Consider a color-blind firm that is currently maximizing profits. An affirmative action
policy is put in place requiring that all firms in the industry abide by a certain quota.
Which of the following will occur?
A. There will be no effect because the firm is currently color-blind.
B. If the quota is already met, the firm will make no changes in its hiring practices.
C. If the firm currently meets the required quota, it will cut costs by adjusting labor to
exactly meet the affirmative action requirements.
D. If the firm currently meets the quota, it will begin to lose profits due to the
affirmative action requirements.
E. The firm will have to fire some workers.
Expansions in globalization and the reduction of trade barriers world-wide during the
1980s and 1990s most likely had what effect on the demand for U.S. labor?
A. The demand for unskilled workers increased, while the demand for skilled workers
decreased.
B. The demand for unskilled workers decreased, while the demand for skilled workers
increased.
C. The demand for unskilled and skilled workers increased.
D. The demand for unskilled and skilled workers decreased.
E. The demand for unskilled workers increased, while the demand for skilled workers
didnt change.
Union organizing drives will be more successful in firms that have relatively
___________ labor demand curves.
A. inelastic
B. elastic
C. flat
D. linear
E. increasing
Due to the discouraged worker effect, the labor force participation rate
A. increases during a recession.
B. decreases during a recession.
C. is counter-cyclical.
D. over-counts the number of workers wanting a job.
E. over-counts the number of workers with a job.
What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing
at a decreasing rate) function?
A. The marginal return to schooling increases as years of schooling increases.
B. The marginal return to schooling is positive but falling as years of schooling
increases.
C. Average wages fall as years of schooling increases.
D. The cost of schooling increases, but at a decreasing rate.
E. The cost of schooling decreases, but at an increasing rate.
Piece rates typically
A. encourage greater effort from workers.
B. are more common than time rates.
C. are associated with the worker incurring less risk concerning ones income.
D. are more common among higher paying jobs.
E. do not reward skill.
If labor is supplied perfectly inelastically, the imposition of a payroll tax legislated to be
paid by firms will do all of the following except:
A. Reduce the wage rate by exactly the amount of the tax.
B. Leave employment levels unchanged.
C. Leave firm profits unchanged.
D. Reduce total output.
E. Generate tax revenue paid to the government.
What type of questions can be answered with economic tools without interjecting any
value judgment as to whether the particular outcome is desirable or harmful?
A. Normative questions.
B. Positive questions.
C. Labor questions.
D. Econometric questions.
E. Public policy questions.
What is the best description of unemployment insurance benefits in the United States?
A. All unemployed workers receive the same benefit regardless of what their previous
job was.
B. All unemployed workers receive the same wage-adjusted benefit regardless of what
state they live in.
C. Unemployment benefits are based on family size and age.
D. Unemployment benefits are greater for low-wage workers than for high-wage
workers.
E. Unemployment benefits are a greater percentage of previous earnings for low-wage
workers than for high-wage workers.
How does the income distribution in the United States compare to other developed
countries?
A. The income distribution is vastly more unequal in the United States compared to
other developed countries.
B. The income distribution is vastly more equal in the United States compared to other
developed countries.
C. The income distribution tends to be more unequal in the United States compared to
other developed countries, but not by a huge amount.
D. The income distribution tends to be more equal in the United States compared to
other developed countries, but not by a huge amount.
E. The income distribution must be the same in all developed countries, the United
States included, because of increased globalization.
Assuming a country has a constant returns to scale Cobb-Douglas production function,
what effect will immigration have on native labor that has a high degree of
substitutability with the immigrant labor?
A. Immigration has no long-run effect on native wages.
B. Immigration lowers native wages in the long run.
C. Immigration raises the labor-capital ratio in the long run.
D. Immigration has no short-run effect on native wages.
E. Immigration has a negative effect on total employment in the short run.
One argument against using a profit-sharing scheme is the potential for free-riding. In
this situation, free-riding refers to
A. one firm using the same contract specifications as another firm.
B. a worker not providing effort because his contribution to profit is very small.
C. a worker not providing effort because he doesnt want his co-workers wages to
increase.
D. the firm not honestly reporting its profits.
E. profits being insensitive to worker effort because all increases in profit are returned
to the workers due to the profit-sharing scheme.
Which of the following would prevent a single equilibrium wage existing across all
labor markets?
A. A competitive labor market.
B. Workers having various skills and preferences.
C. Firms being free to enter any of the labor markets.
D. Potential workers being able to freely enter any of the labor markets.
E. A payroll tax paid equally by workers and firms.