ECON 82131 | Course Paper

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Given isoprofit line 1, this worker’s wage-fringe optimum is given by point: (All points

along the ray 0P reflect a constant proportion of wages to fringe benefits.)

a. A

b. B

c. C

d. D

Fuchs’ research suggests the most important reasons for the increased labor force

participation rate of women are:

a. rising real wages and expansion of service sector jobs

b. rising real wages and the feminist movement

c. the feminist movement and passage of antidiscrimination legislation

d. passage of antidiscrimination legislation and technological innovations in household

production methods

Suppose that the decline in prices of personal computers has reduced the demand for

labor at a particular firm. We may conclude that at this firm:

a. computers and labor are pure complements

b. computers and labor are gross complements but not pure complements

c. computers and labor are gross substitutes

d. computers and labor are perfect substitutes

The Earned Income Tax Credit:( Assume under an income maintenance program that

the basic benefit (income guarantee) is $9000 and the benefit-reduction rate is 50%.)

a. reduces desired hours of work for those already in the labor force

b. increases the labor force participation rate

c. always increases with increases in earnings

d. is phased out as the number of children increases

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?

a. If tastes for leisure are the same, the effect of the higher pension must outweigh the

effects of the higher wages

b. If tastes for leisure are the same, the effects of the higher wages must outweigh the

effects of the higher pensions

c. Since higher wages and pensions both suggest a lower retirement age, those with

more education must value leisure less

d. Regardless of the tastes for leisure, the higher wages and pensions would both

suggest a higher retirement age

The increase in economic rent shown in the diagram is consistent with:

a.setting a limit on the number of licensed employees in this occupation

b.imposing a tariff on similar products produced by foreigners

c.imposing a quota on similar products produced by foreigners

d.imposing a requirement that all future employees in this occupation obtain an

advanced degree

Higher than average productivity growth in industry X would be least likely lead to

relative employment growth in industry X if the demand for X is:

a.both price and income inelastic

b.both price and income elastic

c.price inelastic and income elastic

d.price elastic and income elastic

In the equation for the net present value of migration, ,

the term “E2” refers to:

a.the net psychic costs of moving

b.the length of time expected on the new job

c.earnings from the new job

d.earnings from the old job

Which one of the following conditions is required for allocative efficiency?

a. Marginal revenue product exceeds the value of marginal product by the greatest

amount

b. Marginal revenue product equals the wage rate

c. Value of marginal product equals the marginal wage cost

d. Value of marginal product is the same in all alternative employments of a given type

of labor

Which one of the following is not a valid explanation for why workers may prefer an

extra dollar’s worth of fringe benefits to an extra dollar’s worth of cash?

a. workers may prefer to bind themselves against their own tendencies toward

immediate gratification

b. certain fringe benefits effectively trade current taxes for future taxes

c. people generally prefer in-kind benefits to cash

d. certain fringe benefits are untaxed

Early empirical evidence reported by Barry Chiswick indicated that foreign-born

persons migrating to the U.S., all else constant:

a.tended to earn more than natives from the time they arrived at the destination

b.initially tended to earn less than natives, caught up after 10-15 years, and eventually

surpassed natives

c.typically did not catch up to the earnings of native-born workers, even after several

years

d.had little or no variance in their earnings

If this market is best represented by the “monopoly union” model, the union will

bargain for: (Wc is the competitive wage and Ic is the union’s utility level at the

competitive wage and employment level.)

a.Wa and the firm will respond by hiring Q1 workers

b.Wb and the firm will respond by hiring Q2 workers

c.Wa and the firm will respond by hiring Qc workers

d.Wb and the firm will respond by hiring Qc workers

White-collar workers:

a.are just as likely as blue-collar workers to be union members

b.are less likely to unionize because unionization may be an obstacle to their ambitions

c.are more likely to unionize because the potential gains from unionization are larger

d.are exempt from most labor legislation

The federally mandated minimum wage:

a.is adjusted each year by an act of Congress to account for inflation

b.typically falls in value owing to inflation until periodically adjusted by Congress

c.is adjusted automatically whenever its inflation-adjusted value falls below its original

value established in 1938

d.is substantially below its original 1938 value in real terms because of the effect of

inflation

Consider the diagram. Suppose the government establishes a minimum wage of $7.00

in this market. If all displaced workers subsequently contribute an amount equal to their

next most productive employment, the net loss of domestic output is: (which shows a

competitive low-wage labor market):

a.$17.50

b.$40

c.$50

d.$75

The unemployment rate at which there is neither excess demand nor excess supply in

the aggregate labor market:

a.must be 0%

b.is called the natural rate of unemployment

c.will lead to higher inflation if pursued as a policy goal

d.corresponds to the rate we would observe if inflation were lower than had been

expected

Because resources are scarce relative to human wants, economics is best described as:

a. the science of allocating productive resources fairly

b. a science of choice

c. the science of allocating goods and services fairly

d. the set of natural laws that govern human behavior in the face of adverse conditions

The horizontal portion of the demand curve will be extended by an increase in the:

(Waa/Ww is the ratio of the African American wage rate to the white wage rate):

a. number of firms that discriminate

b. number of firms that do not discriminate

c. productivity of white workers

d. supply of African American workers

Internal labor markets are most likely to exist if:

a.workers do not require extensive amounts of firm-specific training

b.there are substantial costs to the employer associated with worker turnover

c.costs of screening and recruiting job applicants are relatively low

d.workers’ productivity does not increase with experience

“To find the market demand curve for a particular type of labor, simply sum the labor

demand curves of all employers of that type of labor.” This statement is:

a. true

b. falsesum the value of marginal product curves for the firms to account for changes in

wage rates as employment increases

c. falsesum the value of marginal product curves for the firms to account for changes in

output price as production increases

d. falsealthough the price of output for any individual firm may be constant, this may

not be the case for all firms taken collectively

At labor input Z, labor’s:

a. average product is maximized

b. marginal product is maximized

c. marginal product is zero

d. total product is zero

Which of the following will leave unit labor costs unchanged?

a.Nominal wages and productivity both increase by 3%

b.Nominal wages do not increase, regardless of the productivity increase

c.Real wages do not increase, regardless of the productivity increase

d.Real wages, productivity, and prices all increase by 3%

Consider the three combinations of leisure and income represented by points A, B, and

C. Which of the following is a correct statement?

a. Larry prefers A to B

b. Larry prefers A to C

c. Larry prefers B to C

d. Larry prefers C to A

A decrease in the supply of African American workers will: (Waa/Ww is the ratio of the

African American wage rate to the white wage rate):

a. extend the horizontal portion of the demand curve, raising the relative wage of

African Americans

b. lower the relative wage of African Americans

c. eliminate the wage differential between whites and African Americans if the resulting

supply curve intersects the horizontal portion of the demand curve

d. embolden more employers to discriminate, reducing the horizontal portion of the

demand curve, and lowering the relative wage of African Americans

Typically, as the level of education increases:

a. costs rise and benefits fall, reducing the internal rate of return to education

b. costs rise and benefits fall, increasing the internal rate of return

c. costs fall and benefits rise, increasing the internal rate of return

d. both costs and benefits fall, having an unpredictable effect on the rate of return

Over the last few decades, industrial production has shifted from the Northeast and

Midwest to the South and Southwest regions of the U.S. This fact is most consistent

with the:

a.managerial-opposition hypothesis

b.union-growth hypothesis

c.structural-change hypothesis

d.substitution hypothesis

Suppose this firm is a perfectly discriminating monopsonist. If W* is imposed as the

minimum wage, then:

a.employment will rise from Q1 to Q2

b.employment will fall from Q3 to Q1

c.employment will fall from Q3 to Q2

d.employment will be unaffected

Which of the following best explains the growth of public-sector employment relative

to the private sector since 1950?

a.Labor supply has increased at the same pace in both sectors, but labor demand has

increased more rapidly in the public sector

b.Labor supply has increased at the same pace in both sectors, but labor demand has

increased more rapidly in the private sector

c.Labor demand has increased at the same pace in both sectors, but labor supply has

increased more rapidly in the public sector

d.Labor demand has increased at the same pace in both sectors, but labor supply has

increased more rapidly in the private sector

An earnings-maximizing student would attend college if:

a. the net present value of a college education is zero

b. the internal rate of return on a college education is positive

c. the internal rate of return on a college education exceeds the interest rate on

borrowed funds

d. there is an earnings gain associated with a college education

If both the union and the firm know the shape and position of the other’s concession

curve, then: (EC is the employer concession curve and UR is the union resistance

curve.)

a.a strike of length T* will occur

b.the parties will agree on a wage of W*

c.both a. and b. are correct

d.neither a. nor b. are correct