The Markets for the Factors of Production 4579
2. For a worker, the opportunity cost of an hour of leisure
a. rises by $8 when his wage rises by $8 per hour.
b. falls by $8 when his wage rises by $8 per hour.
c. is the same for a celebrity talk-show host as it is for a teacher.
d. is determined by factors that are unrelated to his hourly wage.
3. Fiona’s hourly wage increases from $8 to $10. Which of the following describes a consequence of
the increase in Fiona’s wage?
a. The opportunity cost of Fiona’s leisure time has decreased.
b. Fiona may choose to work fewer hours due to the increase in her wage.
c. If Fiona’s labor supply curve is upward sloping, she will choose to work fewer hours.
d. Both a and b are correct.
4580 The Markets for the Factors of Production
4. Roxanne’s hourly wage increases from $9 to $13. Which of the following describes a consequence
of the increase in Roxanne’s wage?
a. The opportunity cost of Roxanne’s leisure time has increased.
b. Roxanne may choose to work fewer hours due to the increase in her wage.
c. If Roxanne’s labor supply curve is upward sloping, she will choose to work fewer hours.
d. Both a and b are correct.
5. Fiona’s hourly wage decreases from $10 to $8. Which of the following describes a consequence of
the decrease in Fiona’s wage?
a. The opportunity cost of Fiona’s leisure time has decreased.
b. Fiona may choose to work more hours due to the decrease in her wage.
c. Fiona may choose to work fewer hours due to the decrease in her wage.
d. All of the above are correct.
The Markets for the Factors of Production 4581
6. Fiona’s hourly wage decreases from $10 to $8. Which of the following describes a consequence of
the decrease in Fiona’s wage?
a. The opportunity cost of Fiona’s leisure time has increased.
b. Fiona may choose to work more hours due to the decrease in her wage.
c. Fiona may choose to work fewer hours due to the decrease in her wage.
d. Both b and c are correct.
7. If your wage increases from $10 per hour to $15 per hour, then your
a. opportunity cost of an hour of leisure decreases by $5 per hour.
b. opportunity cost of an hour of leisure increases by $5 per hour.
c. out–of–pocket cost of an hour of leisure decreases by $5 per hour.
d. out–of–pocket cost of an hour of leisure increases by $5 per hour.
4582 The Markets for the Factors of Production
Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift
attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus
around the ski resort, earning $11 per hour.
8. Refer to Scenario 18-3. During the winter months, what is Sam’s opportunity cost of taking an
hour off work to go skiing?
a. $13
b. between $11 and $12
c. $11
d. less than $11
9. Refer to Scenario 18-3. During the summer months, what is Sam’s opportunity cost of taking an
hour off work to go hiking?
a. $13
b. between $11 and $12
c. $11
d. less than $11
The Markets for the Factors of Production 4583
10. Refer to Scenario 18-3. Assume that Sam has an upward-sloping labor supply curve. If the
opportunity cost of Sam‘s leisure time increases, he will respond by working
a. more hours.
b. fewer hours.
c. an equal number of hours.
d. a number of hours that cannot be determined from the information. The labor demand curve is
needed to make this determination.
11. Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the summer than in the winter,
we can assume that his labor supply curve for the range of earnings in this example
a. is horizontal.
b. is vertical.
c. is upward sloping.
d. has a backward-bending portion.
4584 The Markets for the Factors of Production
12. Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the winter than in the summer,
we can assume that his labor supply curve for the range of earnings in this example
a. is horizontal.
b. is vertical.
c. is upward sloping.
d. has a backward-sloping portion.
13. Your college roommate receives a pay raise at her part–time job from $9 to $11 per hour. She
used to work 25 hours per week, but now she decides to work 20 hours per week in order to
spend more time studying economics. For this price range, her labor supply curve is
a. vertical.
b. horizontal.
c. upward sloping.
d. backward sloping.
The Markets for the Factors of Production 4585
14. Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She
used to work 10 hours per week, but now she decides to work 15 hours per week. For this price
range, her labor supply curve is
a. vertical.
b. horizontal.
c. upward sloping.
d. backward sloping.
15. Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10
hours per week, but now he decides to work 12 hours per week. For this price range, his labor
supply curve is
a. vertical.
b. horizontal.
c. upward sloping.
d. backward sloping.
4586 The Markets for the Factors of Production
16. An upward-sloping labor supply curve means that
a. workers prefer to buy more leisure time when their incomes increase.
b. workers prefer to supply less labor when wages are high.
c. an increase in the opportunity cost of leisure leads workers to increase the quantity of labor
they supply.
d. All of the above are correct.
17. An upward-sloping labor-supply curve implies that an increase in the wage induces
a. firms to decrease the quantity of labor they hire.
b. firms to increase the quantity of labor they hire.
c. workers to increase the quantity of labor they supply.
d. workers to increase the quantity of leisure they enjoy.
The Markets for the Factors of Production 4587
18. An upward-sloping labor-supply curve implies that an increase in the wage induces
a. firms to increase the quantity of labor they hire.
b. firms to increase the quantity of output they produce.
c. workers to decrease the quantity of leisure they enjoy.
d. All of the above are correct.
19. If a worker respond to an increase in the opportunity cost of leisure by taking less leisure, then his
labor supply curve is
a. horizontal.
b. vertical.
c. backward sloping.
d. upward sloping.
4588 The Markets for the Factors of Production
20. If a worker respond to an increase in the opportunity cost of leisure by taking more leisure, then
her labor supply curve is
a. upward sloping.
b. backward sloping.
c. horizontal.
d. vertical.
21. A household member’s decision about how much labor to supply is most closely linked to
a. the supply of factors of production other than labor.
b. technological change.
c. the tradeoff between leisure and work.
d. immigration trends.
The Markets for the Factors of Production 4589
22. Among the people who are characterized below, who has the highest opportunity cost of leisure?
a. an attorney who earns $200 per hour and who plays golf during her leisure time
b. a medical doctor who earns $210 per hour and who sleeps during his leisure time
c. a retail clerk who earns $15 per hour and who watches TV during her leisure time
d. a waiter who earns $12 per hour and who reads poetry during his leisure time
23. Among the people who are characterized below, who has the highest opportunity cost of leisure?
a. a veterinarian who earns $25 per hour and who goes surfing during her leisure time
b. a professional tennis player who earns $50 per hour giving tennis lessons and who watches TV
during his leisure time
c. a retail clerk who earns $15 per hour and who plays computer games during his leisure time
d. a CPA who earns $150 per hour and who golfs during her leisure time
4590 The Markets for the Factors of Production
24. The labor supply curve reflects how
a. workers’ decisions about the labor-leisure tradeoff respond to a change in the wage.
b. workers‘ decisions about the opportunity cost of labor respond to a change in the quantity of
labor supplied.
c. firms’ decisions about the labor-leisure tradeoff respond to the quantity of labor demanded.
d. firms’ decisions about how the quantity of labor they hire respond to changes in their
opportunities to earn profits.
25. If Ernie’s individual labor supply curve is upward sloping, then Ernie responds to an increase in the
a. wage by working more hours per week.
b. opportunity cost of leisure by working fewer hours per week.
c. opportunity cost of leisure by taking more hours of leisure per week.
d. Both a and b are correct.
The Markets for the Factors of Production 4591
26. Which of the following statements is correct? An individual worker’s labor supply curve
a. can never be backward sloping.
b. slopes backward if that person responds to a higher wage by taking fewer hours of leisure per
week.
c. slopes backward if that person responds to a higher opportunity cost of leisure by working
fewer hours per week.
d. slopes upward if that person works the same number of hours per week, regardless of the
opportunity cost of leisure.
27. If the wages of a dentist increase,
a. so does her opportunity cost of leisure.
b. her hours of labor supplied may increase.
c. her hours of labor supplied may decrease.
d. All of the above are correct.
4592 The Markets for the Factors of Production
28. If the wages of a CPA decrease,
(i) her opportunity cost of leisure increases.
(ii) her opportunity cost of leisure decreases.
(iii) her hours of labor supply may increase.
(iv) her hours of labor supply may decrease.
a. (i) and (iii) only
b. (ii) and (iv) only
c. (i), (iii), and (iv) only
d. (ii), (iii), and (iv) only
The Markets for the Factors of Production 4593
Figure 18-6
29. Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade
breads and breakfast pastries. If the bakery profession becomes more attractive to young women
and men because of a new reality television show, what happens in the market for bakers?
a. Demand increases from D1 to D2.
b. Demand decreases from D2 to D1.
c. Supply increases from S1 to S2.
d. Supply decreases from S2 to S1.
4594 The Markets for the Factors of Production
30. Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade
breads and breakfast pastries. If the bakery profession becomes less attractive to young women
and men because of news reports documenting health risks, what happens in the market for
bakers?
a. Demand increases from D1 to D2.
b. Demand decreases from D2 to D1.
c. Supply increases from S1 to S2.
d. Supply decreases from S2 to S1.
31. Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade
breads and breakfast pastries. If the wages paid to wedding cake bakers increase, what happens
in the market for bread bakers?
a. Demand increases from D1 to D2.
b. Demand decreases from D2 to D1.
c. Supply increases from S1 to S2.
d. Supply decreases from S2 to S1.
The Markets for the Factors of Production 4595
32. Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade
breads and breakfast pastries. If the wages paid to wedding cake bakers decrease, what happens
in the market for bread bakers?
a. Demand increases from D1 to D2.
b. Demand decreases from D2 to D1.
c. Supply increases from S1 to S2.
d. Supply decreases from S2 to S1.
33. Refer to Figure 18-6. The graph above illustrates the market for bakers who make homemade
breads and breakfast pastries in Northern Minnesota. If Northern Minnesota experiences an
increase in immigration from Canada, what happens in the market for bakers?
a. Demand increases from D1 to D2.
b. Demand decreases from D2 to D1.
c. Supply increases from S1 to S2.
d. Supply decreases from S2 to S1.
4596 The Markets for the Factors of Production
34. Which of the following events can cause the labor-supply curve to shift?
a. an increase in the wage rate
b. an increase in the price of output
c. an increase in the rate of immigration
d. a technological advance
35. Which of the following events can not cause the labor-supply curve to shift?
a. a change in people’s attitudes toward work
b. an increase in the price of output
c. a change in workers’ alternative opportunities
d. an increase in the rate of immigration
36. Which of the following would shift a market labor supply curve to the right?
a. an increase in the price of output
b. an increase in immigration
c. a labor-saving technological change
d. a decrease in the wage rate
The Markets for the Factors of Production 4597
37. Which of the following would not shift a market labor supply curve to the right?
a. a decrease in the wage paid to workers in a competing market
b. labor–augmenting technology
c. a change in worker tastes so that workers want to retire later
d. an increase in immigration
38. Which of the following would shift a market labor supply curve to the left?
a. a decrease in the price of output
b. an increase in the price of output
c. a labor-augmenting technological change
d. better employment opportunities in a closely-related job
39. Which of the following would shift a market labor supply curve to the left?
a. an increase in the wage paid to workers in a competing market
b. labor–saving technology
c. a change in worker tastes so that workers want to retire later
d. an increase in immigration
4598 The Markets for the Factors of Production
40. Immigration is an important
a. explanation for the failure of firms to operate on their labor-demand curves.
b. explanation for the failure of firms to operate on their output-supply curves.
c. source of shifts in labor demand.
d. source of shifts in labor supply.
41. Which of the following events would shift the labor supply curve?
a. changes in the number of women willing to work
b. immigration of workers
c. changing attitudes towards work
d. All of the above are correct.