Question 1

Exhibit 12-4 
-In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

Accepted Answer

The employer will have to pay $12 per hour to compensate for the additional hours beyond the standard 40-hour workweek, likely due to overtime pay requirements.

Question 2

Exhibit 12-2 
-In Exhibit 12-2, which of the following is true at a wage rate of $14?

Accepted Answer

At a wage rate of $14, the individual would be willing to supply 2 hours of labor, which is more than the 1 hour she was willing to supply at a wage rate of $12. This indicates that the substitution effect dominates the income effect, leading to an increase in labor supply as wages increase.

Question 3

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Accepted Answer

Close monitoring by a supervisor is often perceived as unpleasant and can lead to stress and possibly a lack of autonomy on the job. As a result, fewer individuals may be willing to work in such an environment, which can drive up the wage rate as employers have to offer higher wages to attract workers.

Question 4

Which of the following statements regarding labor supply is false?

Accepted Answer

The statement that the labor supply curve will slope upward if the income effect dominates the substitution effect is false. The correct statement is that the labor supply curve will slope backward if the income effect dominates the substitution effect.

Question 5

Bob and Mary each have a Ph.D. in economics. Bob has a job in private industry at which he earns $90,000 a year. Mary earns half that much as a college professor. Which of the following could not explain Mary's career choice?

Accepted Answer

Diminishing marginal utility would imply that Mary values each additional dollar earned less than the previous one, which would make her less likely to choose a lower-paying job. Therefore, this option could not explain her career choice.

Question 6

College students often spend summers in internships that pay little or no income because internships provide benefits in the form of higher future incomes.

Accepted Answer

Internships provide valuable experience and skills that can increase a student's future earning potential. Additionally, internships can lead to job offers with higher salaries than those who did not participate in internships.

Question 7

Exhibit 12-4 
-In Exhibit 12-4, when the wage rate rises above $12, the substitution effect outweighs the income effect.

Accepted Answer

The answer of Exhibit 12-4 
-In Exhibit 12-4, when the...

Question 8

Exhibit 12-1 
-Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change just equal the substitution effect?

Accepted Answer

The point where the income effect of a wage change just equals the substitution effect is the point where the labor supply curve is tangent to the budget line. This occurs at point C in Exhibit 12-1, which is between points b and c.

Question 9

A large inheritance from a relative will tend to

Accepted Answer

The answer of A large inheritance from a relative will...

Question 10

A person who wins a large sum of money in the state lottery is likely to

Accepted Answer

Winning a large sum of money in the state lottery would likely decrease the amount of work offered at each wage rate, as the individual would have the financial means to reduce their labor supply and potentially retire or take more time off. This is an example of the income effect, where an increase in income leads to a decrease in labor supply as individuals substitute market work for leisure time.

Question 11

Exhibit 12-2 
-In Exhibit 12-2, which of the following is true at a wage rate of $20?

Accepted Answer

The income effect dominates the substitution effect at a wage rate of $20 because the increase in income from working more than offsets the decrease in leisure time.

Question 12

Exhibit 12-4 
-Consider Exhibit 12-4. If the wage rate is $9, how many hours per week will this person work?

Accepted Answer

The answer of Exhibit 12-4 
-Consider Exhibit 12-4. If the...

Question 13

Exhibit 12-4 
-In Exhibit 12-4, when the wage rate increases from $9 to $12, the substitution effect outweighs the income effect.

Accepted Answer

When the wage rate increases, the opportunity cost of leisure increases as well, leading individuals to substitute leisure time for work time, thereby increasing labor supply. This is the substitution effect. On the other hand, the income effect occurs when the increase in wage rate leads to an increase in income, which may lead individuals to consume more leisure time, decreasing labor supply. In this case, the increase in wage rate is large enough to outweigh the income effect, causing a net increase in labor supply.

Question 14

Exhibit 12-3 
-In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

Accepted Answer

When the wage rate increases, the substitution effect typically leads to working more hours because the opportunity cost of leisure increases, making work relatively more attractive.

Question 15

The market labor supply curve is

Accepted Answer

The market labor supply curve is the sum of individual labor supply curves at each wage rate. This is because at each wage rate, each individual has a quantity of labor they are willing and able to supply. Thus, the market labor supply curve shows the total quantity of labor supplied by all individuals in the market at each wage rate.

Question 16

Exhibit 12-2 
-In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Accepted Answer

A decrease in wage rate from $14 to $6 per hour increases the opportunity cost of leisure time, making leisure more expensive in terms of forgone wages. This creates a substitution effect where people will want to work more because they can earn more for the same amount of leisure. However, the decrease in wage rate also reduces the amount of income earned from working, causing a negative income effect. In this case, the substitution effect dominates the income effect as people still want to work more despite the decrease in income. Therefore, the labor supply curve slopes upward indicating a positive relationship between wage rate and quantity of labor supplied.

Question 17

Which of the following would reduce the supply of an athletic trainer's services at today's wage rate, other things constant?

Accepted Answer

If the future earning possibilities go down due to a negative image associated with this work, the incentive to enter or continue in this profession will decrease. This will lead to a reduction in the supply of athletic trainers' services at today's wage rate.

Question 18

Exhibit 12-3 
-In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

Accepted Answer

When the wage rate increases, the substitution effect typically leads to working more hours because the opportunity cost of leisure increases, making work relatively more attractive.

Question 19

Sharon wants a career as an accountant. During the summer she turns down a job painting houses at $6 an hour to work in an accounting office for $4 an hour. Which of the following would not explain her choice?

Accepted Answer

The law of diminishing marginal utility is not relevant to Sharon's decision to take the accounting job over the painting job. The other choices are all plausible reasons that would explain her choice.

Question 20

Exhibit 12-3 
-In Exhibit 12-3, which of the following is true at a wage rate of $7?

Accepted Answer

At a wage rate of $7, the substitution effect, which encourages more labor supply as wages increase, dominates the income effect, which might encourage less labor supply as income increases.

Quiz 12: Labor Markets and Labor Unions

Exhibit 12-4 -In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

Exhibit 12-2 -In Exhibit 12-2, which of the following is true at a wage rate of $14?

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Which of the following statements regarding labor supply is false?

Bob and Mary each have a Ph.D. in economics. Bob has a job in private industry at which he earns $90,000 a year. Mary earns half that much as a college professor. Which of the following could not explain Mary's career choice?

College students often spend summers in internships that pay little or no income because internships provide benefits in the form of higher future incomes.

Exhibit 12-4 -In Exhibit 12-4, when the wage rate rises above $12, the substitution effect outweighs the income effect.

Exhibit 12-1 -Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change just equal the substitution effect?

A large inheritance from a relative will tend to

A person who wins a large sum of money in the state lottery is likely to

Exhibit 12-2 -In Exhibit 12-2, which of the following is true at a wage rate of $20?

Exhibit 12-4 -Consider Exhibit 12-4. If the wage rate is $9, how many hours per week will this person work?

Exhibit 12-4 -In Exhibit 12-4, when the wage rate increases from $9 to $12, the substitution effect outweighs the income effect.

Exhibit 12-3 -In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

The market labor supply curve is

Exhibit 12-2 -In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Which of the following would reduce the supply of an athletic trainer's services at today's wage rate, other things constant?

Exhibit 12-3 -In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

Sharon wants a career as an accountant. During the summer she turns down a job painting houses at $6 an hour to work in an accounting office for $4 an hour. Which of the following would not explain her choice?

Exhibit 12-3 -In Exhibit 12-3, which of the following is true at a wage rate of $7?