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42. Refer to Figure 18-9. If the price of apples decreases, the equilibrium wage will
a.
increase, and more apple pickers will be hired.
b.
decrease, and more apple pickers will be hired.
c.
increase, and fewer apple pickers will be hired.
d.
decrease, and fewer apple pickers will be hired.
Figure 18-10
43. Refer to Figure 18-10. When the relevant labor demand curve is D1 and the labor market is in equilibrium,
a.
the value of the marginal product of labor to firms is less than W1.
b.
the opportunity cost of leisure to workers is greater than W1.
c.
the wage is W1.
d.
All of the above are correct.
44. Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?
a.
technological progress
b.
an increase in the price of firms' output
c.
an increase in the supply of a relevant factor of production other than labor
d.
All of the above are correct.
45. Refer to Figure 18-10. Which of the following would shift of the labor demand curve from D1 to D2?
a.
a change in workers' attitudes toward the work-leisure tradeoff
b.
decreases in wages in other labor markets
c.
an increase in the price of firms' output
d.
All of the above are correct.
46. \Refer to Figure 18-10. Assume W1 = $20 and W2 = $22, and the market is always in equilibrium. A shift of the
labor demand curve from D1 to D2 would
a.
increase the value of the marginal product of labor by $2.
b.
increase the value of the marginal product of labor by less than $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.
47. Refer to Figure 18-10. If the relevant labor demand curve is D2 and the current wage is W1,
a.
there is a surplus of labor.
b.
there is a shortage of labor.
c.
the quantity of labor supplied exceeds the quantity of labor demanded.
d.
workers are failing to take into account the work-leisure tradeoff in deciding what quantity of labor to supply
at alternative wages.
48. Suppose that the market for labor is initially in equilibrium. An increase in the price of output 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.
49. Suppose that the market for labor is initially in equilibrium. A decrease in the price of output 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.
50. Suppose that the market for labor is initially in equilibrium. If the firm employs labor-augmenting technology, 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.
51. Suppose that the market for labor is initially in equilibrium. If the firm employs labor-saving technology, 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.
52. Suppose that technological progress increases the productivity of teachers. Which of the following accurately
describes the labor market for teachers after the technological change? Equilibrium wages will
a.
rise, and the equilibrium quantity of teachers employed will fall.
b.
rise, and the equilibrium quantity of teachers employed will rise.
c.
fall, and the equilibrium quantity of teachers employed will fall.
d.
fall, and the equilibrium quantity of teachers employed will rise.
53. Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all
computer programmers increased dramatically. Holding all else equal, what effect did this process have on the labor
market for computer programmers? The equilibrium wage
a.
increased, and the equilibrium quantity of labor increased.
b.
increased, and the equilibrium quantity of labor decreased.
c.
decreased, and the equilibrium quantity of labor increased.
d.
decreased, and the equilibrium quantity of labor decreased.
54. Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all
computer programmers increased dramatically. Holding all else equal, the equilibrium wage in the labor market for
computer programmers
a.
increased.
b.
decreased.
c.
did not change.
d.
It is not possible to determine the equilibrium wage.
55. Consider the labor market for computer programmers. During the late 1990s, the value of the marginal product of all
computer programmers increased dramatically. Holding all else equal, the equilibrium quantity in the labor market for
computer programmers
a.
increased.
b.
decreased.
c.
did not change.
d.
It is not possible to determine the equilibrium quantity.
56. Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers
went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when
these computer programming students graduated, the dot.com bust took place. The dot.com bust decreased the value of
the marginal product of computer programmers. Holding all else equal, what effect did these two circumstances have on
the equilibrium wage in the labor market for computer programmers?
a.
The equilibrium wage increased.
b.
The equilibrium wage decreased.
c.
The equilibrium wage did not change.
d.
It is not possible to determine what happens to the equilibrium wage.
57. Consider the labor market for computer programmers. Because of the dot.com boom in the late 1990s, a lot of workers
went to school to learn how to write computer code for one of thousands of new dot.com companies. However, when
these computer programming students graduated the dot.com bust took place. The dot.com bust decreased the value of the
marginal product of computer programmers. Holding all else equal what effect did these two circumstances have on the
equilibrium quantity in the labor market for computer programmers?
a.
The equilibrium quantity of labor increased.
b.
The equilibrium quantity of labor decreased.
c.
The equilibrium quantity of labor did not change.
d.
It is not possible to determine what happens to the equilibrium quantity of labor.
58. Consider the labor market for heath care workers. Because of the aging population in the United States, the output
price for health care services has increased. Holding all else equal, in the labor market for health care employees the
equilibrium wage
a.
increases, and the equilibrium quantity of labor increases.
b.
increases, and the equilibrium quantity of labor decreases.
c.
decreases, and the equilibrium quantity of labor increases.
d.
decreases, and the equilibrium quantity of labor decreases.
59. Consider the labor market for heath care workers. Because of the aging population in the United States, the output
price for health care services has increased. Holding all else equal, the equilibrium wage of health care employees would
a.
increase.
b.
decrease.
c.
not change.
d.
It is not possible to determine what happens to the equilibrium wage.
60. Consider the labor market for heath care workers. Because of the aging population in the United States, the output
price for health care services has increased. Holding all else equal, the equilibrium quantity of health care employees
would
a.
increase.
b.
decrease.
c.
not change.
d.
It is not possible to determine what happens to the equilibrium quantity.
Scenario 18-7
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become
a university economics professor.
Event 2: An increasing number of students in U.S. primary and secondary schools increases the number of students
entering college, increasing the output price of university economics professors’ services.
61. Refer to Scenario 18-7. As a result of these two events, holding all else constant, the equilibrium wages 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 wages.
62. Refer to Scenario 18-7. As a result of these two events, holding all else constant, 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.
Scenario 18-8
Suppose the following events occur in the market for university economics professors.
Event 1: A recession in the U.S. economy lowers the opportunity cost of going to graduate school in economics to become
a university economics professor.
Event 2: A decreasing number of students in U.S. primary and secondary schools decreases the number of students
entering college, decreasing the output price of university economics professors’ services.
63. Refer to Scenario 18-8. As a result of these two events, holding all else constant, the equilibrium wages 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 wage.
64. Refer to Scenario 18-8. As a result of these two events, holding all else constant, 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.
65. When firms are able to increase the amount of physical capital available to workers, the
a.
marginal product of labor will decrease.
b.
value of the marginal product of labor will decrease.
c.
value of the marginal product of labor will increase.
d.
final product price will increase.
66. An increase in the value of the marginal product of labor has the effect of increasing the
a.
demand for labor.
b.
wage.
c.
quantity of labor employed.
d.
All of the above are correct.
67. Suppose medical research provides evidence that eating bananas provides far greater health benefits than was
previously thought. The resulting increase in the demand for bananas
a.
increases the marginal product of banana pickers for any given number of banana pickers.
b.
increases the value of the marginal product of banana pickers for any given number of banana pickers.
c.
increases the supply of banana pickers.
d.
All of the above are correct.
68. Consider the labor market for short-order cooks. A labor-augmenting technological change such as a faster food
processor 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.
69. Consider the labor market for short-order cooks. A shortage in the availability of frying pans 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.
70. Assume the market for candles is competitive. A decrease in the market price of candles
a.
decreases the demand for workers who make candles and decreases their equilibrium wage.
b.
decreases the demand for workers who make candles and increases their equilibrium wage.
c.
increases the demand for workers who make candles and decreases their equilibrium wage.
d.
increases the demand for workers who make candles and increases their equilibrium wage..
71. Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in
the production of candles. This development
a.
decreases the demand for workers who make candles and decreases their equilibrium wage.
b.
increases the demand for workers who make candles and increases their equilibrium wage.
c.
increases the supply of workers who make candles and decreases their equilibrium wage.
d.
increases the supply of workers who make candles and increases their equilibrium wage.
72. An increase in the demand for houses
a.
increases the equilibrium wage of carpenters and increases the value of carpenters’ marginal product of labor.
b.
increases the equilibrium wage of carpenters and decreases the value of carpenters’ marginal product of labor.
c.
decreases the equilibrium wage of carpenters and increases the value of carpenters’ marginal product of labor.
d.
decreases the equilibrium wage of carpenters and decreases the value of carpenters’ marginal product of labor.
73. An increase in the supply of labor
a.
increases the equilibrium wage and increases the value of the marginal product of labor.
b.
increases the equilibrium wage and decreases the value of the marginal product of labor.
c.
decreases the equilibrium wage and increases the value of the marginal product of labor.
d.
decreases the equilibrium wage and decreases the value of the marginal product of labor.
74. Suppose the wage earned by pear pickers suddenly rises. Which of the following effects would we most likely observe
as a result?
a.
The supply of apple pickers would decrease and the equilibrium wage of apple pickers would decrease.
b.
The supply of apple pickers would decrease and the equilibrium wage of apple pickers would increase.
c.
The demand for apple pickers would increase and the equilibrium wage of apple pickers would decrease.
d.
The demand for apple pickers would decrease and the equilibrium wage of apple pickers would decrease.
75. Which of the following is not correct?
a.
High-skilled immigration has many economic benefits.
b.
Each year in the United States, about one-third of the people earning a PhD. in science or engineering are
foreign born.
c.
Low-skilled immigration lowers the earnings of native-born workers by 10-20 percent.
d.
Illegal immigrants may pay less in taxes, but they also are ineligible for many government benefits.
76. A significant slowdown in the growth of productivity persisted in the U.S. economy between
a.
1960 and 1973.
b.
1973 and 1995.
c.
1973 and 2015.
d.
1995 and 2015.
77. Both theory and history point to a close relationship between increases in
a.
labor demand and increases in labor supply.
b.
labor demand and decreases in real wages.
c.
the productivity of labor and increases in real wages.
d.
interest rates and decreases in real wages.
78. Which of the following statements is correct?
a.
Neither economic theory nor evidence from the U.S. economy suggests that there is a close link between
productivity and real wages.
b.
Economic theory suggests that there is a close link between productivity and real wages, but evidence from the
U.S. economy fails to confirm that link.
c.
Evidence from the U.S. economy suggests a close link between productivity and real wages, but economic
theory provides no basis for such a link.
d.
Both economic theory and evidence from the U.S. economy suggest that there is a close link between
productivity and real wages.
79. Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does
the increase in the demand for labor affect the value of the marginal product of labor (VMPL)?
a.
The VMPL increases by less than $4.
b.
The VMPL increases by $4.
c.
The VMPL increases by more than $4.
d.
The VMPL decreases by $4.
80. Which of the following is correct? Using data from 2014,
a.
immigrants (both legal and illegal) make up about 40 percent of the U.S. population.
b.
low-skilled immigration lowers the earnings of all workers in the United States by about 15 percent.
c.
illegal immigrants make up about 20 percent of the U.S. workforce.
d.
over 80 percent of immigrants are from Latin America and Asia.
81. Which of the following is not correct? Using data from 2014,
a.
immigrants (both legal and illegal) make up about 40 percent of the U.S. population.
b.
immigration lowers the earnings of native-born workers in the United States by about 1 to 3 percent.
c.
illegal immigrants make up about 5 percent of the U.S. workforce.
d.
today the largest percentage of immigrants come from Latin America and Asia, whereas in the 1950s and
1960s the largest percentage came from Europe.
