Question 1

According to the information provided, what is Amy's opportunity cost of taking an hour off from work and going surfing during the summer months?

Accepted Answer

The opportunity cost is the value of the next best alternative forgone, and in this case, Amy's next best alternative is working and earning money. The information provided states that Amy earns $20 an hour at her job, so her opportunity cost of taking an hour off to go surfing is also $20. Therefore, the answer is B, $20.

Question 2

When the price of computer software rises, the value of the marginal product of computer programmers will:

Accepted Answer

When the price of computer software rises, the demand for programmers will increase, as more programmers will be needed to produce the software. As the demand for programmers increases, the value of the marginal product of computer programmers will also increase, leading to higher wages and an increase in their value to the firm. Therefore, the correct answer is B, rise.

Question 3

If consumers demand more abalone, the value of the marginal product of labour for abalone fishers will:

Accepted Answer

If consumers demand more abalone, there will be an increase in demand for abalone fishers which will increase their marginal product of labor. As a result, they will be able to produce more abalone, leading to an increase in their productivity and income. Therefore, the value of the marginal product of labor for abalone fishers will increase.

Question 4

According to the information provided, if Amy takes more hours of leisure in the summer than in the winter we can assume that her labour supply curve:

Accepted Answer

Amy taking more hours of leisure in the summer than in the winter suggests that she is substituting leisure for work when the opportunity cost of leisure (i.e., the wage rate) is lower. This behavior is consistent with an upward-sloping labor supply curve, where individuals supply more labor (and thus take less leisure) as the wage rate increases.

Question 5

In 2005, Zimbabwe was an unstable place to live or work.The civil unrest sent thousands of refugees across the border to South Africa, where they sought relief from the dangers.From the information provided, in which of the following ways might the Zimbabwean situation possibly affect South African labour markets?

Accepted Answer

The Zimbabwean situation could affect South African labour markets in multiple ways, including potential increases in refugee labour supply which could reduce wages (B) and potentially increase total employment (C) while also potentially decreasing the marginal product of labour (D). Therefore, answer A is the most accurate.

Question 6

Which of the following factors would lead to an increase in the supply of labour?

Accepted Answer

Increasing immigrant labour would lead to an increase in the overall supply of labour, as there are more workers available to enter the workforce. The other options would lead to a decrease in the supply of labour.

Question 7

Refer to the information provided.Assume that Amy has an upward-sloping labour supply curve.Amy's crocodile zoo employer is considering decreasing her wage.If Amy is offered $22 per hour, it is likely that she will:

Accepted Answer

Amy's upward-sloping labour supply curve indicates that she will choose to work fewer hours if her wage decreases. Therefore, if her employer decreases her wage to $22 per hour, it is likely that she will work fewer hours.

Question 8

Suppose that a change to early retirement laws leads to a decrease in labour supply.This means that:

Accepted Answer

A decrease in labor supply, assuming demand remains constant, would lead to a shortage of workers. This shortage increases the bargaining power of workers, leading to higher wages. The assumption that the supply curve is downward-sloping is standard in economic models, reflecting that as wages increase, more individuals are willing to work, and vice versa.

Question 9

When a labour market experiences a surplus of labour, there is downward pressure on:

Accepted Answer

A surplus of labour means that there are more workers available than there are jobs. This gives employers bargaining power and they can offer lower wages to workers. Therefore, there is downward pressure on wages. The other options are not necessarily affected by a surplus of labour.

Question 10

Which of the following events would cause an increase in the labour supply curve?

Accepted Answer

If more married women decide to work, the total number of people in the labour force will increase, shifting the supply curve to the right.

Question 11

Bob has been a private school caretaker for 30 years.For practical purposes, assume that Bob's productivity never changes.What then, if anything, will decrease the value of the labour that Bob performs?

Accepted Answer

The value of Bob's labor is directly related to the amount of tuition fees being paid by the students attending the school. If there is a decrease in tuition fees, Bob's labor is worth less even if his productivity remains the same. Therefore, choices A and B are not relevant in this scenario.

Question 12

Assume that the South African labour market was in equilibrium before the Zimbabwean situation.At the equilibrium wage that prevailed in South Africa prior to the Zimbabwean situation, what would the post-war status of the labour market be?

Accepted Answer

The influx of workers from Zimbabwe would increase the supply of labor in South Africa, leading to a surplus of labor at the pre-existing equilibrium wage, as the supply of labor would exceed the demand at that wage level.

Question 13

According to the information provided, what is Amy's opportunity cost of taking an hour off work to go cycling during the winter months?

Accepted Answer

Amy's opportunity cost is the value of what she could have earned if she had not taken an hour off work. Since she earns $25 per hour at her job and she spends $5 on cycling, her opportunity cost would be $25 - $5 = $20. Therefore, the best choice would be option C, which states that the opportunity cost is $25, as this is the closest option to the calculated value.

Question 14

The South African government started to patrol the border and had a policy of returning all refugees to Zimbabwe.This policy would:

Accepted Answer

Returning refugees to Zimbabwe would prevent them from entering the labor market in South Africa, thus preventing an increase in the supply of Zimbabwean labor in South Africa.

Question 15

According to the information provided, if Amy takes more hours of leisure in the summer than in the winter we can assume that the:

Accepted Answer

The income effect suggests that as an individual's income increases, they tend to consume more leisure. If Amy is taking more hours of leisure in the summer when her income is not typically higher than in the winter, it implies that the income effect is dominating the substitution effect.

Question 16

What happens to the labour supply in the pear-picking market when the apple pickers get a wage rise?

Accepted Answer

When the apple pickers get a wage rise, they will have less incentive to switch to pear picking, resulting in a decrease in the labour supply in the pear-picking market. Therefore, the best choice is letter A.

Question 17

What happens to the labour supply curves in both countries when New Zealand workers immigrate to the Australia?

Accepted Answer

When New Zealand workers immigrate to the Australia, the labour supply curve in Australia shifts to the right, indicating an increase in labour supply. At the same time, the labour supply curve in New Zealand shifts to the left, indicating a decrease in labour supply. Therefore, the correct answer is A.

Question 18

Refer to the information provided.Assume that Amy has an upward-sloping labour supply curve.If the opportunity cost of Amy's leisure time decreases, she will respond by:

Accepted Answer

If the opportunity cost of Amy's leisure time decreases, it means that the value of her leisure time has increased relative to working. Therefore, she is likely to work fewer hours to enjoy more leisure.

Question 19

Which of the following events would shift the labour supply curve?

Accepted Answer

All the options listed (changes in tastes, changes in the number of women willing to work, and changing attitudes towards work) can influence individuals' willingness or ability to work, thereby shifting the labor supply curve.

Question 20

Jack the physical therapist invents a new wrist-brace that allows assembly line labourers to work without suffering the effects of carpal-tunnel syndrome, thus making the workers more productive.The demand for assembly line workers will:

Accepted Answer

The invention of the new wrist-brace will make assembly line work less physically demanding and therefore more attractive to potential workers who may have avoided such work in the past due to fear of developing carpal-tunnel syndrome. As a result, the demand for assembly line workers is likely to rise.

Quiz 19: The Markets for the Factors of Production