Question 1

-Refer to Figure 17.2.If the supply of labor increases,then equilibrium wage will ________ and equilibrium quantity of hours will ________.

Accepted Answer

An increase in the supply of labor typically leads to a decrease in the equilibrium wage due to the higher availability of workers, and an increase in the equilibrium quantity of hours worked as employers take advantage of the lower wage to hire more labor.

Question 2

Higher wages could lead workers to choose to work less hours.

Accepted Answer

This is known as the "substitution effect" in economics. As wages increase, the opportunity cost of not working (i.e. leisure time) decreases, making it more desirable for workers to take more leisure time and work fewer hours.

Question 3

-Refer to Figure 17.2.If the hourly wage is $15,then:

Accepted Answer

The answer of 
-Refer to Figure 17.2.If the hourly wage...

Question 4

An increase in the wage rate means that the opportunity cost of leisure has fallen.

Accepted Answer

An increase in the wage rate means that the opportunity cost of work has increased, not the opportunity cost of leisure. If the wage rate is higher, leisure becomes relatively more expensive compared to work, as the individual would be giving up more potential earnings by choosing to spend time in leisure activities.

Question 5

Explain the income effect and the substitution effect due to an increase in the wage rate.

Accepted Answer

The answer of Explain the income effect and the substitution...

Question 6

How does occupational licensing affect the labor market for a particular occupation?

Accepted Answer

The answer of How does occupational licensing affect the labor...

Question 7

Ignoring the income effect,an increase in the wage rate will cause an increase in labor supply.

Accepted Answer

When the wage rate increases, the opportunity cost of leisure time increases, and people are more likely to work more hours. This leads to an increase in labor supply. However, the income effect may offset some of the increase in labor supply, as individuals may choose to work less if their income has increased enough to meet their desired level of consumption.

Question 8

There is a negative relationship between the price of labor and the quantity of labor supplied,ceteris paribus.

Accepted Answer

Ceteris paribus, there is typically a positive relationship between the price of labor (wages) and the quantity of labor supplied, as higher wages incentivize more individuals to enter the workforce or offer more hours of work.

Question 9

-Refer to Figure 17.2.If the equilibrium wage $12 and a new minimum wage is set at $15,then:

Accepted Answer

Setting a new minimum wage above the equilibrium wage decreases the quantity demanded because employers are less willing to hire the same number of workers at a higher wage. Demand, as a concept, refers to the relationship between price and quantity demanded and does not rise or fall with the price change; instead, the quantity demanded decreases.

Question 10

If the hourly wage rate is above the equilibrium wage,then:

Accepted Answer

If the hourly wage rate is above the equilibrium wage, it means employers are paying more than what is necessary to attract the amount of labor they need. This will result in a surplus of labor, as there will be more people looking for work than there are available job opportunities.

Question 11

-Refer to Figure 17.2.If the hourly wage increases from $9 to $12,then:

Accepted Answer

When the hourly wage increases, it makes working more attractive to potential employees, thus increasing the quantity of labor supplied as more people are willing to work or existing workers are willing to work more hours at the higher wage.

Question 12

As the dollar prizes for professional golf tournaments have increased,professional golfers have entered fewer tournaments per year.Is this type of behavior consistent with utility maximization? Explain.

Accepted Answer

The answer of As the dollar prizes for professional golf...

Question 13

-Refer to Figure 17.2.If the demand for labor increases,then equilibrium wage will ________ and equilibrium quantity of hours will ________.

Accepted Answer

When the demand for labor increases, it means that employers are willing to hire more workers at each wage level. This leads to an increase in the equilibrium wage because workers are in higher demand, and also leads to an increase in the equilibrium quantity of hours worked as more labor is hired.

Question 14

Comment on the following statement: "An increase in the wage always leads to an increase in the quantity of labor supplied."

Accepted Answer

The answer of Comment on the following statement: "An increase...

Question 15

Suppose that you currently work 20 hours a week at $10 per hour and your employer tells you he must reduce your wage to $8 per hour.Using the concept of income and substitution effects,explain how you might react.

Accepted Answer

The answer of Suppose that you currently work 20 hours...

Question 16

-Refer to Figure 17.2.If the supply of labor decreases,then equilibrium wage will ________ and equilibrium quantity of hours will ________.

Accepted Answer

A decrease in the supply of labor will lead to an increase in the equilibrium wage due to the reduced availability of labor, and a decrease in the equilibrium quantity of hours worked because there are fewer workers available.

Question 17

-Refer to Figure 17.2.If the demand for labor decreases,then equilibrium wage will ________ and equilibrium quantity of hours will ________.

Accepted Answer

When the demand for labor decreases, the equilibrium wage decreases because employers are willing to pay less for labor, and the equilibrium quantity of hours worked also falls because there is less demand for workers.

Question 18

If the wage rate is below the equilibrium,then:

Accepted Answer

If the wage rate is below the equilibrium, employers will be willing to hire more workers at that wage rate. This will bid up the wage rate until it reaches equilibrium. Therefore, choice B is the correct answer. Choices A and C are not correct because a wage rate below equilibrium will actually lead to an increase in the supply of labor as more workers will be willing to work at that wage rate. Unemployment does not necessarily result from a wage rate below equilibrium as long as the wage rate is still above the worker's reservation wage.

Question 19

Tyler's wage rises and he chooses to increase the number of hours he supplies to the labor market.What does this imply about the relative sizes of the substitution effect and the income effect? Explain.

Accepted Answer

The answer of Tyler's wage rises and he chooses to...

Question 20

We cannot easily predict whether an increase in the wage will cause a worker to demand more leisure time or less leisure.

Accepted Answer

The relationship between wage increase and leisure time is complex and can vary depending on individual preferences, work-life balance, and other factors. Therefore, we cannot easily predict whether higher wages will result in more or less leisure time.

Quiz 17: The Labor Market and the Distribution of Income

-Refer to Figure 17.2.If the supply of labor increases,then equilibrium wage will and equilibrium quantity of hours will .