Deck 20: The Labor Market: Workers, Wages, and Unemployment

Question 1

In the twentieth century, average real wages have risen substantially:

A)only in the United States.
B)in industrial countries excluding the United States.
C)in industrial countries including the United States.
D)in neither the United States nor other industrial countries.

Answer 1

in industrial countries including the United States.

Question 2

Compared to Western Europe, over the last three decades unemployment in the United States is ________ and the rate of job creation is ________.

A)higher; slower
B)higher; faster
C)lower; slower
D)lower; faster

Answer 2

lower; faster

Question 3

One trend in labor markets is:

A)a decrease in average real wages in the United States and other industrial countries.
B)increasing wage inequality in the United States.
C)weak rates of job creation in the United States since 1980.
D)an increase in the rate of real wage growth since the early 1970s.

Answer 3

increasing wage inequality in the United States.

Question 4

Compared to the 1960 and 1973 period, average real earnings of workers ________ from 1973 to 1995 and then ________ from 2007 to 2016.

A)declined; slowed again
B)declined; grew
C)grew; grew at about the same rate
D)grew more rapidly; declined

Question 5

One trend in labor markets is:

A)a decrease in average real wages in the United States and other industrial countries.
B)decreasing wage inequality in the United States.
C)weak rates of job creation in the United States since 1980.
D)a slowdown in real wage growth in the United States since 1973.

Question 6

In the United States there is evidence of:

A)a decline in real wages.
B)increasing wage inequality.
C)increasing was equality.
D)a decrease in the proportion of the population over the age of 16 that is employed.

Question 7

The extra production gained by employing one more worker is called the:

A)real wage.
B)nominal wage.
C)marginal product.
D)surplus product.

Question 8

All of the following describe trends in U.S. labor markets except:

A)growing wage inequality in the United States in recent decades.
B)a slowdown in real wage growth since the 1970s.
C)substantial growth in the level of employment in the United States since 2000.
D)substantial growth in real wages during the last century.

Question 9

The demand for labor depends on ________ and ________.

A)the supply of labor; the marginal product of labor
B)the supply of labor; the price of output produced
C)the rate of price inflation; the price of the output produced
D)the marginal product of labor; the price of output produced

Question 10

In the United Sates, the average annual rate of growth of real wages was fastest in the period:

A)1960-1973.
B)1960-1995.
C)1996-2010.
D)1973-1995.

Question 11

All of the following describe trends in U.S. labor markets except:

A)growing wage equality in the United States in recent decades.
B)a slowdown in real wage growth since the 1970s.
C)substantial growth in the level of employment in the United States.
D)substantial growth in real ages during the last century.

Question 12

The growth rate of average annual earnings in the United States from 1973 to 1995 was:

A)higher than it was from 1960 to 1973.
B)lower than it was from 1960 to 1973.
C)the same as it was from 1960 to 1973.
D)roughly equal to zero.

Question 13

The real wage is the:

A)price of labor.
B)demand for labor.
C)ratio of wage of unskilled workers to the wage of skilled workers.
D)marginal product of labor.

Question 14

In the United States between 1980 and 2000, employment:

A)was constant, while the over-sixteen population increased.
B)decreased, while the over-sixteen population increased.
C)grew more rapidly than the over-sixteen population.
D)grew at approximately the same rate as the over-sixteen population.

Question 15

Compared to the United States, over the last three decades unemployment in Western Europe is ________ and the rate of job creation is ________.

A)higher; slower
B)higher; faster
C)lower; slower
D)lower; faster

Question 16

In the United States the real wages of the least-skilled, least educated workers have ________ and the wages of best-educated, highest skilled workers have ________.

A)increased; increased
B)declined; increased
C)increased; declined
D)declined; remained constant

Question 17

A "two-tier" labor market in the United States refers to plenty of jobs for ________ workers and few jobs for ________ workers.

A)highly-skilled; unskilled
B)unskilled; highly-skilled
C)old; young
D)eastern; western

Question 18

The marginal product of labor is the additional:

A)wage paid for an additional hour of work.
B)wage paid for an additional worker employed.
C)labor employed to produce one more unit of output.
D)output produced by one more worker.

Question 19

In the market for labor, the price of labor is the:

A)same as price of the product produced by the labor.
B)real wage.
C)marginal product of labor.
D)number of hours employed per year.

Question 20

The real purchasing power of the average worker's yearly earnings in the United States in 2016 was ________ as in 1960.

A)five times as large
B)twice as large
C)about the same
D)about half as much

Question 21

If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the:

A)supply of labor to All-Oak Table Co. increases.
B)supply of labor to All-Oak Table Co. decreases.
C)demand for labor by All-Oak Table Co. decreases.
D)demand for labor by All-Oak Table Co. increases.

Question 22

The principle of diminishing returns to labor is based on the:

A)scarcity principle.
B)cost-benefit principle.
C)principle of comparative advantage.
D)principle of increasing opportunity cost.

Question 23

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5.  
$$\begin{array} { | c | c r } \hline \text { Number of Warkers } & \text { Pizzas Baked Per Day } \\\hline 0 & & 0 \\\hline 1 & & 10 \\\hline 2 & & 18\\\hline 3 & & 24 \\\hline 4 & & 30 \\\hline 5 & &32 \\\hline\end{array}$$ How many workers will Joe hire if he must pay each one $35 a day?

A)1
B)2
C)3
D)4

Question 24

The following table provides information about production at the XYZ-TV Company.  
  
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $34,000? 

A)0
B)1
C)2
D)3

Question 25

Firms will hire additional workers as long as the wage:

A)is less than the marginal product of labor.
B)equals the marginal product of labor.
C)is greater than the marginal product of labor.
D)is less than the value of the marginal product of labor.

Question 26

The following table provides information about production at the XYZ-TV Company.  
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $60,000?

A)0
B)4
C)5
D)More than 5

Question 27

An increase in the price of the output produced by labor will:

A)increase the supply of labor.
B)decrease the supply of labor.
C)increase the demand for labor.
D)decrease the demand for labor.

Question 28

The following table provides information about production at the XYZ-TV Company.  
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $28,000?

A)1
B)2
C)3
D)4

Question 29

The demand for labor increases when the:

A)real wage increases.
B)real wage decreases.
C)value of the marginal product of labor increases.
D)value of the marginal product of labor decreases.

Question 30

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour.  
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30?

A)1
B)2
C)3
D)4

Question 31

If the price of tables sold by All-Oak Table Co. decreases from $500 to $400, then the:

A)supply of labor to All-Oak Table Co. increases.
B)supply of labor to All-Oak Table Co. decreases.
C)demand for labor by All-Oak Table Co. decreases.
D)demand for labor by All-Oak Table Co. increases.

Question 32

The introduction of a new technology that increases the productivity of labor will:

A)increase the supply of labor.
B)decrease the supply of labor.
C)increase the demand for labor.
D)decrease the demand for labor

Question 33

The value of the marginal product of labor equals the marginal product of labor times the:

A)real wage.
B)nominal wage.
C)price of output.
D)quantity of labor.

Question 34

If the price of TVs produced by XYZ-TV Company falls from $1,000 to $750 per TV set, then the:

A)supply of labor to the XYZ-TV Company increases.
B)supply of labor to the XYZ-TV Company decreases.
C)demand for labor by the XYZ-TV Company increases.
D)demand for labor by the XYZ-TV Company decreases.

Question 35

The following table provides information about production at the XYZ-TV Company.  
 
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $30,000?

A)0
B)1
C)2
D)3

Question 36

If the price of TVs produced by XYZ-TV Company increases from $1,000 to $1,250 per TV set, then the:

A)supply of labor to the XYZ-TV Company increases.
B)supply of labor to the XYZ-TV Company decreases.
C)demand for labor by the XYZ-TV Company increases.
D)demand for labor by the XYZ-TV Company decreases.

Question 37

According to the principle of diminishing returns to labor, if the amount of capital and other inputs are held constant, employing additional workers:

A)increases output at an increasing rate.
B)increases output at a constant rate.
C)increases output at a decreasing rate.
D)decreases output at an increasing rate

Question 38

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour.  
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $70?

A)1
B)2
C)3
D)4

Question 39

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour.  
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $120?

A)0
B)3
C)5
D)More than 5

Question 40

The following table provides information about production at the XYZ-TV Company.  
 
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $32,000?

A)0
B)1
C)2
D)3

Question 41

Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers will ________ and employment of agricultural workers will ________.

A)increase; increase
B)increase; decrease
C)decrease; not change
D)decrease; decrease

Question 42

The slowdown in the growth of real wages in the United States since 1973 is consistent with a concurrent:

A)slowdown in productivity gains.
B)slowdown in the growth of the working age population.
C)slowdown in immigration into the country.
D)speedup in the rate of inflation.

Question 43

Factors increasing the U.S. labor supply and thereby contributing to the slowdown in real-wage growth that began in the 1970s include ________ and ________.

A)skill-biased technological change; globalization
B)increased labor force participation by women; the coming-of-age of the baby-boom generation
C)technological progress; diminishing returns to labor
D)increasing wage inequality; globalization

Question 44

Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the real wages of factory workers will ________ and employment of factory workers will ________.

A)increase; increase
B)increase; decrease
C)decrease; not change
D)decrease; increase

Question 45

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ________ and employment of oil workers will ________.

A)increase; increase
B)increase; decrease
C)decrease; not change
D)decrease; increase

Question 46

If the existence of alternative opportunities makes people become less willing to work in poultry processing plants, then the real wage of unskilled workers in poultry processing plants is predicted to ________ and the employment of unskilled workers in poultry processing plants is predicted to ________.

A)increase; increase
B)increase; decrease
C)increase; not change
D)decrease; decrease

Question 47

An increase in the size of the working-age population:

A)increases labor demand.
B)decreases labor demand.
C)increases labor supply.
D)decreases labor supply.

Question 48

As the real wage decreases, the quantity of labor demanded ________ and the quantity of labor supplied ________.

A)increases; increases
B)increases; decreases
C)decreases; decreases
D)decreases; increases

Question 49

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5. $$\begin{array} { | c | c r } \hline \text { Number of Warkers } & \text { Pizzas Baked Per Day } \\\hline 0 & & 0 \\\hline 1 & & 10 \\\hline 2 & & 18\\\hline 3 & & 24 \\\hline 4 & & 30 \\\hline 5 & &32 \\\hline\end{array}$$  
How many workers will Joe hire if he must pay each one $45 a day?

A)1
B)2
C)3
D)4

Question 50

A war destroys much of the capital stock in the country of Omega. As a result, holding other factors constant, the real wage in Omega will ________ and employment in Omega will ________.

A)increase; increase
B)increase; decrease
C)increase; not change
D)decrease; decrease

Question 51

Slower growth in labor demand in combination with increases in labor supply explains ________ accompanied by ________.

A)a slowdown in real wage growth; a decline in employment
B)a slowdown in real wage growth; rapid employment growth
C)a slowdown in real wage growth; increasing wage inequality
D)accelerated real wage growth; a decline in employment

Question 52

Holding other factors constant, technological progress ________ the real wage and ________ employment.

A)increases; increases
B)increases; decreases
C)increases; does not change
D)decreases; increases

Question 53

Long-term increases in productivity that have increased the demand for labor, and raised real wages, have resulted primarily from ________ and ________.

A)technological progress; a modernized capital stock
B)technological progress; an increased labor supply
C)a modernized capital stock; skill-biased technological change
D)a modernized capital stock; an increased labor supply

Question 54

Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the real wages of workers will ________ and employment of workers will ________.

A)increase; increase
B)increase; decrease
C)decrease; not change
D)decrease; increase

Question 55

As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment. Holding other factors constant, the influx of refugees will ________ the real wage in Alpha and ________ employment in Alpha.

A)increase; increase
B)increase; decrease
C)decrease; decrease
D)decrease; increase

Question 56

The minimum payment you are willing to accept to do a job is your:

A)nominal wage.
B)real wage.
C)reservation price.
D)value of marginal product.

Question 57

The two most important factors contributing to increased productivity in industrialized countries in the twentieth century were:

A)higher relative prices and a larger labor supply.
B)higher relative prices and technological progress.
C)technological progress and increases in the capital stock.
D)technological progress and increases in the labor supply.

Question 58

Real wages increased in industrialized countries in the twentieth century because the demand for labor:

A)increased more rapidly than the supply of labor increased.
B)increased more slowly than the supply of labor increased.
C)increased, while the supply of labor decreased.
D)decreased, while the supply of labor increased.

Question 59

Holding other factors constant, an increase in the capital stock ________ the real wage and ________ employment.

A)increases; increases
B)increases; decreases
C)increases; does not change
D)decreases; increases

Question 60

Larger increases in the demand for labor than in the supply of labor explain:

A)the substantial increase in real wages.
B)the slowdown in real wage growth.
C)increasing wage inequality.
D)skill-biased technological change.

Question 61

If the Luddites had succeeded in ________ the introduction of labor-saving machinery, economic growth in Great Britain may have been ________.

A)blocking; slower
B)blocking; more rapid
C)promoting; slower
D)promoting; more rapid

Question 62

The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of:

A)increasing reservation prices.
B)skill-biased technological change.
C)the diminishing marginal product of labor.
D)globalization.

Question 63

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, so domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, wages in the shoe industry ________ and wages in the computer industry ________.

A)increase; increase
B)increase; decrease
C)decrease; increase
D)decrease; decrease

Question 64

A Luddite is:

A)someone who opposes the introduction of new technologies.
B)a worker whose real wage rises as a result of globalization.
C)a fictional character from American folk history.
D)a consumer who refuses to buy imported goods, even if they are cheaper.

Question 65

Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ________ technological change.

A)capital-labor
B)skill-biased
C)marginal-productivity
D)high-low

Question 66

The movement of workers between jobs, firms, and industries is called:

A)the reservation price.
B)diminishing returns to labor.
C)worker mobility.
D)globalization.

Question 67

Macroland produces dishes and glassware. Before trade, a set of dishes sells for $100 and a set of glasses sells for $50. When Macroland opens to trade, foreign demand for domestically produced china is strong, raising the price of a set of dishes to $125. But foreign competition reduces the demand for domestically produced glasses, so they now sell for $25 a set. Assuming workers cannot move between industries, the wages of workers producing dishes will ________ and the wages of workers producing glasses will ________.

A)increase; increase
B)increase; not change
C)increase; decrease
D)decrease; increase

Question 68

Skill-biased technological has different effects on the marginal products of ________ workers and ________ workers.

A)male; female
B)union; nonunion
C)government; private-sector
D)higher-skilled; lower-skilled

Question 69

Most economists generally argue ________ trying to block technological advances because these technological advances ________.

A)in favor of; cause the economy to grow to rapidly
B)in favor of; increase wage inequality
C)against; are necessary for improved standards of living
D)against; promote wage equality

Question 70

An increase in the demand for workers producing computers for export versus producing agricultural products that can be imported more cheaply from abroad is an example of how increasing wage inequality can result from:

A)the diminishing marginal product of labor.
B)the diminishing marginal product of capital.
C)increasing reservation prices.
D)globalization.

Question 71

In recent decades, slower growth in the demand for labor accompanied by an accelerated growth in the supply of labor in the U.S. explains:

A)negative real wage growth and double-digit rates of unemployment.
B)negative real wage growth and increasing wage inequality.
C)negative real wage growth and an increase in the number of people with jobs.
D)increasing wage inequality and double-digit rates unemployment.

Question 72

Two explanations for increasing wage inequality are ________ and ________.

A)technological progress; a modernized capital stock
B)increased labor supply; a slowdown in productivity growth
C)increased worker mobility; transition aid
D)globalization; skill-biased technological change

Question 73

Globalization ________ the wages of workers in the exporting industries and ________ the wages of workers in the import-competing industries.

A)raises; raises
B)raises; lowers
C)raises; does not change
D)lowers; raises

Question 74

Increasing wage inequality results when international trade leads to ________ wages for workers in exporting industries and ________ wages for workers in importing industries.

A)higher; higher
B)higher; lower
C)lower; no change in
D)lower; higher

Question 75

The increase in wage inequality resulting from globalization can be reversed through:

A)revoking the principle of comparative advantage.
B)increases in worker mobility.
C)decreases in worker mobility.
D)making markets more competitive.

Question 76

Slower real wage growth in the U.S. since the 1970s accompanied by rapid job growth, can be explained by:

A)skill-biased technological change.
B)globalization.
C)a productivity slowdown accompanied by an increase in the labor supply.
D)a productivity slowdown accompanied by a decrease in the labor supply.

Question 77

Globalization and skill-biased technological change have contributed to:

A)the long-term growth in real wages.
B)the slowdown in productivity since 1973.
C)increasing wage inequality.
D)high rates of employment in Western Europe.

Question 78

Initially, workers in the shoe industry and the computer industry earn the same wage. Reductions in trade barriers give domestic consumers access to cheaper shoes produced abroad, which causes domestic shoe prices fall. At the same time, foreign consumers purchase more computers, raising the relative price of computers. As a result of these changes, the demand for labor in the shoe industry ________ and the demand for labor in the computer industry ________.

A)increases; increases
B)increases; decreases
C)decreases; increases
D)decreases; decreases

Question 79

Globalization can increase wage inequality in the United States if international competition is primarily in industries requiring ________ workers.

A)many
B)few
C)highly-skilled
D)low-skilled

Question 80

Skill-biased technological change increases wage inequality by altering the ________ high-skilled workers relative to low-skilled workers.

A)reservation price of
B)mobility of
C)supply of
D)demand for