The Markets for the Factors of Production 4599
42. Which of the following events would shift a labor supply curve?
(i) immigration of high-skilled workers
(ii) immigration of low-skilled workers
(iii) changes in the number of women willing to work full time
a. (i) and (iii) only
b. (ii) and (iii) only
c. (iii) only
d. (i), (ii), and (iii)
43. The labor supply curve shifts when
a. employers need to hire more people.
b. employers develop new technology.
c. workers change the number of hours that they want to work at any given wage.
d. workers become more productive.
4600 The Markets for the Factors of Production
44. What happens to labor supply in the pear-picking market when the wage paid to apple pickers
increases?
a. The labor supply will stay unchanged until the wages paid to pear pickers change.
b. The labor supply will decrease.
c. The labor supply will increase.
d. The labor supply may fall or rise, depending on the price of pears.
45. Suppose that the wage paid to workers who detassel corn rises. What happens in the market for
workers who weed soybean fields, given that workers who detassel corn can easily work weeding
soybean fields?
a. The demand curve for soybean workers increases.
b. The demand curve for soybean workers decreases.
c. The supply curve for soybean workers increases.
d. The supply curve for soybean workers decreases.
The Markets for the Factors of Production 4601
46. What happens to the labor supply curves in both countries when Mexican workers leave Mexico
and move to the United States?
a. Labor supply decreases in Mexico and decreases in the United States.
b. Labor supply increases in the United States and increases in Mexico.
c. Labor supply increases in the United States and decreases in Mexico.
d. Labor supply increases in Mexico and decreases in United States.
47. Immigration of workers into the United States is often an important source of
a. increases in the demand for labor in the United States.
b. decreases in the demand for labor in the United States.
c. increases in the supply of labor in the United States.
d. decreases in the supply of labor in the United States.
4602 The Markets for the Factors of Production
48. Which of the following events would lead to an increase in the supply of labor?
a. The price of a firm‘s product increases.
b. A country experiences an increase in immigrant labor.
c. The development of a new labor-augmenting technology.
d. All of the above are correct.
49. When the wages paid to government economists increase, the labor supply curve for academic
economists
a. shifts to the left.
b. shifts to the right.
c. will become backward-sloping.
d. will not change.
The Markets for the Factors of Production 4603
50. Which of the following could increase the labor-supply curve for computer-repair technicians?
a. an increase in the wages paid to computer-repair technicians
b. an increase in immigration
c. a change in the work preferences of men, with more of them preferring to be stay–at–home
fathers
d. an increase in the wages paid to television-repair technicians
51. Which of the following could decrease the labor-supply curve for teachers?
a. a decrease in the wages paid to teachers
b. an increase in immigration
c. a change in the work preferences of men, with more of them preferring to be stay–at–home
fathers
d. any factor that would decrease the labor-demand curve
4604 The Markets for the Factors of Production
52. Which of the following could increase the supply of labor in the market for cranberry pickers?
(i) a change in the preferences of women toward full-time work
(ii) an increase in the output price
(iii) an increase in the wages paid to apple pickers
(iv) a decrease in the wages paid to apple pickers
a. (ii) only
b. (i), (ii), and (iv) only
c. (i) and (iv) only
d. (ii) and (iii) only
Multiple Choice – Section 03: Equilibrium in the Labor Market
1. In a representative labor market,
a. the wage adjusts to balance the supply and demand for labor.
b. the wage equals the value of the marginal product of labor.
c. an increase in the supply of labor increases the equilibrium wage.
d. Both a and b are correct.
The Markets for the Factors of Production 4605
2. Which of the following is correct?
a. Any event that changes the supply or demand for labor must change the value of the marginal
product.
b. A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the
marginal product of labor.
c. An increase in the supply of labor increases both employment and wages.
d. A decrease in the demand for labor decreases wages but increases employment.
3. Which of the following is not correct?
a. In a labor market, the wage adjusts to balance the supply and demand for labor.
b. A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the
marginal product of labor.
c. Any event that changes the supply or demand for labor must change the equilibrium wage.
d. Any event that changes the supply or demand for labor must change the value of the marginal
product.
4606 The Markets for the Factors of Production
Scenario 18-4
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the
Adriatic Sea to Italy where they sought relief from the fighting.
4. Refer to Scenario 18-4. The Albanian civil war probably affected Italian labor markets by
causing
a. total employment in Italy to decrease.
b. wages in Italy to increase.
c. the marginal product of labor in Italy to decrease.
d. All of the above are correct.
5. Refer to Scenario 18-4. The Italian government started to patrol the Adriatic Sea and had a
policy of returning all refugees to Albania. This policy would contribute to
a. an increase in the supply of labor in Italy.
b. an increase in the demand labor in Italy.
c. a decrease in the demand for labor in Italy.
d. preventing an increase in the supply of labor in Italy.
The Markets for the Factors of Production 4607
Scenario 18-5
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to emigrate to
southern Canada.
6. Refer to Scenario 18-5. In the labor market in southern Canada, the equilibrium wage
a. and the equilibrium quantity of labor will rise.
b. and the equilibrium quantity of labor will fall.
c. will rise, and the equilibrium quantity of labor will fall.
d. will fall, and the equilibrium quantity of labor will rise.
7. Refer to Scenario 18-5. In the labor market in the northern United States, the equilibrium wage
a. and the equilibrium quantity of labor will rise.
b. and the equilibrium quantity of labor will fall.
c. will rise, and the equilibrium quantity of labor will fall.
d. will fall, and the equilibrium quantity of labor will rise.
4608 The Markets for the Factors of Production
Figure 18–7
8. Refer to Figure 18-7. When the relevant labor supply curve is S1, and the labor market is in
equilibrium, the
a. wage is W1.
b. opportunity cost of leisure to workers is W1.
c. value of the marginal product of labor to firms is W1.
d. All of the above are correct.
The Markets for the Factors of Production 4609
9. Refer to Figure 18-7. Which of the following would shift the labor supply curve from S1 to S2?
a. technological progress
b. a decrease in the price of the firm’s output
c. a change in workers’ attitudes toward the work-leisure tradeoff
d. an increase in the price of the firm’s output
10. Refer to Figure 18-7. Which of the following would shift the labor supply curve from S1 to S2?
a. a change in workers’ attitudes toward the work-leisure tradeoff
b. decreases in wages in other labor markets
c. immigration of workers into the region or country
d. All of the above are correct.
11. Refer to Figure 18-7. If the relevant labor supply curve is S2 and the current wage is W1,
a. there is a surplus of labor.
b. the quantity of labor demanded exceeds the quantity of labor supplied.
c. an increase in the minimum wage could restore equilibrium in the market.
d. firms will need to raise the wage to restore equilibrium.
4610 The Markets for the Factors of Production
12. Refer to Figure 18-7. Assume W1 = $20 and W2 = $18, and the market is always in
equilibrium. A shift of the labor supply curve from S1 to S2 would
a. increase the value of the marginal product of labor by $2.
b. decrease the value of the marginal product of labor by $2.
c. decrease the value of the marginal product of labor by more than $2.
d. not change the value of the marginal product of labor.
13. Refer to Figure 18-7. Assume W1 = $15 and W2 = $12, and the market is always in
equilibrium. A shift of the labor supply curve from S1 to S2 would
a. increase the value of the marginal product of labor by $3.
b. decrease the value of the marginal product of labor by $3.
c. decrease the value of the marginal product of labor by more than $3.
d. not change the value of the marginal product of labor.
14. Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause
the equilibrium wage
a. and the equilibrium quantity of labor to rise.
b. and the equilibrium quantity of labor to fall.
c. to rise and the equilibrium quantity of labor to fall.
d. to fall and the equilibrium quantity of labor to rise.
15. Suppose that the market for labor is initially in equilibrium. Suppose that workers’ tastes change so
that they choose
to retire at age 55 rather than age 67. Then the equilibrium wage
a. and the equilibrium quantity of labor will rise.
b. and the equilibrium quantity of labor will fall.
c. will rise, and the equilibrium quantity of labor will fall.
d. will fall, and the equilibrium quantity of labor will rise.
4612 The Markets for the Factors of Production
16. Suppose that the market for labor is initially in equilibrium. Suppose that workers’ tastes change so
that they choose to retire at age 70 rather than age 67. Then the equilibrium wage
a. and the equilibrium quantity of labor will rise.
b. and the equilibrium quantity of labor will fall.
c. will rise, and the equilibrium quantity of labor will fall.
d. will fall, and the equilibrium quantity of labor will rise.
17. Consider the market for university economics professors. Suppose the opportunity cost of going to
graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally
takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the
equilibrium wage for university economics professors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium wage.
The Markets for the Factors of Production 4613
18. Consider the market for university economics professors. Suppose the opportunity cost of going to
graduate school to get a Ph.D. in economics increases for many individuals. Suppose it generally
takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the
equilibrium wage for university economics professors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium wage.
19. Consider the market for medical doctors. Suppose the opportunity cost of going to medical school
decreases for many individuals. Suppose it generally takes about ten years to become a practicing
doctor. Holding all else constant, in ten years the equilibrium wage for doctors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium wage.
4614 The Markets for the Factors of Production
20. Consider the market for medical doctors. Suppose the opportunity cost of going to medical school
increases for many individuals. Suppose it generally takes about ten years to become a practicing
doctor. Holding all else constant, in ten years the equilibrium wage for doctors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium wage.
21. Consider the market for university economics professors. Suppose the opportunity cost of going to
graduate school to get a Ph.D. in economics decreases for many individuals. Suppose it generally
takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the
equilibrium quantity of university economics professors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium quantity.
The Markets for the Factors of Production 4615
22. Consider the market for university economics professors. Suppose the opportunity cost of going to
graduate school to get a Ph.D. in economics increases for many individuals. Suppose it generally
takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the
equilibrium quantity of university economics professors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium quantity.
23. Consider the market for medical doctors. Suppose the opportunity cost of going to medical school
decreases for many individuals. Suppose it generally takes about ten years to become a practicing
doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium quantity.
4616 The Markets for the Factors of Production
24. Consider the market for medical doctors. Suppose the opportunity cost of going to medical school
increases for many individuals. Suppose it generally takes about ten years to become a practicing
doctor. Holding all else constant, in ten years the equilibrium quantity of doctors will
a. increase.
b. decrease.
c. not change.
d. It is not possible to determine what will happen to the equilibrium quantity.
25. When labor supply increases,
a. the marginal productivity of workers always increases.
b. profit-maximizing firms reduce employment.
c. wages increase as long as labor supply is upward sloping.
d. wages decrease as long as labor demand is downward sloping.
The Markets for the Factors of Production 4617
26. Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly
describes what would happen in the market for labor in Minnesota?
a. The equilibrium wage would increase, and the quantity of labor would increase. With more
workers, the added output from an extra worker is larger.
b. The equilibrium wage would decrease, and the quantity of labor would decrease. With fewer
workers, the added output from an extra worker is smaller.
c. The equilibrium wage would decrease, and the quantity of labor would increase. With more
workers, the added output from an extra worker is smaller.
d. The equilibrium wage would decrease, and the quantity of labor would increase. With more
workers, the added output from an extra worker is larger.
27. When a labor market experiences a surplus of labor, there is downward pressure on
a. the supply of labor.
b. the final product price.
c. wages.
d. the demand for labor.
4618 The Markets for the Factors of Production
28. An increase in the supply of labor has the effect of decreasing the
a. wage.
b. marginal product of labor.
c. value of the marginal product of labor.
d. All of the above are correct.
29. Consider the labor market for short-order cooks. An increase in immigration will cause
a. both equilibrium wages and equilibrium employment to increase.
b. both equilibrium wages and equilibrium employment to decrease.
c. equilibrium wages to increase and equilibrium employment to decrease.
d. equilibrium wages to decrease and equilibrium employment to increase.