Deck 28: Labor Markets and Wage Rates

Question 1

If Justine's money wages tripled from 2015 to 2020 and the consumer price index tripled,we would know that Justine's real wages

A)fell substantially.
B)fell slightly.
C)stayed the same.
D)rose slightly.
E)rose substantially.

Answer 1

C

Question 2

An effective minimum wage is set

A)above the equilibrium level.
B)below the equilibrium level.
C)at the equilibrium level.

Answer 2

A

Question 3

In 1993,the base year,you were earning $400/week.Your wages rose to $550 in 2001,the current year,when the Consumer Price Index stood at 137.5.What statement can you make about what happened to your real wages over this period?

A)They rose.
B)They fell.
C)They remained the same.
D)There is not enough information to determine whether they rose,fell,or remained the same.

Answer 3

C

Question 4

The minimum wage is a price ____,which tends to ___ the employment of unskilled workers.

A)ceiling;decrease
B)ceiling;increase
C)floor;decrease
D)floor;increase

Question 5

The backward-bending labor supply curve includes each of these variables except

A)the income effect.
B)the substitution effect.
C)the savings effect.

Question 6

The substitution effect takes place as we move

A)upward from I to J.
B)down from J to I.
C)up from J to K.
D)down from K to J.

Question 7

Which statement is false?

A)Germany pays higher manufacturing wage rates than the U.S.does.
B)The United States pays the highest manufacturing wage rates in the world.
C)Both Britain and Norway pay higher manufacturing wage rates than the United States.
D)None of the statements are false.

Question 8

If Jason were offered a job as an accountant at $30,000 and a job as a running back for the Oakland Raiders at $300,000,and he would have been willing to accept the latter even if it paid as little as $50,000,he would be receiving economic rent of

A)$30,000.
B)$50,000.
C)$250,000.
D)$300,000.

Question 9

Today a college graduate earns about $____ while a high school graduate earns about $_____.

A)70,000;24,000
B)53,000;32,000
C)53,000;24,000
D)70,000;32,000

Question 10

Some conservative economists want to help more teenagers to find jobs by

A)providing a government jobs program.
B)raising the minimum wage rate for teenagers.
C)lowering the minimum wage rate for teenagers.
D)requiring every business with more than 25 employees to hire at least one teenager for each three new employees hireD.

Question 11

If Bart's money wages doubled from 2013 to 2018 and the consumer price index rose by 50%,we would know that Bart's real wages

A)fell by 50%.
B)stayed about the same.
C)rose by less than 50%.
D)doubleD.

Question 12

In 1991,the base year,you were earning $350/week.Your wages rose to $450 in 2000,the current year,when the Consumer Price Index stood at 135.What statement can you make about what happened to your real wages over this period?

A)They rose.
B)They fell.
C)They remained the same.
D)There is not enough information to determine whether they rose,fell,or remained the same.

Question 13

In order for real wages to grow

A)productivity must grow.
B)productivity must fall.
C)money wages must grow.
D)money wages must fall.

Question 14

Who made this statement? "The really exhausting and the really repulsive labours,instead of being better paid than others,are almost invariably paid the worst of all.....The hardships and the earnings,instead of being directly proportional,as in any just arrangements of society they would be,are generally in an inverse ratio to one another."

A)John Stuart Mill
B)John Maynard Keynes
C)Elizabeth Warren and Amelia Warren Tyagi
D)Beth Schulman
E)Barbara Ehrenreich

Question 15

Statement I: To move from the secondary to the primary labor market,a college degree is a necessary condition,but not a sufficient condition.
Statement II: There were huge expansions of the college population during the late 1940s and from the late 1960s to the early 1970s.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 16

Which statement is false?

A)The primary labor market includes jobs in the skilled crafts,management,and the professions.
B)The dual labor market consists of the primary market and the secondary market.
C)The dual labor market theory doesn't account for the huge middle level of occupations-nursing,teaching,social work,and non-college-graduate positions in insurance,banking,and retailing.
D)None of the statements are false.

Question 17

A minimum wage law creates a price (or wage)_____ and a labor _____.

A)floor,shortage
B)floor,surplus
C)ceiling,shortage
D)ceiling,surplus

Question 18

Which statement is false?

A)The substitution effect means that you trade away leisure time for more money.
B)The income effect means that you trade away some money for more leisure time.
C)Both statements are true.

Question 19

Which statement is true?

A)American manufacturing wages are the highest in the world.
B)American manufacturing wage rates are the lowest of any industrial country.
C)Our manufacturing wage rates are the second highest in the world.
D)None of the statements are true.

Question 20

A firm's demand for labor is

A)its MRP schedule.
B)determined by the going wage rate.
C)shaped mainly by the supply of labor.

Question 21

In general output per hour rises at _____ real wages.

A)a much higher rate than
B)a somewhat higher rate than
C)about the same rate as
D)a somewhat lower rate than
E)a much lower rate than

Question 22

If the legal minimum wage is set below the equilibrium wage rate

A)employment will tend to be lower than it otherwise would have been.
B)employment will tend to be higher than it otherwise would have been.
C)the level of employment will not be affected.
D)there is no way to determine how the level of government would be affecteD.

Question 23

As wage rates rise to extremely high levels,

A)the income effect becomes stronger than the substitution effect.
B)the substitution effect becomes stronger than the income effect.
C)both the income effect and substitution effect become stronger.
D)both the income effect and substitution effect become weaker.

Question 24

In the year 2020,suppose the average college graduate could get a job starting at $100,000/year.How would the real wages earned by the average college graduate in 2010 compare with that of today's average college graduate?

A)They will be higher.
B)They will be lower.
C)They will be about the same.
D)There is no way of knowing.

Question 25

If the legal minimum wage is set above the equilibrium wage rate

A)employment will tend to be lower than it otherwise would have been.
B)employment will tend to be higher than it otherwise would have been.
C)the level of employment will not be affected.
D)there is no way to determine how the level of employment would be affecteD.

Question 26

Conservative economists would like to help younger workers get work experience by

A)setting up a government jobs program.
B)raising the minimum wage rate.
C)lowering the minimum wage rate.
D)passing a law requiring employers to hire teenagers ahead of older workers who are equally qualifieD.

Question 27

Suppose your economics professor earns an equal annual salary of $40,000.The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year.Your professor is earning annual economic rent of

A)$40,000.
B)$25,000.
C)$55,000.
D)$15,000.

Question 28

If there is an increase in the nominal (money),the real wage

A)will also rise.
B)will also rise,unless the consumer price index rises.
C)will also rise,unless the consumer price index rises as much or more than the nominal (money)wage.
D)None of the choices are true.

Question 29

A rise in the wage rate would cause

A)an increase in the MRP schedule of labor.
B)a decrease in the MRP schedule of labor.
C)no change in the MRP schedule of labor.

Question 30

A decrease in economic rent would cause

A)an increase in the MRP schedule of labor.
B)a decrease in the MRP schedule of labor.
C)a change in the MRP schedule of labor.

Question 31

Which statement is true?

A)The highest paid professional athletes earn economic rent.
B)Economic rent is paid on land,but not in the form of wages.
C)Economic rent is earned mainly by the poor and the lower middle class.
D)Economic rent is paid in proportion to the marginal revenue product of a resource.
E)None of the statements are true.

Question 32

Who is most likely to be earning economic rent?

A)A landlord
B)A postal employee
C)Someone who lives in a rental apartment
D)A major league baseball player

Question 33

Which statement is false?

A)A firm's marginal revenue product curve for labor is its demand curve for labor.
B)Most desirable jobs are in the primary labor market.
C)Virtually no one today earns economic rent.
D)None of these statements are false.

Question 34

The above graph is

A)the demand for labor.
B)the supply of labor.
C)the supply of capital.
D)the demand for capital.

Question 35

Which statement is false?

A)According to the theory of the dual labor market,the rich stay rich and the poor stay poor.
B)The dual labor market theory does not account for the huge middle level of occupations-such as nursing,teaching,and social work.
C)Most poorer people tend to find jobs in the primary labor market,according to the theory of the dual labor market.
D)None of the statements are false.

Question 36

If the legal minimum wage rate is set at $1/hour instead of at the equilibrium rate,

A)employment for inexperienced and marginal workers will tend to fall.
B)employment of inexperienced and marginal workers will tend to rise.
C)employment of inexperienced and marginal workers will not be affected.
D)there is no way to determine how the employment of inexperienced and marginal workers would be affecteD.

Question 37

There is _____ relationship between the rise in real wages and the rise in productivity.

A)a strong
B)a weak
C)no

Question 38

The income effect and the substitution effect offset each other at point

A)I
B)J
C)K
D)S

Question 39

The amount a person earns over and above the amount she/he would be willing to work for is called

A)marginal resource cost.
B)economic rent.
C)marginal revenue product.
D)profit on human capital.

Question 40

Which statement is true?

A)Productivity only partially explains wage differentials.
B)The reason why college graduates earn much more than high school graduates is that they have received very valuable job training in college.
C)With almost no exceptions,the more productive you are,the more you earn.
D)None of the statements are true.

Question 41

An upward sloping labor supply curve suggests that;

A)there is no substitution effect.
B)the income effect outweighs the substitution effect.
C)the substitution effect outweighs the income effect.
D)None of the choices are correct.

Question 42

Statement I: Between 1973 and 1993,real hourly wages fell for most Americans.
Statement II: In 2008,real wages were 9% less than in 1973.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 43

Among these countries,which has the highest hourly wage and fringe benefits in manufacturing?

A)Germany
B)Japan
C)The U.S.
D)Canada

Question 44

The demand for labor is

A)determined by the wage rate.
B)determined by the supply of labor.
C)its marginal revenue product schedule.
D)higher at lower wage rates.

Question 45

An increase in the demand for electricians will

A)increase economic rent earned by electricians.
B)decrease the supply of electricians.
C)decrease economic rent earned by electricians.
D)have no effect on economic rent earned by electricians.

Question 46

Traditionally our society got its dirty work done by

A)forcing oppressed minorities to do it.
B)paying people higher wages to do it.
C)All of the choices are correct.

Question 47

As the wage rate rises to extremely high levels,the ____________ becomes stronger than the ____________.

A)income effect;substitution effect
B)substitution effect;income effect
C)marginal revenue product;resource demand
D)None of these choices are correct.

Question 48

Economic rent is generally associated with

A)high wages.
B)low wages.
C)both high and low wages.
D)neither high nor low wages.

Question 49

If we consider the period from 1973 to 2007,real wages were the lowest around the year

A)1973.
B)1979.
C)1986.
D)1990.
E)1996.

Question 50

Compared to real wages in 1973,today they are about

A)17% lower.
B)9% lower.
C)the same.
D)9% higher.
E)17% higher.

Question 51

Which of the following is NOT true about the theory of the dual labor market?

A)It is a class theory of employment.
B)The dividing line between the primary and secondary markets is whether you have a college degree.
C)Jobs in the secondary market pay better than those in the primary market.
D)This theory does not take into account the huge middle level of occupations-nursing,social work,and non-college-graduate positions in insurance,banking,and retailing.

Question 52

Most lawyers,doctors,and accountants are in the

A)secondary labor market.
B)primary labor market.
C)minimum wage labor market.
D)None of these choices are correct.

Question 53

If the legal minimum wage rate were set at $15/hour,

A)employment would decline substantially.
B)employment would decline slightly.
C)employment would not be affected.
D)employment would rise slightly.
E)employment would rise substantially.

Question 54

Winner-take-all markets explain

A)why no one ever remembers who came in second.
B)why top paid corporate executives,professional athletes,and entertainers earn such high salaries.
C)why nominal wages are always higher than real wages.
D)why real wages are tied to productivity.

Question 55

Sue Ann Buchanan,can make $800,000 on the pro tennis tour,but would be willing to do it for $200,000.Her economic rent is

A)$200,000.
B)$600,000.
C)$800,000.
D)$1,000,000.

Question 56

The supply curve of labor for any particular occupation is upward sloping because

A)higher wages usually imply higher education and training requirements for the job.
B)all supply curves are upward sloping.
C)a higher wage is necessary to attract more people into that occupation from other occupations.
D)working conditions are more important than wages in a person's choice of occupation.

Question 57

If you signed a 40-year contract in 1970 to be paid $1,000,000 a year,right now your real wages would be

A)over $1,000,000.
B)$1,000,000.
C)less than $500,000.
D)less than $250,000.
E)less than $100,000.

Question 58

As someone's income rises,eventually their

A)income effect will outweigh their substitution effect.
B)substitution effect will outweigh their income effect.
C)their substitution and income effects will attain permanent equality.

Question 59

Among these countries,which has the lowest hourly wage and fringe benefits in manufacturing?

A)Germany
B)Britain
C)Canada
D)United States

Question 60

Which statement is false?

A)Winner-take-all markets are spreading.
B)The U.S.has the highest hourly wage and fringe benefits of all the industrial nations.
C)Real hourly wages in the U.S.were lower in 1994 than they were in 1986.
D)None of these statements are false.

Question 61

Real wages have fallen in the U.S.since 1973 for which of the following reasons?

A)Productivity growth slowed down during this period.
B)American factories were closing left and right as our relatively high-paying manufacturing jobs went to other countries.
C)The decline in the percentage of better-paid,unionized workers in the United States.
D)All of the choices are correct.

Question 62

At relatively low wage rates the ____________ outweighs the ____________.

A)income effect;substitution effect
B)substitution effect;income effect
C)marginal revenue product;resource demand
D)None of these choices are correct.

Question 63

The _______________ supports the contention that there are non-competing groups in the labor market.

A)living wage
B)dual labor market theory
C)backward-bending labor supply curve
D)marginal revenue product

Question 64

A minimum wage increase _________ the number of unemployed people.

A)may decrease
B)will decrease
C)may increase
D)will increase

Question 65

Which statement is false?

A)American chief executive officers (CEOs)earn on average more than 400 times the salary of the average production worker.
B)The effects of globalization has depressed American wage.
C)Hourly wages and fringe benefits in the U.S.are the lowest of any industrial country.
D)None of the statements are false.

Question 66

Statement I: At relatively low wage rates the substitution effect outweighs the income effect.
Statement II: At relatively high wage rates the income effect outweighs the substitution effect.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 67

Statement I: American workers are paid the highest hourly wages and fringe benefits in the world.
Statement II: The average hourly wage in the United States in 2008 was about $9.00.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 68

Many conservative economists want to __________ the minimum wage.

A)raise
B)lower
C)abolish

Question 69

Statement I: At relatively high wage rates the substitution effect outweighs the income effect.
Statement II: The relatively high earnings of college graduates,compared to the relatively low earnings of high school graduates,can be explained entirely by the education that was obtained in college.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 70

If the minimum wage were abolished,the employment of unskilled and inexperienced workers would

A)rise.
B)fall.
C)stay the same.

Question 71

According to the theory of the backward-bending labor supply curve,as the hourly wage keeps rising we

A)eventually reach a maximum number of hours worked.
B)eventually reach a minimum number of hours worked.
C)keep increasing indefinitely the number of hours worked.
D)will work a set number of hours whether or not the wage rate is increaseD.

Question 72

In 1992,the base year,you were earning $500/week.Your wages rose to $900 in 2001,the current year,when the Consumer Price Index stood at 150.What statement can you make about what happened to your real wages over this period?

A)They rose.
B)They fell.
C)They remained the same.
D)There is not enough information to determine whether they rose,fell,or remained the same.

Question 73

A college graduate earns nearly _____________ a person with just a high school diploma.

A)one-third more than
B)half again as much
C)two-thirds more than
D)twice as much

Question 74

Bob Smith's money wages rose from $32,000 to $48,000,while the CPI rose by 50%.His real wages

A)fell by 50%.
B)stayed the same.
C)rose by 25%.
D)rose by 50%.
E)rose by 75%.

Question 75

Who is most likely to be earning economic rent?

A)A tenant farmer
B)A factory worker
C)David Letterman
D)An IRS agent

Question 76

When thinking about the price of gas in terms of how many minutes you would need to work to pay for a gallon of gas,in 2006 you would have had to work about ______ minutes.

A)4
B)5
C)9
D)14

Question 77

Statement I: According to the theory of the backward-bending labor supply curve,the substitution effect and the income effect work in opposite directions.
Statement II: The theory of the backward-bending labor supply curve has no validity in real life because it assumes that money is the only factor that motivates us to work.

A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question 78

As of July 2009,the legal hourly minimum wage was ________.

A)$5.15
B)$6.20
C)$7.25
D)$12.30

Question 79

The last time Congress raised the U.S.minimum wage was in the year _______.

A)1988
B)1991
C)1994
D)1997
E)2007

Question 80

A ____________ is a necessary condition for a person to move from the secondary to the primary labor market,but is no longer a sufficient condition.

A)some high school
B)high school diploma
C)college diploma
D)None of these choices are correct.