Transcript The market wage increases from $9 to $11 and

The market wage increases from $9 to $11 and
the firm responds by reducing its labor force by
16%. The wage elasticity coefficient is:
a)
b)
c)
d)
8.00,
0.80,
1.25,
1.60,
indicating
indicating
indicating
indicating
elastic demand
inelastic demand
elastic demand
inelastic demand
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a)
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0%
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b)
c)
d)
Which of the following can be predicted
to increase the demand for labor?
a) An increase in the price of a gross
substitute for labor
b) A increase in the price of a gross
complement in production
c) A decrease in product demand
d) A decrease in the number of firms
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a)
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0%
b)
c)
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d)
As a result of an increase in the market supply of labor,
suppose the wage rate falls by 10%. After adjusting their
employment levels, firms in the market find that their total
wage bills (=WxL) have increased. This result indicates
that:
a)
labor demand is inelastic over this
range of wage rates
labor demand is elastic over this
range of wage rates.
labor demand, was inelastic at the
old wage, but is elastic at the
new, higher wage.
labor demand, was elastic at the
old wage, but is inelastic at the
new, higher wage.
b)
c)
d)
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a)
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0%
0%
b)
c)
d)
Suppose workers in labor market X are qualified to
work in an alternative labor market Y and vice-versa. If
an increase in labor demand causes an increase in the
wage rate to workers in market Y, this will tend to:
a)
increase labor supply and
reduce the wage rate in X.
increase labor demand and
reduce the wage rate in X
reduce labor supply and
increase the wage rate in X
reduce labor demand and
reduce the wage in X.
b)
c)
d)
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a)
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5
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b)
c)
d)
A monopsonist tends to hire too _____
workers because ______:
a)
b)
c)
d)
few; marginal revenue product
exceeds the value of marginal
product.
few; marginal wage costs
exceeds the wage rate
many; marginal revenue product
exceeds the value of marginal
product
many; marginal wage costs
exceeds the wage rate.
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a)
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b)
c)
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d)
At wage rate W1 there is an:
a)
b)
c)
d)
1
excess
excess
excess
excess
2
3
4
supply of labor and the wage rate will fall
supply of labor and the wage rate will rise
demand for labor and the wage rate will fall
demand for labor and the wage rate will rise
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a)
b)
c)
d)
For the supply and demand curves in the
diagram, the level of employment will be
highest at
a)
b)
c)
d)
1
wage rate W1
a wage rate higher than W1
wage rate W2
a wage rate lower than W2
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a)
b)
c)
d)
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4
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The employer’s share of the Social Security and Medicare
components of the payroll tax has increased, from 6.13%
in 1980 to its current rate of 7.65%. Because employers
pay no payroll tax on many fringe benefits, this change in
tax rates has effectively
a)
b)
c)
d)
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reduced the "price" of fringe benefits,
rotating the wage-fringe isoprofit line
inward
increased the "price" of fringe benefits,
rotating the wage-fringe isoprofit line
inward
reduced the "price" of fringe benefits,
rotating the wage-fringe isoprofit line
outward
increased the "price" of fringe benefits,
rotating the wage-fringe isoprofit line
outward
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5
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a)
b)
c)
d)
The principal-agent problem arises
primarily because
a)
principals and agents work in a team,
leading to free-rider problems
principals and agents have common
interests
principals and agents have common
interests
agents pursue some of their own
objectives that may conflict with the
objectives of the principals
b)
c)
d)
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a)
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b)
c)
d)
Compensation paid in proportion to the
value of sales best describes
a)
b)
c)
d)
piece rates
time rates
commissions
bonuses
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a)
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2
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5
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0%
b)
c)
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d)
A firm might choose to pay its employees a
wage higher than that which would clear the
market because:
a) the higher wage raises the
opportunity cost of shirking
b) the higher wage may shift the
labor demand curve to the left
c) the firm will have higher
turnover, allowing new workers
to invigorate the work place
d) the higher wage solves the
free-rider problem
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5
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a)
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b)
c)
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d)
Which one of the following conditions is
required for allocative efficiency?
a) Marginal revenue product
exceeds the value of marginal
product by the greatest amount
b) Marginal revenue product equals
the wage rate
c) Value of marginal product equals
the marginal wage cost
d) Value of marginal product is the
same in all alternative
employments of labor
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a)
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b)
c)
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d)