894 Miller Economics Today, 16th Edition
47) A decrease in the supply of labor could be caused by
A) wage rates falling in another industry.
B)
b
etter working conditions.
C) more job flexibility.
D) increased wage rates in another industry.
48) Which of the following will not cause the supply of labor curve to shift in the economics
professor industry?
A) A decrease in the wage rate for Ph.D. economists in the banking industry.
B) A decrease in the number of courses a professor must teach.
C) Universities have discovered a way to make professors more productive.
D) University professors are going to be required to spend more time in their offices.
49) An increase in the supply of labor to an industry could be caused by
A) higher wages.
B) increased productivity of labor.
C) an increase in job flexibility in the industry.
D) an increase of wages in another industry.
50) Ajax Corporation has just decided to let managers work from home one day a week. This
decision will make working conditions better and will
A) cause the demand curve for labor for managers to increase.
B) increase the elasticity of demand for labor for managers.
C) lead to an increase in the supply curve of labor for managers.
D) leave the supply curve of labor unchanged.
51) In the perfectly competitive market, the labor supply curve faced by the individual firm is
________, while that of the market is ________.
A) perfectly elastic; perfectly inelastic B) perfectly inelastic; perfectly elastic
C) perfectly elastic; upward sloping D) perfectly inelastic; upward sloping
52) A single firm in a competitive labor market has a labor supply curve that is
A) upward sloping. B) perfectly inelastic.
C) perfectly elastic. D) downward sloping.
53) In a perfectly competitive labor market, the wage rate paid by the individual firm is
A) the equilibrium market wage rate.
B) dependent on the demand for the product.
C)
b
elow the equilibrium market wage rate.
D) a function of the tax system.
54) Absent government interference, the wage rate for labor in a competitive market is established
A) solely by the firm s demand for labor.
B) solely by the market supply of labor.
C)
b
y both the demand for and supply of labor at each individual firm.
D)
b
y the the market supply and market demand for labor.
55) A change in a price of a substitute input for labor will cause
A) a change in the demand for labor in the opposite direction of the price change.
B) no change in the demand for labor.
C) a change in the supply of labor in the opposite direction of the price change.
D) a change in the demand for labor in the same direction of the price change.
56) If an increase in the price of one input causes an increase in demand for labor, the two inputs are
A) complementary. B) substitutes.
C) interchangeable. D) flexible.
57) Which of the following would NOT a reason for a shift in the labor demand curve?
A) A change in demand for the final product
B) A change in labor productivity
C) A change in the market wage rate
D) A change in the price of a related input
58) There are a number of reasons why labor supply curves will shift in a particular industry.
Which one of the following is NOT one of them?
A) Changes in working conditions in an industry affect the labor supply curve.
B)
J
ob flexibility that determines the position of the labor supply curve.
C) There is a change in the market wage rate.
D) Taxes on labor affect the labor supply curve.
59) If the price of golf balls increases, what will likely happen to the demand for golf club
manufacturing employees?
A) It will increase. B) It will decrease.
C) It will stay the same. D) Nothing, the two are not related.
60) When the price of labor increases, the substitution effect will ________ the quantity of labor
demanded and the output effect will ________ it.
A) increase; increase B) increase; decrease
C) decrease; increase D) decrease; decrease
61) Which of the following will NOT shift the MRP curve for labor?
A) a change in the productivity of labor
B) a change in the price of the product being sold
C) a change in the wage rate in the market
D) a change in the demand for the product being produced
62) All of the following shift the labor demand curve EXCEPT changes in
A) fringe benefits offered to employees. B) the demand for the final product.
C) labor productivity. D) prices of related factors.
63) All of the following shift an industry s labor supply curve EXCEPT changes in
A) market wages offered in other industries.
B) the demand for the final product.
C)
j
ob flexibility.
D) working conditions.
64) Suppose the market price of zinc doubles. Which of the following scenarios is most likely?
A) The demand for zinc miners will increase, raising the market wage rate.
B) The demand for zinc miners will decrease, reducing the market wage rate.
C) The demand for zinc will increase, raising the market price further.
D) The demand for zinc miners will decrease, reducing the market price back to its original
price.
65) What does it mean for a firm to be a price taker in the labor market?
66) What is the general rule for hiring for a perfectly competitive firm? Show it on a graph. What is
the demand curve for labor on the graph? Explain.
67) Suppose the market for autoworkers is initially in equilibrium, but then the automakers
purchase capital goods that are a substitute for workers. What happens in the market for
autoworkers? Explain. Now, suppose the automakers improve working conditions at the plants.
What are the effects? Explain.
68) Explain the efficiency wage theory.
69) What can cause the demand curve for labor to shift? Explain.
70) Explain how the equilibrium wage rate is determined for a perfectly competitive industry and
how a firm in that industry determines its profit maximizing employment level.
900 Miller Economics Today, 16th Edition
28.4 Labor Outsourcing, Wages, and Employment
1) When U.S. computer companies hire workers in India to staff their customer service call centers,
they are engaging in
A) predatory pricing. B) unfair trade practices.
C) outsourcing. D) labor engagement.
2) A firm s employment of labor outside the country in which the firm is located is called
A) featherbedding. B) a lockout.
C) outsourcing. D) dumping.
3) The practice of outsourcing has been given a boost by
A) advances in telecommunications and computer networking.
B) support from organized labor.
C) firms that are becoming more risk averse.
D) sharp increases in the cost of overseas labor.
4) Outsourcing is being practiced by
A) U.S. firms that want to keep jobs at home in the United States.
B) overseas firms hiring in the U.S. labor market and by U.S. firms hiring in foreign labor
markets with lower wages.
C) U.S. firms only.
D) governments but private firms are not allowed to outsource work.
5) Which of the following is an example of outsourcing?
A) A U.S. firm moves a manufacturing plant from the U.S. to Thailand where the firm can
hire cheaper labor.
B) A German firm hires an accountant in the U.S. to manage its payrolls.
C) All the above are examples of outsourcing.
D) None of the above is an example of outsourcing.
6) Suppose that U.S. firms outsource plane manufacturing jobs to China, it is expected that
A) the wage rate for workers manufacturing planes will decrease in the U.S. but increase in
China.
B) the wage rate for workers manufacturing planes will increase in the U.S. but decrease in
China.
C) the wage rate for workers manufacturing planes will increase in both the U.S. and China.
D) the wage rate for workers manufacturing planes will decrease in both the U.S. and China.
7) When Canadian firms outsource accounting services to the United States, in markets for the
labor of accountants,
A) equilibrium employment and the market clearing wage rate will both increase in Canada,
but equilibrium employment and the market clearing wage rate will both decrease in the
United States.
B) equilibrium employment and the market clearing wage rate will both decrease in Canada,
but equilibrium employment and the market clearing wage rate will both increase in the
United States.
C) equilibrium employment and the market clearing wage rate will both increase in Canada
and in the United States.
D) equilibrium employment and the market clearing wage rate will both increase in Canada
and in the United States.
8) A firm s employment of labor outside the country in which the firm is located
A) is outsourcing.
B) shifts the supply of labor in the original country.
C) is the marginal revenue product.
D) shifts the supply of labor in the other country.
9) Outsourcing is
A) one of the factors that shifts the supply of labor curve.
B) when a firm employs labor outside the country in which the firm is located.
C) when the change in the price of a complementary input causes the demand for labor curve
to shift in the opposite direction.
D) the cost of using an additional unit of an input.
10) Outsourcing is
A) only beneficial to a few select countries.
B) another way for residents of different nations to conduct trade with one another.
C) not beneficial to any country.
D) not beneficial to the consumers who purchase outsourced goods.
11) Some companies are having their technical support calls answered by people located in India.
This is an example of
A) a factor that shifts the supply of labor curve in the U.S.
B) insourcing.
C) outsourcing.
D) a change in the demand for the final product that labor produces.
12) What are the short run economic effects when U.S. firms substitute labor outside of the U.S. for
labor inside the U.S.?
A) The wage rate in the U.S. will remain the same, and the wage rate in the foreign country
will decrease.
B) The wage rate in the U.S. will increase, and the wage rate in the foreign country will
decrease.
C) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will
decrease.
D) The wage rate in the U.S. will decrease, and the wage rate in the foreign country will
increase.
13) What are the short run economic effects when U.S. firms substitute labor outside of the U.S. for
labor inside the U.S.?
A) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign
country will increase.
B) The demand curve for labor in the U.S. increases, and the demand curve in the foreign
country will decrease.
C) The demand curve for labor in the U.S. decreases, and the demand curve in the foreign
country will decrease.
D) The demand curve for labor in the U.S. increases, and the demand curve in the foreign
country will increase.
14) Refer to the above figure. Which panel represents what happens in the U.S. job market in the
short run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?
A) Panel A B) Panel B C) Panel C D) Panel D
15) Refer to the above figure. Which panel represents what happens in the foreign job market in the
short run when U.S. firms substitute labor outside of the U.S. for labor inside the U.S.?
A) Panel A B) Panel B C) Panel C D) Panel D
16) Which of the following statements describes the long run effects of global outsourcing?
A) Wages for U.S. workers will decrease but wages in other countries will increase.
B) Wages in all countries will remain the same as before the outsourcing.
C) Wages and employment will increase globally.
D) Wages will increase globally and employment will stay the same.
17) Which of the following statements is FALSE about the long run effects of outsourcing?
A) Outsourcing allows countries to specialize in producing what they can produce most
efficiently.
B) More goods and services can be produced than in the absence of outsourcing.
C) Globally wages will increase because of outsourcing.
D) Employment levels will decrease globally as the result of outsourcing.
18) Employment of labor in a country other than the firm s home country is called
A) employing guest workers. B) outsourcing.
C) employing non naturalized workers. D) employing illegal aliens.
19) Economic analysis indicates the net long run effect of outsourcing for the United States is likely
to be
A) an increased demand for labor due to economic growth.
B) a decreased in the demand for labor in the United States in the short run.
C) an increase in the supply of labor.
D) a decrease in the supply of labor.
20) When firms in a U.S. industry outsource some of their production,
A)
b
oth U.S. labor demand and U.S. wages in the industry fall
B) U.S. labor demand falls, but U.S. wages are not affected.
C) U.S. labor demand remains unchanged, but U.S. wages fall.
D) U.S. labor demand falls, but U.S. wages increase.
21) Suppose a U.S. computer company outsources its technical support services to India. This will
cause
A) the demand for labor in the United States to fall, lowering U.S. wage rates, and the
demand for labor in India to increase, increasing Indian wage rates.
B) the demand for labor in the United States to increase, lowering U.S. wage rates, and the
demand for labor in India to fall, increasing Indian wage rates.
C) the demand for labor in the United States to fall, lowering U.S. wage rates, and the
demand for labor in India to fall, decreasing Indian wage rates.
D) the demand for labor in the United States to increase, increasing U.S. wage rates, and the
demand for labor in India to fall, decreasing Indian wage rates.
22) Explain the implications of outsourcing for employment and wages in the domestic and foreign
labor markets.
28.5 Monopoly in the Product Market
1) Other things being equal, the behavior of a monopolist differs from that of a competitive
industry in that
A) the monopolist does not attempt to maximize economic profit.
B) the monopolist hires more labor.
C) the monopolist restricts output and hires less labor.
D) the monopolist must consider fixed costs in deciding the optimal level of output to
produce in the short run.
2) Which of the following would be the most likely outcome if all perfectly competitive firms in a
product market join together to form a monopoly?
A) Both the rate of output and the quantity of labor input employed will decrease.
B) Both the rate of output and the quantity of labor input employed will increase.
C) The rate of output in the market will increase but the quantity of labor input will decrease.
D) The rate of output in the market will decrease but the quantity of labor input will increase.
3) The monopolist s input demand curve is equal to its
A) variable cost curve. B) marginal cost curve.
C) average cost curve. D) marginal revenue product curve.
4) Other things being equal, the monopolist will
A) hire more workers than if the industry were perfectly competitive.
B) hire the same number of workers as a perfectly competitive industry would.
C) hire fewer workers than if the industry were perfectly competitive.
D) have lower profits than if the industry were perfectly competitive.
5) A monopolist hires fewer workers than a perfectly competitive industry, other things being
equal, because
A) a monopolist has to pay higher wages in order to attract additional workers.
B) the monopolist substitutes more capital for labor when compared to a competitive
industry.
C) the monopolist producer has to deal with unions and face higher wages than do
competitive industries.
D) the monopolist produces less output than a competitive industry.
6) A monopolist will hire fewer workers than a competitive firm, other things being equal, because
A) the monopolist exploits labor and other types of producers do not.
B) the monopolist must take account of the declining product price that must be charged in
order to sell more units of the product.
C) the monopolist is more efficient.
D) diminishing marginal productivity of labor is more severe for a monopolist.
7) If a firm sells its product in a monopolistic market, even though the firm operates in a perfectly
competitive labor market, the firm will employ workers up to the point where
A) TR TC.
B) the MRP the wage rate.
C) the MRP the marginal physical product of labor.
D) the MRP the output price.
8) A firm wanting to maximize profits should operate in such a way that
A) the MRP of each input is equal to or greater than its MFC.
B) MRP equal MFC in the input market but MC must exceed MR in the output market.
C) marginal revenue must be equal to the marginal revenue product.
D) none of the above
9) If a monopolist has an output price of $10, marginal revenue equal to $4, and faces a fixed wage
of $6, he or she should hire labor until the marginal revenue product is equal to
A) $10. B) $4. C) $6. D) $2.
10) The demand curve for labor of a monopolist
A) is horizontal even though the demand curve for labor for a competitive firm is downward
sloping.
B) slopes down for the same reason as the demand curve for labor of a perfectly competitive
firm.
C) slopes down because of the law of diminishing marginal product and because the
monopolist must lower prices to sell additional units of the good.
D) slopes upward because monopolists use more capital than do perfectly competitive firms.
11) The monopolist s input demand curve is the
A) marginal revenue curve. B) marginal revenue product curve.
C) marginal physical product curve. D) marginal factor cost.
12) Compared to the perfectly competitive firm , the monopolist s input demand curve is
A) more elastic.
B) more inelastic.
C) due to a constant per unit price of the product.
D) marginal factor cost.
13) A monopolist will hire an additional unit of labor as long as
A) the additional cost of the worker is outweighed by the additional revenues made from
selling the output of theses workers.
B) the marginal revenue curve is above the demand curve.
C) the marginal revenue product is larger than the marginal factor cost.
D) the marginal revenue product is less than the marginal factor cost.