Labor Econ Test 1

Front 1

Holding other variables constant except output and wages, with a lower real wage,

Back 1

Make it profitable for new firms to enter the market

Front 2

A regression of W = a + bX where W is wages and X is hours worked per week yielded a t-statistic of 0.75 for b. Statistically speaking, this result suggests that

Back 2

we cannot reject the hypothesis that hours worked are unrelated to wages.

Front 3

Suppose in a city, an employer gets an increase in output of $600 a week from employing another worker, X. The increase in output falls to $500 for the next worker after that, Y, and falls to $410 for the next one after that, Z. All the workers are willing to work for the employer for $400 a week. In the case of hiring X, the $200 producer surplus is captured by the landlord, who charges the firm an extra rent of $200. If Y is hired, the landlord also captures that $100 surplus. Suppose that all firms in the city have that productivity structure.Which of the following laws are most efficient and equitable?

Back 3

WTF?

Front 4

A regression estimates that a worker's hourly productivity (P), measured in units of output, is related to hourly wage (W) as follows: Pi = 4.5 + 0.2Wi. This indicates that

Back 4

a firm raising their wage by $10 will raise their productivity by 2 units

Front 5

To be counted as one of the official unemployed, one needs to be:

Back 5

16 or older and actively seeking employment

Front 6

Given the data in Table 1, the labor force participation rate is

Back 6

Working/Total Pop

70%

Front 7

Given the data in Table 1, the unemployment rate is?

Back 7

Unemployed/Employeed

7.1%

Front 8

If the salaries of accountants increase and other conditions remain the same, then

Back 8

a firm will move to the left along its labor demand curve for accountants

Front 9

A real wage is

Back 9

nominal wages divided by a price level index.

Front 10

Which of the following events will cause the labor demand curve to shift to the right?

Back 10

an increase in product demand

Front 11

Since the technology available and the conditions under which capital and labor are supplied have remained constant, this change in product demand would increase the labor desired at any wage level that might prevail.

Back 11

In other words the entire labor demand curve shifts to the right.

Front 12

In a highly competitive industry, if the general industry average product of labor is greater than the marginal product of labor, with labor paid its marginal product, the average product minus the marginal product is

Back 12

Wft?!

Front 13

Diminishing marginal returns occur because

Back 13

an empirical proposition that derives from the fact that as employment expands, each additional worker has a progressively smaller share of the capital stock to work with.

Front 14

If leisure is a normal good, a rise in the wage rate has what effect?

Back 14

The opportunity cost of an hour of leisure is equal to one’s wage rate—the extra earnings a worker can take home from an extra hour of work.

Front 15

A competitive firm can be in neither short-run nor long-run equilibrium if ...

Back 15

If marginal product is greater than the average product.

Front 16

Unskilled labor receives low wages because

Back 16

its average product is below that of skilled labor.

Front 17

Greater labor market frictions make the labor supply curve

Back 17

the higher workers’ mobility costs are, the steeper the labor supply curve facing a firm will tend to be. Conversely, as mobility costs fall, other things equal, the labor supply curve to firms will flatten and become more elastic

Front 18

The firm's labor demand curve in the short run

Back 18

The requirement that MPL = W/P in order for profits to be maximized means that the firm’s labor demand curve in the short run (in terms of the real wage) is identical to itsMPL schedule (refer to Figure 3.1).

Front 19

In the long run a profit-maximizing firm will select capital and labor and land so that

Back 19

the wage divided by the marginal product of labor equals the rental cost of a unit of capital divided by the marginal product of capital

Front 20

The labor force is made up of

Back 20

all adults of age 16 or more who are employed or unemployed.

Front 21

If two inputs are gross complements, the cross-wage elasticity of demand for the two inputs will be

Back 21

Negative

Front 22

Other things equal, the own-wage elasticity of demand for a category of labor is higher when

Back 22

percentage change in quantity of labor demanded divided by percentage change in wages.????

Front 23

A city mandates that all businesses who sell goods and services to the city must pay at least a living wage to their workers that is substantially above what low-skilled workers are currently being paid. Which of the following will result in a greater decrease in employment of low-skilled workers who were working for the affected businesses?

Back 23

Higher-skilled workers are readily available at the higher wage.

Front 24

If an island has W farms each producing X tons of corn and W farms each producing Y tons of corn, each farm hiring a tractor in exchange for Z tons of corn during each period of production, and land rent in the Y-ton land is zero, then how much are total wages measured in corn?

Back 24

WTF?!?!

Front 25

The relationship between the aggregate production function and the demand for labor is

Back 25

The quantity of labor employed in the economy and the total quantity of output produced

Front 26

In a world without scarcity

Back 26

There would be no costs

Front 27

The most widely used method of estimating a regression line for a data set involves selecting the line

Back 27

which minimizes the sum of the squared vertical distances between the line and the individual data points.

Front 28

Economic rationality requires that

Back 28

people maximize utility and that at any moment in time, they have consistent preferences.

Front 29

Economists assume that workers seek to maximize

Back 29

Utility

Front 30

To be counted as one of the official unemployed, one needs to be:

Back 30

16 or older and actively seeking employment or hired but not yet working.

Front 31

A real wage is

Back 31

nominal wages divided by a price level index.

Front 32

The minimum wage is a relatively blunt and inefficient instrument with which to reduce poverty because

Back 32

most workers whose wages are affected by minimum wage increases do not live in poor families, and a more efficient way to raise the income of the poor is a tax credit or cash subsidy..

Front 33

During a recession, average labor productivity tends to decrease because output falls and

Back 33

workers with specific training are not laid off.

Front 34

A firm could profitably pay for a worker's general training if

Back 34

the training program would also serve as a screening device to learn more about the worker's abilities.

Front 35

) A wage increase creates a substitution effect which leads the worker to desire ________ leisure,and an income effect which leads the worker to desire ________ leisure.

Back 35

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