Question 1

In the 1700s and 1800s:

Accepted Answer

During the 1700s and 1800s, labor laws to protect workers or prevent child labor were not yet widespread, and the concept of the "invisible hand," introduced by Adam Smith, suggested that in a free market, wages could indeed be pushed down to subsistence levels due to the forces of supply and demand without intervention.

Question 2

A monopolist will hire workers up to the point at which the wage equals the marginal:

Accepted Answer

A monopolist is a price maker in the market, so the marginal revenue product (MRP) of labor is used instead of the price of output. The monopolist will hire workers up to the point at which the MRP equals the wage. This is because the MRP reflects the additional revenue generated by each additional unit of labor, and the monopolist will hire workers as long as the additional revenue generated is greater than the cost of hiring them (i.e. the wage).

Question 3

Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Accepted Answer

The given result states that the income of obese women is lower than that of women of recommended weight, with no indication of causality. Therefore, it could either be because they are less productive or because employers discriminate against them. Both these explanations are equally plausible and cannot be singled out as the sole cause for the income difference. Hence, option D - obese women earn less either because they are less productive or because employers discriminate against them - is the most appropriate answer.

Question 4

Refer to the graphs shown. If labor supply shifts from S₁ to S₂, the market wage rate will:

Accepted Answer

The answer of Refer to the graphs shown.  If...

Question 5

Refer to the graph shown. If labor supply shifts from S₁ to S₂, the firm will:

Accepted Answer

The answer of Refer to the graph shown.  If...

Question 6

The fact that some people are willing to take a pay cut to be able to work from home suggests that:

Accepted Answer

The fact that some people are willing to take a pay cut to work from home suggests that they are receiving non-monetary benefits, also known as "psychic income," from working in a favorable environment. This indicates that people value work conditions and flexibility, and are willing to sacrifice extra pay for it.

Question 7

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Accepted Answer

To minimize costs, the firm should use the inputs in proportion to their marginal revenue product per dollar. Since labor has a higher marginal revenue product per dollar (40/1) compared to capital (30/1), the firm should increase labor and reduce capital. Therefore, the best choice is to increase labor and reduce capital to meet the cost minimization condition, Choice C.

Question 8

Which of the following is not a type of labor law in the United States?

Accepted Answer

Maximum wage laws do not exist in the United States. The other options listed are all types of labor laws that provide protections for workers. Child labor laws regulate the employment of minors, worker safety and health laws establish standards for workplace safety, and overtime pay laws require employers to pay employees at a higher rate for hours worked beyond a certain threshold.

Question 9

The derived demand curve for labor shows the:

Accepted Answer

The derived demand curve for labor shows the maximum amount of labor, measured in labor hours, that a firm will hire at various wages. This is because firms will only hire labor up to the point where the marginal revenue product of labor (MRPL) equals the wage rate. At this point, any additional labor hired would cost more than the revenue generated, leading to a decrease in profits. Therefore, the derived demand curve for labor is upward sloping, indicating that as the wage rate increases, firms will hire more labor up to a point.

Question 10

A firm's demand curve for labor services:

Accepted Answer

The demand for labor services depends on the amount of other inputs used by the firm, such as capital and technology. An increase in the amount of other inputs can increase the demand for labor services, while a decrease can decrease the demand. Therefore, the demand for labor services is not independent of the demand for the firm's output or unrelated to the price of the firm's output. The demand for labor services may also change if technology changes, as it can affect the amount of other inputs used.

Question 11

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP)of labor used to produce apples would:

Accepted Answer

The marginal revenue product (MRP) of labor is calculated as the additional revenue generated by employing one more unit of labor. If the price of apples doubles, the revenue generated from selling apples also doubles, assuming the quantity of apples produced and sold remains constant. Therefore, the MRP of labor, which is directly tied to the revenue generated, would also double.

Question 12

After adjusting for institutional factors, economists have found that:

Accepted Answer

Economists have found that after adjusting for institutional factors such as education, work experience, etc., institutional factors do explain some of the pay difference between men and women. However, workplace discrimination also appears to play a role in the lower pay that women receive. Therefore, the best choice is C.

Question 13

Harvard University once paid two financial managers, who helped manage Harvard's $20 billion endowment, each about $25 million. Harvard defended their pay "as normal in the community of hedge-fund managers with which Harvard Management competes for talent." An economist probably would say that these pay levels:

Accepted Answer

An economist would say that the pay levels make sense if the value of their marginal product (the additional value they bring to the endowment through their management) exceeds $25 million. This is because if their contribution is worth more than what they are paid, then it is rational for Harvard to compensate them at such a high level in order to retain their talent.

Question 14

On average, women receive ________ of the pay that men receive.

Accepted Answer

According to data from the United States Census Bureau, women earn approximately 82 cents for every dollar earned by men, which equates to about 82% of men's pay. Therefore, the best choice is option D, which falls between 70 and 90 percent.

Question 15

Researchers have found that family income of obese women is about 17 percent lower than that of women who are of the recommended weight. If researchers were able to demonstrate that there is no difference in the productivity of women who are obese and women who are of the recommended weight, this would suggest that the difference in income:

Accepted Answer

If productivity is equal between obese women and women of the recommended weight, then the difference in income can be attributed to discrimination. This could be discrimination in hiring, promotions, or pay raise decisions based on weight bias.

Question 16

Discrimination based on institutional factors occurs when:

Accepted Answer

The answer of Discrimination based on institutional factors occurs when:
...

Question 17

When the cost minimization condition is met:

Accepted Answer

When the cost minimization condition is met, the ratio of marginal product to price is equal for all inputs. This means that the firm is using each input in the most efficient way possible, producing the most output possible for the amount spent on each input. Therefore, choice D is the correct answer.

Question 18

The marginal revenue product of an input tends to decrease as:

Accepted Answer

As more of the input is used, the marginal product of the input tends to decrease due to the principle of diminishing marginal returns. This, in turn, decreases the marginal revenue product of the input.

Question 19

Among jobs that you like, you would be wise to choose a job in a field in which:

Accepted Answer

Choosing a job in a field where labor supply is decreasing while labor demand is increasing will generally provide more job security and potentially higher wages due to the shortage of workers in that field. This is because the demand for labor exceeds the available supply, giving workers more bargaining power in terms of wages and job offers. On the other hand, if both labor supply and demand are decreasing or increasing, it may result in higher competition for jobs, lower wages, and less job security.

Question 20

Refer to the graph shown.  Which curve represents the firm's derived demand for labor curve?

Accepted Answer

The answer of Refer to the graph shown.  Which...

Quiz 17: Work and the Labor Market

In the 1700s and 1800s:

A monopolist will hire workers up to the point at which the wage equals the marginal:

Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Refer to the graphs shown. If labor supply shifts from S₁ to S₂, the market wage rate will:

Refer to the graph shown. If labor supply shifts from S₁ to S₂, the firm will:

The fact that some people are willing to take a pay cut to be able to work from home suggests that:

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Which of the following is not a type of labor law in the United States?

The derived demand curve for labor shows the:

A firm's demand curve for labor services:

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would:

After adjusting for institutional factors, economists have found that:

On average, women receive ________ of the pay that men receive.

Discrimination based on institutional factors occurs when:

When the cost minimization condition is met:

The marginal revenue product of an input tends to decrease as:

Among jobs that you like, you would be wise to choose a job in a field in which:

Refer to the graph shown. Which curve represents the firm's derived demand for labor curve?

Quiz 17: Work and the Labor Market

In the 1700s and 1800s:

A monopolist will hire workers up to the point at which the wage equals the marginal:

Researchers have found that the income of obese women is about 17 percent lower than that of women who are of the recommended weight. This result implies that:

Refer to the graphs shown. If labor supply shifts from S1 to S2, the market wage rate will:

Refer to the graph shown. If labor supply shifts from S1 to S2, the firm will:

The fact that some people are willing to take a pay cut to be able to work from home suggests that:

Suppose that the marginal revenue product of labor is currently 40 and the marginal revenue product of capital is 30. If both inputs have the same cost, the firm should:

Which of the following is not a type of labor law in the United States?

The derived demand curve for labor shows the:

A firm's demand curve for labor services:

The price of apples is currently $1 per pound. If apples are sold in a competitive market and the price of apples increases to $2 per pound, the marginal revenue product (MRP) of labor used to produce apples would:

After adjusting for institutional factors, economists have found that:

On average, women receive ________ of the pay that men receive.

Discrimination based on institutional factors occurs when:

When the cost minimization condition is met:

The marginal revenue product of an input tends to decrease as:

Among jobs that you like, you would be wise to choose a job in a field in which:

Refer to the graph shown. Which curve represents the firm's derived demand for labor curve?

Refer to the graphs shown. If labor supply shifts from S₁ to S₂, the market wage rate will:

Refer to the graph shown. If labor supply shifts from S₁ to S₂, the firm will: