Question 1

If employers are perfectly competitive profit maximizers then they hire labor until:&#10;A) The VMPL equals the average total cost&#10;B) The VMPL equals the average variable cost&#10;C) The VMPL equals the wage&#10;D) The VMPL is greater than the average fixed cost

Accepted Answer

If employers are perfectly competitive profit maximizers, they hire labor until the VMPL (Value Marginal Product of Labor) equals the wage. This is because in perfect competition, firms cannot influence the wage rate, and hiring one more worker will only increase total costs by the amount of the wage, so it is only profitable to hire additional workers if the VMPL is greater than or equal to the wage. Therefore, the equilibrium level of employment is reached when VMPL equals the wage.

Question 2

Empirical studies have revealed a process called ___________,involving the birth of innovative firms and the death of other firms,can be responsible for a large fraction of ______________ in developing and developed countries

A) Technological advancement; wage growth
B) Technological advancement; productivity growth
C) Creative destruction; productivity growth
D) Creative destruction; wage growth

C

Accepted Answer

Empirical studies have shown that creative destruction, which involves the birth and death of firms due to innovation and market competition, is responsible for a large fraction of productivity growth in both developing and developed countries. This process allows for new and more efficient firms to replace older and less efficient ones, leading to overall economic growth. Wage growth may also occur as a result of increased productivity, but it is not the direct result of creative destruction. Technological advancement is often a key component of creative destruction, but it is not the only factor involved.

Question 3

Successful economic growth requires structural changes or&#10;A) Changing the natural rate of unemployment&#10;B) Shifts in the nature and location of economic activity&#10;C) Increasing structural unemployment&#10;D) Building new machines or factories

Accepted Answer

Successful economic growth often requires shifts in the nature and location of economic activity, such as from agriculture to manufacturing or from low-tech to high-tech industries. This can involve changes in the structure of the economy, such as the development of new sectors or the modernization of existing ones. Changing the natural rate of unemployment or increasing structural unemployment would not necessarily lead to successful economic growth, and building new machines or factories is just one possible means to achieve structural changes.

Question 4

In order for economic growth from an investment or innovation to lead to increases in the standards of living for _______,it should cause the _______schedule to rise,causing a ________for labor and an increase in wages.

A) Skilled laborers; demand; increase in demand
B) Unskilled laborers; supply; decrease in supply
C) Unskilled laborers; VMPL; increase in demand
D) Skilled laborers; supply; increase in supply

Accepted Answer

Economic growth from an investment or innovation leading to increases in standards of living for unskilled laborers requires the VMPL (Value of Marginal Product of Labor) schedule to rise. This increase in VMPL reflects higher productivity or value added by labor, leading to an increase in demand for labor and subsequently an increase in wages.

Question 5

When workers receive a specified pay per acre weeded,or per kilogram harvested they earn:&#10;A) Piece rates&#10;B) Fringe benefits&#10;C) Wage premiums&#10;D) Compensating differentials

Accepted Answer

Piece rates are a form of payment where workers receive a specified amount of pay for each unit of work completed, such as acres weeded or kilograms harvested. This is different from hourly wages, where workers are paid a set amount of money for each hour they work, regardless of how much work they complete.

Question 6

Agrarian employment arrangements use:&#10;A) Higher paid permanent labor&#10;B) Higher paid temporary workers&#10;C) Lower paid permanent labor&#10;D) Lower paid temporary workers

Accepted Answer

Agrarian employment arrangements typically rely on lower paid permanent labor, such as sharecroppers or tenant farmers, who work on the land in exchange for a share of the crops or a portion of the profits. This system allows landowners to minimize labor costs while still ensuring a stable workforce.

Question 7

Figure 9.1&#10;The Effects of an Employer-Specific Labor Demand Increase when Labor is Perfectly Mobile(a) (b) (c)&#10;  &#10;According to Figure 9.1 which of the panels depicts,when producer 1 increases wages to attract workers from producer 2,what happens to total labor in the market?&#10;A) Producer 1 increases labor,producer 2 decreases labor the total labor used stays the same&#10;B) Producer 1 decreases labor,producer 2 decreases labor the total labor used increased&#10;C) Producer 1 decreases labor,producer 2 increases labor the total labor increased&#10;D) Producer 1 increases labor,producer 2 decreases labor the total labor increased

Accepted Answer

In panel (a), when producer 1 increases wages to attract workers from producer 2, producer 1 increases labor and producer 2 decreases labor, but the total labor used in the market increases. This happens because labor is perfectly mobile, meaning workers can easily move from one producer to another without any restrictions. Therefore, when one producer increases wages, it attracts workers from the other producer. As a result, total labor in the market increases. Panels (b) and (c) show the same phenomenon but with different initial levels of total labor in the market.

Question 8

Employment in jobs that make poor use of their skills or employ only a fraction of the labor time they are willing to offer is referred to as:&#10;A) Underemployment&#10;B) Unemployment&#10;C) Is not counted as employed or unemployed&#10;D) Is a discouraged worker phenomenon

Accepted Answer

Underemployment refers to a situation where a person is employed but not in a job that makes full use of their skills or only works part-time when they would like to work full-time. This is different from unemployment, which refers to a situation where a person is actively seeking work but is unable to find a job.

Question 9

The wage premiums required leaving workers indifferent about working in dangerous conditions instead of a lower paying,but better condition job is referred to as:&#10;A) Compensation packages&#10;B) Fringe benefits&#10;C) Wage premium&#10;D) Compensating differentials

Accepted Answer

The wage premiums required to compensate workers for working in dangerous conditions instead of a lower paying, but safer job is called "compensating differentials." Compensating differentials are a way to balance the trade-off between risk and reward for workers who face the choice of working in a hazardous environment or taking a lower-paying, but safer job.

Question 10

Over the course of development,the shares of manufacturing and service sectors in GDP tend to _______,while the agricultural sector _______.&#10;A) Fall; rises&#10;B) Fall; also falls&#10;C) Rise; also rises&#10;D) Rise; declines

Accepted Answer

As an economy develops, there tends to be a shift away from agriculture towards manufacturing and services. This means that the shares of manufacturing and service sectors in GDP tend to rise over time. At the same time, the agricultural sector tends to decline as a share of GDP. So, option D is the correct answer.

Question 11

Figure 9.1&#10;The Effects of an Employer-Specific Labor Demand Increase when Labor is Perfectly Mobile(a) (b) (c)&#10;  &#10;According to Figure 9.1 which of the panels depicts a firm who invested in a technological innovation that is labor using,in the sense that it improves the Value of the marginal product of labor?&#10;A) Panel a&#10;B) Panel b&#10;C) Panel c&#10;D) Panel and a and b.

Accepted Answer

The answer of Figure 9.1&#10;The Effects of an Employer-Specific Labor...

Question 12

If labor use is ___________ then there is no way to make one person better off,without making any other person worse off,simply by _____________.&#10;A) Equitable; paying everyone a higher wage&#10;B) Inefficient; reallocating resources across different uses&#10;C) Efficient; paying workers a higher wage&#10;D) Efficient; reallocating labor across different uses

Accepted Answer

The answer of If labor use is ___________ then there...

Question 13

As long as labor markets are perfectly competitive and workers are mobile,__________ in the demand for low-skill labor in any one sector or location bring _________ for _________workers.&#10;A) Increases; decreases in prices; unskilled&#10;B) Increases; rising wages; all&#10;C) Increases; rising prices; all&#10;D) Decreases; increased income; skilled

Accepted Answer

The answer of As long as labor markets are perfectly...

Question 14

Which of the following is not an investment in human capital?&#10;A) acquisition of skills through primary and secondary schools&#10;B) Job Training&#10;C) Learning by doing tasks on the job&#10;D) Purchasing a tool to improve labor productivity

Accepted Answer

The answer of Which of the following is not an...

Question 15

When labor supply is _______,asset growth that increases the demand for low-skill labor _________ and well-being __________ for the low-skill workers already in the market.&#10;A) Elastic; reduces wages; significantly&#10;B) Elastic; raises wages; insignificantly&#10;C) Inelastic; decreases wages; insignificantly&#10;D) Inelastic; raises wages,significantly

Accepted Answer

The answer of When labor supply is _______,asset growth that...

Question 16

All of the following are reasons why a labor market may remain segmented rather than eventually settling into a competitive labor market except:&#10;A) A minimum wage above the competitive equilibrium wage&#10;B) A minimum wage below the competitive equilibrium wage&#10;C) Labor unions&#10;D) It may be profitable for firm to maintain higher pay rather than facing a high search cost and high training costs

Accepted Answer

The answer of All of the following are reasons why...

Question 17

When the supply of labor is highly _______,the increased demand for labor generates _______ benefits for low-skill workers.&#10;A) Elastic; many&#10;B) Elastic; few&#10;C) Inelastic; few&#10;D) Inelastic; many

Accepted Answer

The answer of When the supply of labor is highly...

Question 18

Figure 9.2&#10;Equilibrium in Markets for Low- and High-Skill Labor(a) (b)&#10;  &#10;According to figure 9.2 the wage for high skilled labor WH is higher than the wage for unskilled WL workers because:&#10;A) Unskilled workers are less productive and more scarce&#10;B) High skilled workers are less productive and more abundant&#10;C) High skill workers are more productive and more scarce&#10;D) Unskilled workers are more productive and more scarce

Accepted Answer

The answer of Figure 9.2&#10;Equilibrium in Markets for Low- and...

Question 19

Rather than implementing _________ where governments provide cash transfers to workers who have recently become unemployed,many developing country governments attempt instead to reduce workers' vulnerability to unemployment through_______________,which require employers to give workers advance notice of firing,to make large lump sum severance payments to workers they dismiss,or to obtain government approval before laying off workers.

A) Underemployment benefits; private institutions
B) Unemployment insurance; job security regulations
C) Job security regulations; unemployment benefits
D) Unemployment insurance; unemployment benefits

Accepted Answer

The answer of Rather than implementing _________ where governments provide...

Question 20

When a firm offers a wage higher than the competitive equilibrium due to high search and training costs of replacing employees they are paying___________.&#10;A) Minimum wages&#10;B) Efficiency wages&#10;C) Competitive wages&#10;D) Premium wages

Accepted Answer

The answer of When a firm offers a wage higher...

Question 21

Workers reap _________ productivity benefit of general training in the form of __________.&#10;A) Most of the; increased wages&#10;B) The full; increased leisure hours&#10;C) The full; increased wages&#10;D) A small fraction of the; increased leisure hours

Accepted Answer

The answer of Workers reap _________ productivity benefit of general...

Question 22

What costs are associated with migration of workers?&#10;A) If migration is temporary workers will take with them any training they received&#10;B) It can cause private safety net institutions to break-down&#10;C) Tends to raise transmission of infectious diseases&#10;D) All of the above are costs of migration

Accepted Answer

The answer of What costs are associated with migration of...

Question 23

If firms have to _______ of the workers they train to keep them from being poached the firm's costs may increase by _________ as the increase in revenue,which gives employers _______ to invest in training of their workers.

A) Raise wages; the same amount; no incentive
B) Raise wages; less than; a strong incentive
C) Lower wages; more than; no incentive
D) Raise prices; more than; a strong incentive

Accepted Answer

The answer of If firms have to _______ of the...

Question 24

What has empirical research pointed to as the most important determinants of migration decisions? Include four or more conditions that could lead to increased migration.

Accepted Answer

The answer of What has empirical research pointed to as...

Question 25

How can governments expand private sector training activities&#10;A) They can provide training services&#10;B) They can offer employee loans to us in purchasing job training&#10;C) They can tax private employers&#10;D) All of the above

Accepted Answer

The answer of How can governments expand private sector training...

Question 26

Under which conditions can investments and innovations that lead to the same rate of economic growth make it more likely to channel benefits to low-wage workers than others?

Accepted Answer

The answer of Under which conditions can investments and innovations...

Question 27

What is the effect of a technological improvement that only affects some firms in the market?

Accepted Answer

The answer of What is the effect of a technological...

Question 28

When workers acquire skills,they transform themselves from low-skill to high-skill workers.This shifts the supply schedule for low-skill workers to the _______ and shifts the supply schedule for high-skill workers to the ______ ,tending to _______ wages for low-skill workers and ________ wages for high-skill workers.

A) Left; right; raise; reduce
B) Right; right; reduce; raise
C) Left; left ; raise; reduce
D) Right; left; reduce; raise

Accepted Answer

The answer of When workers acquire skills,they transform themselves from...

Deck 9: Labor Markets