Chapter 2 Suppose Individual Worker The Backward bending Portion

30. Suppose an individual worker is on the backward–bending portion of her labor supply curve. Then, for a wage

increase, the

31. Refer to the following diagram.

If the current wage rate results in a budget constraint of AB1, the individual will choose

32. Refer to the following diagram.

The shift from budget line AB1 to AB2 implies a(n)

33. Refer to the following diagram.

The equilibrium positions shown imply that in the relevant wage range, this person is

34. Refer to the following diagram.

The equilibrium positions shown in the diagram imply that for a wage increase,

35. Refer to the following diagram.

In the diagram, the substitution effect associated with a wage increase is shown by the distance

36. Suppose an individual worker is on the up sloping portion of her labor supply curve. Then, for a wage increase,

the

37. A 10% increase in the wage induces Margy to increase her desired work hours by 2%. Over this range of wages,

Margy?s wage elasticity of labor supply is

38. For Jenny, the income effect of a wage increase dominates the substitution effect. Jenny?s wage elasticity of

labor supply is

39. Which of the following circumstances will increase the likelihood of an individual being a non-participant in the

labor market?

40. Steven’s reservation wage is $12, and his market wage is $11. We can conclude that

41. Shanita is required by her employer to work a standard eight-hour workday. Suppose her marginal rate of

substitution of leisure for income is less than the wage rate at this level of work effort. We can conclude that Shanita

will

42. Sammy is required by her employer to work a standard eight-hour workday. Suppose her marginal rate of

substitution of leisure for income exceeds the wage rate at this level of work effort. We can conclude that Sammy

will

43. Compared to workers with less education, people who have more education tend to earn higher wages and have

higher pensions upon retirement. Given this observation, which of the following statements best explains why those

persons with more education also retire at a later age?

44. Refer to the following diagram. TS represents the standard 40-hour workweek. Indifference curves labeled with

subscripts “a” and “b” are for individuals A and B, respectively.

Assuming workers must work TS hours or not work at all, worker A will

45. Refer to the following diagram. TS represents the standard 40-hour workweek. Indifference curves labeled with

subscripts “a” and “b” are for individuals A and B, respectively.

Assuming workers must work TS hours or not work at all, worker B will

46. Refer to the following diagram.

Suppose this worker is currently working 40 hours per week and earning $8 per hour. Which one of the following

would cause a move to point B and the subsequent increase in work hours to 60?

47. Refer to the following diagram.

Suppose this worker’s union negotiates an increase in the straight-time wage from $8 to $9.33 per hour with no

bonus for overtime. This plan would allow earnings of $560 at 60 hours per week. Assuming this worker can freely

choose the number of hours worked, he will choose to work

48. Suppose a working mother is currently ineligible for any government assistance. If she were then to become

eligible for an income maintenance program that incorporates both a basic benefit and a positive benefit-reduction

rate,

49. Assume under an income-maintenance program that the basic benefit (income guarantee) is $9,000 and the

benefit-reduction rate is 50%. If a family has an earned income of $3,000 per year, its subsidy payment will be

50. Assume under an income-maintenance program that the basic benefit (income guarantee) is $9,000 and the

benefit-reduction rate is 50%. The break-even level of income is

51. Suppose an income-maintenance program offers a basic benefit of $7,500 per year and the benefit-reduction rate

is 33 1/3%. The break-even level of income is then

52. The Personal Responsibility and Work Opportunity Act of 1996

53. In the years following enactment of welfare reform in 1996, welfare case loads

54. Empirical evidence indicates that inheritances _____ labor force participation; further, persons receiving

inheritances tend to be _____ likely to work in the years preceding the inheritance.

55. The Earned Income Tax Credit

Chapter 02 Test Bank Summary