Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Chapter 16 Test Bank Key
1. The willingness to work a certain amount of time at a given wage rate is known as
given time period, ceteris paribus.
2. If we move to the right along the upward-sloping labor supply curve, we observe that the cost of labor
3. The opportunity cost of working is the
labor as leisure time declines.
4. The wage rate is
5. The value of an hour of leisure can best be estimated as
6. As more hours are worked, the marginal utility of leisure time tends to
7. As an individual earns additional income, the marginal utility of income tends
8. If you have an increasing marginal utility for leisure, then as you work more to make greater income,
9. As we work fewer hours and our leisure time increases, the opportunity cost of labor
10. Campbell loves to work. He does not receive any enjoyment from leisure time. The last dollar that he earns
each year means just as much to him as the first dollar. Which of the following best describes the shape of
Campbell's labor supply curve?
11. The number of hours that a worker is willing to work is determined by the trade-off between the increasing
12. Workers typically require higher wages in order to work additional hours because of the
A. Increasing opportunity cost of labor.
13. For an upward-sloping labor supply curve, the quantity of labor supplied varies directly, ceteris paribus, with
14. If wages are relatively high, the individual labor supply curve may
15. The labor supply curve starts to bend backward once the
16. The substitution effect of wages states that a decreased wage rate
17. Higher wage rates allow a person to reduce the hours worked without losing income. This is known as the
18. The labor supply curve will be positively sloped if the substitution effect of wages is
19. Kip will work fewer hours if his salary increases. For Kip, the ___________ effect must outweigh the
__________ effect.
20. The labor supply curve will be negatively sloped if the substitution effect of wages is
21. If Lauren's substitution effects outweigh her income effects, her labor supply curve will
22. An individual's labor supply curve
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Create
Difficulty: 02 Medium
Learning Objective: 16-01 What factors shape labor supply and demand.
Topic: LABOR SUPPLY
C. The determinants of the market supply of labor include all of the following except
24. The market supply of labor is
25. The market supply curve for labor curve is upward-sloping because
A. As the wage rises, most workers want to work fewer hours.
26. If payroll taxes are increased, there will be a
A. Leftward shift of the labor supply curve.
27. If leisure activities become more attractive, there will be a
28. If there is an increase in the number of workers who want to work as accountants, there will be a
29. If the wage rate increases, there will be a
A. Leftward shift of the labor supply curve.
30. The elasticity of labor supply measures the
A. Opportunity cost of labor.
31. The elasticity of labor supply does not depend on
A. The demand for labor.
32. When a labor supply curve is backward-bending, the elasticity of labor supply in the backward-bending
portion is
33. Jackson hates to work. He receives a great deal of enjoyment from leisure time. Jackson's elasticity of
labor supply is
34. If the elasticity of labor is 0.60, a 15 percent increase in the wage rate will induce a
35. If Anh's elasticity of labor supply is 1.5 and she increases her supply of labor by 5 percent, then the wage rate
must have
A. Increased by 3.3 percent.
36. If Janella increases her supply of labor by 6 percent in response to a 5 percent increase in the wage rate, her
elasticity of labor supply must be
37.
In Figure 30.1, the movement from point G to point F along the labor supply curve S1 is a result of
38.
In Figure 30.1, the shift in the labor supply curve from S1 to S2 means that
39.
In Figure 30.1, the labor supply could shift from S1 to S2 due to all of the following except
40. Which of the following is not true about the demand for factors of production?
A. It is derived from the demand for the goods and services the firm produces.
41. The demand for labor and other factors of production typically decline in a recession because those factors
42. If consumers decide to buy fewer strawberries, then the
A. Demand for strawberry pickers will fall.
43. Assume the apple market is competitive. If citizens want wages and the number of available jobs for apple
pickers to increase, the best strategy would be to
44. A firm's demand for labor is referred to as a derived demand
45. Students who major in computer science are paid a lot more when they graduate than those who major in
philosophy because
A. The derived demand for computer science majors is less than the derived demand for philosophy majors.
46. Which of the following would not shift the market demand for labor, ceteris paribus?
A. The wage paid to labor.
47. The determinants of labor demand include
A. Marginal physical productivity.
48. The marginal physical product of labor is equal to
A. Total output divided by the quantity of labor.
labor.
49. When the MPP of labor is zero, ceteris paribus,
50. The change in total revenue associated with one additional unit of input measures
A. Elasticity of labor supply.
51. The marginal revenue product establishes
A. An upper limit to the wage rate an employer is willing and able to pay.
52. In competitive markets, the marginal revenue product curve and marginal physical product curve have similar
shapes because
53. If a chair can be sold for $20 and it takes a worker two hours to make a chair, the marginal revenue product
of this worker is
54. The marginal revenue product of labor is equal to
A. The marginal physical product multiplied by the marginal revenue of the output.
As the marginal output from each added worker declines, the marginal revenue product will decline (MRP =
MPP ×price). MRP sets an upper limit to the wage rate an employer will pay; therefore the labor demand is
downward-sloping.
56. The law of diminishing returns states that, ceteris paribus, the
57. Marginal physical product diminishes as additional workers are hired because
A. Each worker has an increasingly smaller amount of other factors with which to work.
58. Because of the law of diminishing returns, as additional workers are hired, total
59. As marginal physical product diminishes, marginal revenue product
A. Also diminishes.
60. The marginal revenue product of labor curve is the firm's
61. A firm should hire an additional worker as long as the wage rate is
A. Greater than the MRP.
62. A competitive firm should continue to hire workers until the MRP is equal to
63. If the MPP of an additional unit of labor is 4 units per hour, product price is constant at $5 per unit, and the
wage rate is $19 per hour, then
64. If the MPP of an additional unit of labor is 3 units per hour, product price is constant at $8 per unit, and the
wage rate is $26 per hour, then
65. As labor productivity increases, which of the following shifts in the labor market should occur?
A. Supply of labor should shift to the left.
66. If the marginal revenue product of labor improves, which of the following shifts in the labor market should
occur?
A. Supply of labor should shift to the left.
67. If the price of the output produced by a particular type of labor decreases, which of the following shifts should
occur in the labor market for the particular type of labor?
68.
Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor
wage changes with output. In Table 30.1, the marginal physical product of the third worker hired is
69.
Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor
wage changes with output. In Table 30.1, the marginal revenue product of the second worker hired is
70.
Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor
wage changes with output. In Table 30.1, the contribution to total revenue of the fourth worker hired is
