate | 5 | 10 | 15 | 20 |
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| | A) | 15 |
| | B) | 20 |
| | C) | 25 |
| | D) | 30 |
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| 7 | |
Which of the following possible points on a labor supply curve is consistent with the income-leisure tradeoff graph below? <![CDATA[<a onClick="window.open('/olcweb/cgi/pluginpop.cgi?it=jpg::::/sites/dl/free/0078021693/236468/chap14_2.jpg','popWin', 'width=NaN,height=NaN,resizable,scrollbars');" href="#"><img valign="absmiddle" height="16" width="16" border="0" src="/olcweb/styles/shared/linkicons/image.gif"> (6.0K)</a>]]>
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| | A) | Wage = 1: Hours worked = 12 |
| | B) | Wage = 2: Hours worked = 10 |
| | C) | Wage = 3: Hours worked = 14 |
| | D) | All of the above are consistent with the information on the graph. |
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| 8 | |
Which statement is true? |
| | A) | If Ingrid has a target level of income she seeks to maintain, she will have a backward bending labor supply curve. |
| | B) | If leisure is an inferior good to Ingrid she will not have a backward bending labor supply curve. |
| | C) | It is more likely that Ingrid would have a backward bending supply of labor curve than it is likely that the entire labor market would have a backward bending labor supply curve. |
| | D) | All of the above are true. |
| | E) | None of the above are true. |
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| 9 | |
A minimum wage set above market equilibrium could lead to more workers being hired at the higher wage if |
| | A) | the product produced is sold in a perfectly competitive market. |
| | B) | The employer is a monopsonist. |
| | C) | The supply of labor curve is backward bending at high wage levels. |
| | D) | The supply of labor curve is horizontal. |
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| 10 | |
In the VMPL measurement the MPL and the price of the output are key determinants of the wage rate. Frank suggests that the puzzling "winner take all" phenomenon may still fit marginal productivity theory if |
| | A) | one realizes that MPL measurements are vastly underestimated for a few stars. |
| | B) | the public's fascination with being first dramatically raises the price of what the winner is selling. |
| | C) | the unseen earnings of less heralded second place performers are fully known. |
| | D) | perfect competition was present in the labor markets where superstars perform. |
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| 11 | |
A firm's demand for labor is W = 101 - QL. If the price of the product is 2, what is the marginal product of the first worker employed? |
| | A) | 50 |
| | B) | 100 |
| | C) | 50.50 |
| | D) | The answer cannot be determined with the information given. |
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| 12 | |
The demand for labor in a competitive market for labor is W = 101 - QL. If the marginal product of the 5th worker is 32, what is the unit price of the product if the product sells in a competitive market? |
| | A) | 2 |
| | B) | 3 |
| | C) | 69 |
| | D) | 64 |
| | E) | The answer cannot be determined form the information given. |
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| 13 | |
The value of the marginal product of labor and the marginal revenue product of labor differ. The difference between the two comes from the fact that the VMPL assumes that |
| | A) | labor is not subject to diminishing marginal productivity. |
| | B) | The product market is perfectly competitive while the MRPL assumes that the product market is imperfect. |
| | C) | Employers are profit maximizers while the MRPL assumes that employers are sales maximizers. |
| | D) | The short run and the MRPL assumes the long run. |
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| 14 | |
The market demand curve for labor is more elastic than the individual firm's demand curve for labor. This is |
| | A) | always true because when wages fall in the entire labor market the economy as a whole demands far more labor than any individual firm would demand. |
| | B) | True only when product prices fall as industry output expands. |
| | C) | Never true because labor expansion across an industry will always involve greater industry output and falling product prices. Thus the demand for labor curve becomes more inelastic. |
| | D) | True only if diminishing returns to labor do not exist. |
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| 15 | |
If one laborer produces 15 and two laborers together produce 32, and if the product is sold in a imperfectly competitive market where demand for the product is P = 50 - Q, what is the marginal revenue product of the second worker? |
| | A) | 18 |
| | B) | 17 |
| | C) | 51 |
| | D) | 576 |
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| 16 | |
You employ 10 workers for $10 each You then add another worker for which you must move up the supply curve of labor to $12 in order to attract that worker. You cannot wage discriminate so everyone must be paid the same wage. Your marginal factor cost of the 11th worker is |
| | A) | 12 |
| | B) | 2 |
| | C) | 112 |
| | D) | 122 |
| | E) | 32 |
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| 17 | |
A backward bending supply of labor curve |
| | A) | is theoretically impossible given normal indifference curves in the leisure-income tradeoff model. |
| | B) | Is less likely to occur for the individual than for the market as a whole. |
| | C) | Can happen if the income effect of a wage increase discourages work more than the substitution effect of the wage increase encourages work. |
| | D) | Generally happens at low wage levels rather than at high wage levels. |
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The graph below shows a monopsonistic supply of labor function. The following two questions relate to the graph.
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