Question 1

Holding other factors constant, if a larger proportion of the population enters the labor force as a result of a growing social acceptance of women working, then the real wages of workers will ______ and employment of workers will _____.
A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Accepted Answer

The answer of Holding other factors constant, if a larger...

Question 2

Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the real wages of factory workers will ______ and employment of factory workers will _____.
A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Accepted Answer

If computers allow factory workers to manufacture more products per hour, then the overall productivity of the factory will increase. This will lead to an increase in demand for the products, which will lead to an increase in the demand for labor. As the demand for labor increases, the real wages of factory workers will also increase. At the same time, since productivity is higher, the cost of producing each unit of output is lower, which creates room for higher profits. This can lead to an expansion in the scale of production, which could further increase the demand for labor.

Question 3

As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______.
A) increases; increases
B) increases; decreases
C) decreases; decreases
D) decreases; increases

Accepted Answer

As real wages decrease, firms desire more employees. Conversely, as real wages decrease, fewer people find it worthwhile to work or workers desire fewer hours.

Question 4

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5. $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Pizzas Baked Per Day } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 18 \
\hline 3 & 24 \
\hline 4 & 30 \
\hline 5 & 32 \
\hline
\end{array}$$ How many workers will Joe hire if he must pay each one $45 a day?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

The answer of Production data for Joe's Pizza Parlor are...

Question 5

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 18 \
\hline 3 & 24 \
\hline 4 & 28 \
\hline 5 & 30 \
\hline
\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $120?
A) 0
B) 3
C) 5
D) More than 5

Accepted Answer

The marginal revenue product (MRP) of labor must be greater than or equal to the wage. The MRP is the additional revenue from hiring one more worker. At 3 workers, MRP is $60, which is less than the $120 wage, so no workers will be hired.

Question 6

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 18 \
\hline 3 & 24 \
\hline 4 & 28 \
\hline 5 & 30 \
\hline
\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $70?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

From the table, we see that the marginal benefit of hiring an additional worker decreases as the number of workers increases. At $70 hourly wage, we should hire the workers until their marginal benefit (in revenue) equals to $70. This occurs when two workers are hired since the marginal benefit for the second worker is $18 - $10 = $8, which increases from the marginal benefit of the first worker which is $10 - $0 = $10. Therefore, we should hire 2 workers.

Question 7

If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the:
A) supply of labor to All-Oak Table Co. increases.
B) supply of labor to All-Oak Table Co. decreases.
C) demand for labor by All-Oak Table Co. decreases.
D) demand for labor by All-Oak Table Co. increases.

Accepted Answer

When the price of tables sold by All-Oak Table Co. increases, it is expected that the company will experience an increase in demand for their products. As a result, they will need to produce more tables, and therefore will need more labor to help meet this demand. This means that the demand for labor by All-Oak Table Co. will increase.

Question 8

The minimum payment you are willing to accept to do a job is your:
A) nominal wage.
B) real wage.
C) reservation price.
D) value of marginal product.

Accepted Answer

The minimum payment that an individual is willing to accept for a job is known as their reservation price. This is the lowest amount of compensation they are willing to accept for their labor, and any offer below this amount is likely to be rejected.

Question 9

High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Chairs Produced Per Hour } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 18 \
\hline 3 & 24 \
\hline 4 & 28 \
\hline 5 & 30 \
\hline
\end{array}$$ For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

We need to calculate the marginal productivity of labor (MPL) and hire workers up to the point where the MPL equals the hourly wage.

$$\begin{array} { | c | c | c | } 
\hline \text { Number of Workers } & \text { Chairs Produced Per Hour } & \text { MPL } \
\hline 0 & 0 & - \
\hline 1 & 10 & 10 \
\hline 2 & 18 & 8 \
\hline 3 & 24 & 6 \
\hline 4 & 28 & 4 \
\hline 5 & 30 & 2 \
\hline
\end{array}$$

The MPL decreases as we add more workers, which is consistent with the law of diminishing marginal returns.

The hourly wage is $30. We hire workers up to the point where the MPL equals $30.

From the table, when there are 4 workers, the MPL is 4, which is less than $30. When there are 3 workers, the MPL is 6, which is greater than $30. Therefore, the optimal number of workers to hire is 4.

Question 10

If the price of TVs produced by the XYZ-TV Company falls from $1,000 to $750 per TV set, then the:
A) supply of labor to the XYZ-TV Company increases.
B) supply of labor to the XYZ-TV Company decreases.
C) demand for labor by the XYZ-TV Company increases.
D) demand for labor by the XYZ-TV Company decreases.

Accepted Answer

When the price of TVs falls, the XYZ-TV Company may earn less revenue per TV, potentially reducing their need for labor to produce the same quantity, thus decreasing the demand for labor.

Question 11

If the existence of alternative opportunities makes people become less willing to work in poultry processing plants, then the real wage of unskilled workers in poultry processing plants is predicted to ______ and the employment of unskilled workers in poultry processing plants is predicted to ______.
A) increase; increase
B) increase; decrease
C) increase; not change
D) decrease; decrease

Accepted Answer

If the work setting becomes more favorable outside of poultry processing plants, then the supply of workers will shift left and there will be more competition for the remaining poultry processing workers, causing wages will increase and employment to decrease.

Question 12

Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers will ______ and employment of agricultural workers will _____.
A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; decrease

Accepted Answer

If food prices decline then the producers of food will be less inclined to hire workers, so the demand for labor shifts left wages and employment will decrease.

Question 13

An increase in the price of the output produced by labor will:
A) increase the supply of labor.
B) decrease the supply of labor.
C) increase the demand for labor.
D) decrease the demand for labor.

Accepted Answer

An increase in the price of output produced by labor (wages) will increase the demand for labor as firms will want to produce more output and will therefore need more labor to meet this demand.

Question 14

An increase in the size of the working-age population:
A) increases labor demand.
B) decreases labor demand.
C) increases labor supply.
D) decreases labor supply.

Accepted Answer

When the working-age population increases, the potential labor supply increases.

Question 15

Production data for Joe's Pizza Parlor are as follows. For simplicity assume that labor is the only input. Each pizza sells for $5. $$\begin{array} { | c | c | } 
\hline \text { Number of Workers } & \text { Pizzas Baked Per Day } \
\hline 0 & 0 \
\hline 1 & 10 \
\hline 2 & 18 \
\hline 3 & 24 \
\hline 4 & 30 \
\hline 5 & 32 \
\hline
\end{array}$$ How many workers will Joe hire if he must pay each one $35 a day?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

The marginal product of labor is 8 pizzas per worker. At a wage of $35, Joe will hire 2 workers.

Question 16

Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the real wages of workers will ______ and employment of workers will _____.
A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Accepted Answer

An increase in education and skills typically leads to an increase in worker productivity, which in turn leads to an increase in the demand for labor. The increase in demand for labor will, in turn, lead to an increase in real wages and an increase in employment of workers. Therefore, choice A is the correct answer.

Question 17

The demand for labor increases when the:
A) real wage increases.
B) real wage decreases.
C) value of the marginal product of labor increases.
D) value of the marginal product of labor decreases.

Accepted Answer

The value of the marginal product of labor represents the additional output a firm can produce from hiring one more unit of labor. When this value increases, firms are willing to pay more for labor and hire more workers, leading to an increase in the demand for labor. Therefore, the correct answer is C.

Question 18

Firms will hire additional workers as long as the wage:
A) is less than the marginal product of labor.
B) equals the marginal product of labor.
C) is greater than the marginal product of labor.
D) is less than the value of the marginal product of labor.

Accepted Answer

This is an application of the marginal benefit-marginal cost rule.

Question 19

The introduction of a new technology that increases the productivity of labor will:
A) increase the supply of labor.
B) decrease the supply of labor.
C) increase the demand for labor.
D) decrease the demand for labor.

Accepted Answer

The introduction of a new technology that increases the productivity of labor will increase the demand for labor since firms will need more workers to operate and maintain the technology.

Question 20

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will ______ and employment of oil workers will _____.
A) increase; increase
B) increase; decrease
C) decrease; not change
D) decrease; increase

Accepted Answer

If oil prices rise, then producers of oil will be more inclined to hire workers and there will be more demand for oil workers (demand shifts right). As a result, wages and employment will increase.

Quiz 6: Measuring the Price Level and Inflation

Holding other factors constant, if a larger proportion of the population enters the labor force as a result of a growing social acceptance of women working, then the real wages of workers will __ and employment of workers will _.

Holding other factors constant, if computers allow factory workers to manufacture more products per hour, then the real wages of factory workers will __ and employment of factory workers will _.

As the real wage decreases, the quantity of labor demanded and the quantity of labor supplied _.

If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the:

The minimum payment you are willing to accept to do a job is your:

If the price of TVs produced by the XYZ-TV Company falls from $1,000 to $750 per TV set, then the:

If the existence of alternative opportunities makes people become less willing to work in poultry processing plants, then the real wage of unskilled workers in poultry processing plants is predicted to and the employment of unskilled workers in poultry processing plants is predicted to .

Holding other factors constant, if food prices decline relative to the prices of other products, then the real wages of agricultural workers will __ and employment of agricultural workers will _.

An increase in the price of the output produced by labor will:

An increase in the size of the working-age population:

Holding other factors constant, if the education and skills of the typical worker in an economy increases, then the real wages of workers will __ and employment of workers will _.

The demand for labor increases when the:

Firms will hire additional workers as long as the wage:

The introduction of a new technology that increases the productivity of labor will:

Holding other factors constant, if oil prices rise relative to the prices of other products, then the real wages of oil workers will __ and employment of oil workers will _.