A decrease in an individual’s wealth causes the budget set to experience
a. a parallel shift outward.
b. a parallel shift inward.
c. a no change.
d. a pivot upward.
e. a pivot downward.
Which of the following is NOT one of the five steps to the practice of insider
conometrics?
a. Visit a number of sites that use the particular production process.
b. Create a dataset with aggregate industry variables and estimate a macroeconomic
model.
c. Collect panel data on the universe of firms that use the particular process and use
econometric methods to estimate the parameters of an economic model.
d. Conduct field research to thoroughly understand the production process.
e. Form a conclusion from the econometric estimates.
If there are turnover costs, for specific training
a. the firm will bear the full cost of the training.
b. the worker will bear the full cost of the training.
c. the worker receives less than his MRP early in his career.
d. wages decrease based on the costs of the investment.
e. the wage will be higher in order to avoid turnover of the workers.
Suppose a competitive labor market is populated by equal numbers of high-ability (H)
and low-ability (L) workers. Each high-ability worker produces output valued at $100
and each low-ability worker produces output valued at $20. In terms of time for their
effort, it costs $60 for high-ability students to acquire a college degree while it costs
low-ability students $75 to acquire a college degree. High-ability students ______
acquire a college degree and will be paid ______.
a. will not; $60
b. will not; $100
c. will; $60
d. will; $100
e. will; $10
Which of the following is an exogenous variable in the standard model of labor supply?
a. the wage in an alternative industry
b. the wage in that industry
c. the population size
d. the rental price of capital
e. both A and C.
Which of the following is true about point R on the indifference curve ?
a. It corresponds to the utility maximizing solution.
b. It represents a corner solution where the worker chooses to remain out of the labor
force.
c. It is not feasible given the constraints.
d. It satisfies the tangency condition.
e. It represents a feasible outcome that does not maximize the worker’s utility.
In the competitive model where all workers are covered by the minimum wage and all
firms comply with the law, a minimum wage set above the competitive equilibrium
wage will ______ employment and ______ unemployment.
a. increase; increase
b. not affect; decrease
c. decrease; increase
d. decrease; decrease
e. not affect; increase
In which type of market are all workers and firms price takers?
a. Oligopoly
b. Monopoly
c. Monopsony
d. Competitive
e. Monopolistic competition
Which of the following is a true statement about isoquants?
a. Each isoquant corresponds to the same level of capital.
b. Each isoquant corresponds to the same level of labor.
c. Each isoquant corresponds to the same level of output.
d. Isoquants are positively sloped to re?0??4?ect the substitutability between capital and
labor.
e. Isoquants can cross.
Which of the following is not a constraint for McDonald’s?
a. The federal government increases the minimum wage.
b. Each store needs a deep fryer to cook French fries.
c. A news report increases awareness of childhood obesity, which decreases the number
of fast food patrons.
d. The CEO decides to add an additional store in New York City.
e. Like many companies, there is an information asymmetry when hiring a new
employee.
The tangency point occurs
a. at the corner where the individual does not work.
b. where .
c. where
d. where .
e. at a point inside the budget constraint.
Suppose a worker’s earnings are governed by w = 8· ln (1 + s) and r = 5. Given the
unemployment rate with 7 of 16 workers unemployed, what is the optimal level of
schooling?
a. 4 years
b. 5 years
c. 6 years
d. 7 years
e. 9 years
The ______ program represents the largest slice of expenditures in the war on poverty
by far.
a. AFDC
b. Food Stamp
c. Medicaid
d. Medicare
e. EITC
Suppose that, prior to the imposition of the minimum wage, the hourly wage is W*.
Workers are also given fringe benefits equal to B*. The marginal cost of labor increases
to after the imposition of the minimum wage. According to the Wessel’s
effect, firms will reduce fringe benefit payments by precisely:
a.
b.
c.
d.
e. W*
A is an attribute a worker can vary while a is an attribute that is predetermined for each
individual but which varies across individuals.
a. trait; signal
b. signal; trait
c. signal; screen
d. trait; screen
e. discrimination coefficient; discrimination factor
Ports of entry and exit are defined as:
a. where the internal labor market comes in contact with the external labor market.
b. where manufactured products enter and leave a firm.
c. respectively, the wages workers take in and the output they produce.
d. respectively, the output workers produce and the wages they take in.
e. the methods by which inputs are received by a firm and output is delivered by a
firm.
When the price of capital decreases, if the demand for labor then capital and labor are
gross.
a. increases, substitutes
b. increases, complements
c. remains the same, substitutes
d. remains the same, complements
e. decreases, complements
In the United States, the poverty rate is determined:
a. on the basis of a relative standard.
b. on the basis of an absolute standard.
c. by the Social Security Administration.
d. by Congress.
e. by the Department of Agriculture.
In the context of workers’ compensation, the replacement rate is defined as:
a. the ratio of a worker’s post-injury wage rate to his pre-injury wage rate.
b. the ratio of benefits payments to the workers’ pre-injury earnings.
c. the rate at which firms are able to hire new workers to replace those that
unexpectedly quit.
d. the rate at which disabled workers are able to find new jobs.
e. the speed with which firms are able to replace workers who quit.
Which of the following is NOT true of the Oaxaca transformation?
a. The Oaxaca transformation compares the actual earnings of the average majority
member with the hypothetical earnings of the average minority member were he
endowed with the same average productivity as the majority member.
b. The Oaxaca transformation allows for an appropriate apples-to-apples comparison.
c. The residual of the Oaxaca transformation captures the extent of wage discrimination.
d. The observed wage gap of the Oaxaca transformation is equivalent to the
productivity differences between the majority and minority groups.
e. The Oaxaca transformation calculates predicted earnings for an average minority
member.
A monopolist in the product market will most likely
a. hire the same number of workers as the competitive market at the same wage.
b. hire the same number of workers as the competitive market at a lower wage.
c. hire the same number of workers as the competitive market at a higher wage.
d. hire fewer workers than the competitive market.
e. hire more workers than the competitive market.
There are two tasks, 1 and 2, and two workers, A and B. The level of output, y, is
governed by the task-based production technology: where and denote
the respective amount of task 1 and task 2 that are carried out during the period. A‘s
ability is (10, 1), which represents the maximum amount of task 1 and task 2 he can
perform if he devotes all of his time to it. B‘s ability is (6, 3). Which worker has an
absolute advantage in task 1? Which worker has an absolute advantage in task 2?
a. A; A
b. A; B
c. B; A
d. B; B
e. neither; A
What is the net return to Matt’s educational investment?
a. 1
b. 3
c. 6
d. 7
e. 9
Which of the following statements are not true?
a. Fringe benefits include health insurance and pension plans.
b. Workers all value fringe benefits the same.
c. Wage benefits are predicted to lie along a line with a slope of -1.
d. Employers are indifferent between any equally costly wage benefit combination.
e. Fringe benefits arise from a voluntary agreement between workers and employers.
Which of the following is NOT an explanation for the slow adoption-rate puzzle?
a. Reorganization is a costly experiment.
b. Some firms may not benefit from the introduction of new techniques.
c. There are opportunity costs to being an early adopter.
d. Firms are unsure about the viability of new ideas when they are untested.
e. Ideas that are worth implementing are created at a slow rate.
Suppose labor and capital are gross substitutes. If the capital stock increases, what
happens to the marginal product of labor curve and the equilibrium level of
employment?
a. The marginal product of labor will shift to the right, and employment will increase.
b. The marginal product of labor will shift to the right, and employment will decrease.
c. The marginal product of labor will shift to the left, and employment will increase.
d. The marginal product of labor will shift to the left, and employment will decrease.
e. The marginal product of labor will shift to the right, and employment will remain the
same.
The future earnings of an individual at a rate.
a. increase, constant
b. increase, increasing
c. increase, decreasing
d. decrease, constant
e. decrease, decreasing
Fewer women are taking time off to raise their children. What does this imply about
their labor market activities?
a. Women will acquire less on-the-job training and earn less over their lifetime.
b. Women will acquire less on-the-job training and earn more their lifetime.
c. Women will acquire less on-the-job training and earn the same earnings over their
lifetime.
d. Women will acquire more on-the-job training and earn less over their lifetime.
e. Women will acquire more on-the-job training and earn more over their lifetime.
Suppose the own wage elasticity of labor is 0.75%. What does this imply?
a. The supply of labor is elastic.
b. The supply of labor is inelastic.
c. The demand for labor is elastic.
d. The demand for labor is inelastic.
e. The demand for labor is unitary elastic.
Suppose Janet’s initial wealth is $480 and there are 24 hours in a day. What is Janet’s
reservation wage?
a. $10
b. $20
c. $24
d. $240
e. $480
Why might wage discrimination and earnings discrimination not be interchangeable?
a. Wage discrimination is a static measure of discrimination and earnings discrimination
can be measured over time.
b. Earnings are a function of both the wage and hours worked.
c. Earnings are solely at the discretion of the worker because the worker decides what
type of job to accept.
d. Wage discrimination is driven to zero in the long run.
e. Wage and earnings discrimination are completely interchangeable because total
earnings is a function of the wage.
What is the marginal benefit of the investment for Sharon?
a. $20
b. $25
c. $35
d. $40
e. $50
Which of the following is true about earnings and educational levels in the United
States?
a. The median annual income of women is higher than men for all educational levels.
b. The highest percentage of unemployed workers have received some college training.
c. The highest percentage of unemployed workers have less than a high school
education.
d. College enrollment has increased steadily for only men since 1960.
e. College enrollment has increased steadily for only women since 1960.
Which of the following is an example of statistical discrimination?
a. A firm will not hire any laborer over the age of 50 because of the firm’s belief that
most workers over 50 are not able to do the job.
b. A restaurant will not hire a Black server because it fears that its customers are
discriminatory.
c. A worker chooses not to accept a job offer because the owner of the firm is an
expatriate.
d. A school hires only teachers who pass a PRAXIS test of pedagogical knowledge.
e. Only applications from college-educated workers are considered for an opening for
CFO.
Empirical evidence shows that the passage of ______ drastically reduced expenditure
on and enrollees in social welfare programs.
a. PRWOA
b. AFDC
c. TANF
d. The Food Stamp Program
e. Medicaid