Question 1

Assume the minimum wage exceeds the market-clearing wage.If there is an increase in the supply of labor then the number of workers who are unemployed will ______, and the number of workers who are employed will _______.

Accepted Answer

In this case, the labor supply curve shifts rightward but the market price cannot react due to the minimum wage law. The result is higher unemployment but no change in the number of workers employed.

Question 2

A long-term mismatch between the skills of some workers and the jobs available is a principal cause of ______ unemployment.

Accepted Answer

Structural unemployment is caused by a long-term mismatch between the skills of some workers and the jobs available. This arises due to changes in the structure of an economy, such as technological changes or shifts in consumer demand, which make some skills obsolete while creating demand for new skills. Cyclical unemployment is caused by fluctuations in the business cycle, global unemployment refers to the overall level of unemployment in the global economy, and frictional unemployment is caused by temporary transitions between jobs.

Question 3

Arthur is an unskilled worker who is currently unemployed.He has been offered a job that pays $40 a day, but he is currently receiving unemployment insurance benefits equal to $50 a day, so he chooses not to accept the job and to continue looking for a better job.Arthur is ______ unemployed.

Accepted Answer

Arthur is being very selective in picking a job because he has unemployment insurance that pays him more than working would. According to the definition, he is structurally unemployed.

Question 4

Based on the labor market diagram below, if the minimum wage is set at $10 per hour, there will be ______ unemployed workers.

Accepted Answer

The answer of Based on the labor market diagram below,...

Question 5

Based on the figure, if a union contract requires that the wage workers are paid be raised from $25 to $30 per hour, the number of unemployed workers will increase by ______ workers.

Accepted Answer

The answer of Based on the figure, if a union...

Question 6

An increase in unemployment insurance benefits will:

Accepted Answer

An increase in unemployment insurance benefits may lead to a decrease in job search efforts of unemployed workers, as they may feel less pressure to find a job and may be more selective in the jobs they apply for. This could potentially decrease the demand for labor, as there may be fewer workers actively seeking employment.

Question 7

Labor unions contribute to structural unemployment by:

Accepted Answer

Labor unions can negotiate higher wages and benefits for their members, which can result in the wages being above the market-clearing level. This can lead to employers hiring fewer workers or laying off workers, which can contribute to structural unemployment.

Question 8

Periods of unusually low production in an economy result in ______ unemployment.

Accepted Answer

Cyclical unemployment is caused by economic fluctuations, such as a recession or a period of low production, which results in a decrease in demand for labor and thus an increase in unemployment. Environmental, structural, and frictional unemployment are caused by factors other than economic cycles.

Question 9

Unemployment insurance contributes to structural unemployment by:

Accepted Answer

Unemployment insurance provides financial assistance to workers who lose their jobs, allowing them to search for work longer or less intensively. This reduces the urgency for them to find a job and can result in longer spells of unemployment, contributing to structural unemployment. It does not directly affect wages, and it does not force individuals to take the first job offered to them.

Question 10

Minimum wage laws contribute to structural unemployment by:

Accepted Answer

Minimum wage laws set a price floor on wages, meaning that the wage cannot be lower than a certain amount. This creates an excess supply of labor (more people willing to work at that wage level than the number of available jobs) and contributes to structural unemployment. Employers may not be able to hire as many workers as they would like to because they cannot afford to pay them the minimum wage, and workers may be unwilling to work for lower wages than what the law mandates. This creates a mismatch between the wage level and the number of available jobs, leading to structural unemployment.

Question 11

Based on the labor market diagram below, if the minimum wage is increased from $10 to $12 per hour, the numbered of unemployed workers will increase by ______ workers.

Accepted Answer

The answer of Based on the labor market diagram below,...

Question 12

Martha did not like her job as a receptionist, so she quit and is looking for one that better suits her artistic talents.Ting Pei would like to work, but employers are not willing to hire him because he does not speak English.Martha is ______ unemployed and Ting Pei is ______ unemployed.

Accepted Answer

Martha expects to be out of work for a short while as she finds a better fit for her talents. Ting Pei, on the other hand, might be out of work for a long time as he learns a new language that will make him more employable.

Question 13

Heterogeneity and the dynamic nature of labor markets are the principal causes of ______ unemployment.

Accepted Answer

Workers are regularly coming and going from the labor force because there is so much variety in the labor market. For example, people retire every day and workers move from time-to-time, both of which are dynamic.

Question 14

The costs of unemployment are lowest (and perhaps even negative) for ______ unemployment.

Accepted Answer

Frictional unemployment is typically voluntary and short-term, as individuals are searching for better job opportunities. Therefore, the costs associated with this type of unemployment are relatively low. In some cases, it may even have a positive impact on the economy by leading to higher productivity and a better match between workers and jobs. Cyclical and structural unemployment, on the other hand, can have more significant and long-lasting negative impacts on the economy, such as reduced consumer spending and lower GDP.

Question 15

Assume that the union wage already exceeds the market-clearing wage.If the union wage is increased, holding other factors constant, then the number unemployed ______ and the number employed _____.

Accepted Answer

When the union wage is increased, it means that employers are required to pay their workers more than the market-clearing wage. This increases the cost of employment, leading to a decrease in demand for labor. As the employers can afford to hire fewer workers due to the increased cost, the number of unemployed increases while the number of employed decreases. Therefore, choice B is the correct answer.

Question 16

Based on the figure, if a union contract requires that workers be paid $25 per hour, there will be ______ unemployed workers.

Accepted Answer

The answer of Based on the figure, if a union...

Question 17

Assume the union contract wage exceeds the market-clearing wage.If there is an increase in the labor supply, then the number of unemployed workers will ______ and the number of employed workers will _______.

Accepted Answer

When the union contract wage is above the market-clearing wage, it creates a surplus of labor, or unemployment. An increase in labor supply will increase the number of unemployed workers because more workers are willing to work at the union wage, but the number of employed workers will not change as the wage rate remains above the market-clearing level.

Question 18

Structural unemployment is increased when the wage is kept above the market-clearing wage by:

Accepted Answer

Labor unions negotiate higher wages and benefits for their members, which can result in the wage being kept above the market-clearing wage. This can lead to structural unemployment as employers may not be able to afford hiring as many workers at that wage level.

Question 19

Features of the labor market that are likely to cause structural unemployment include all of the following except:

Accepted Answer

Labor unions, minimum wage laws and unemployment compensation are structural impediments to smooth running labor markets and they impede labor market adjustments.

Question 20

If there is a floor on wages created by a minimum wage, union contracts, or other factors, then a decline in the marginal productivity of low-skilled workers will ______ the demand for low-skilled workers and ______ the number of unemployed workers.

Accepted Answer

If the marginal productivity of low-skilled workers declines and there is a floor on wages, then employers will demand fewer low-skilled workers, leading to a decrease in demand. As a result, the number of unemployed workers will increase.

Quiz 6: Wages and Unemployment

Assume the minimum wage exceeds the market-clearing wage.If there is an increase in the supply of labor then the number of workers who are unemployed will , and the number of workers who are employed will _.