Question 1

Exhibit 12-3  In Exhibit 12-3, which of the following is true at a wage rate of $7?

Accepted Answer

The answer of Exhibit 12-3  In Exhibit 12-3, which...

Question 2

A person who wins a large sum of money in the state lottery is likely to

Accepted Answer

A person who wins a large sum of money in the state lottery may have less need to work for a living, so they may choose to decrease the amount of market work offered at each wage rate. This is because they now have more financial resources and can afford to have more leisure time.

Question 3

Exhibit 12-3  In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

Accepted Answer

The answer of Exhibit 12-3  In Exhibit 12-3, which...

Question 4

Exhibit 12-3  In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

Accepted Answer

The answer of Exhibit 12-3  In Exhibit 12-3, which...

Question 5

Exhibit 12-4  Consider Exhibit 12-4.If the wage rate is $9, how many hours per week will this person work?

Accepted Answer

The answer of Exhibit 12-4  Consider Exhibit 12-4.If the...

Question 6

Exhibit 12-2  In Exhibit 12-2, which of the following is true at a wage rate of $20?

Accepted Answer

The answer of Exhibit 12-2  In Exhibit 12-2, which...

Question 7

Exhibit 12-2  In Exhibit 12-2, which of the following is true at a wage rate of $14?

Accepted Answer

The answer of Exhibit 12-2  In Exhibit 12-2, which...

Question 8

College students often spend summers in internships that pay little or no income because internships provide benefits in the form of higher future incomes.

Accepted Answer

Internships provide valuable experience and connections that can lead to higher paying jobs in the future. Therefore, even though they may not provide immediate income, they can be a worthwhile investment in a student's future earning potential.

Question 9

Which of the following would reduce the supply of an athletic trainer's services at today's wage rate, other things constant?

Accepted Answer

If the trainer's future earning possibilities go down due to a new negative image associated with this work, they may choose to leave the field or reduce the amount of services they offer, thus reducing the supply. The other options do not directly affect the trainer's supply at the current wage rate.

Question 10

A large inheritance from a relative will tend to

Accepted Answer

A large inheritance increases non-labor income, which can reduce the need to work, thus shifting the labor supply curve inward as individuals may choose to work less.

Question 11

Which of the following suggests that people have no control over the number of hours they work?

Accepted Answer

Most workdays last from 8 a.m.to 5 p.m. suggests that people have no control over the number of hours they work because it implies that the length of the workday is predetermined and not subject to individual choice.

Question 12

Bob and Mary each have a Ph.D.in economics.Bob has a job in private industry at which he earns $90, 000 a year.Mary earns half that much as a college professor.Which of the following could not explain Mary's career choice?

Accepted Answer

Diminishing marginal utility refers to the idea that as a person receives more of a good or service, the additional satisfaction or benefit they receive from each additional unit decreases. This concept is generally applied to consumption choices, not career choices. Therefore, it cannot explain Mary's career choice. The other choices could all be potential reasons for Mary's decision to become a college professor.

Question 13

Exhibit 12-2  In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Accepted Answer

A decrease in wage rate from $14 to $6 per hour will result in an increase in the quantity of labor supplied as the substitution effect dominates the income effect. The substitution effect encourages individuals to work more as the lower wage rate makes leisure more costly while the income effect discourages individuals to work as they can now afford to consume more leisure as the wage rate has declined. However, since the substitution effect is stronger than the income effect, the net result is an increase in the quantity of labor supplied.

Question 14

Exhibit 12-4  In Exhibit 12-4, when the wage rate increases from $9 to $12, the substitution effect outweighs the income effect.

Accepted Answer

In Exhibit 12-4, the individual moves from point A2 to point A3 when the wage rate increases from $9 to $12. At point A3, the individual consumes more leisure and less labor compared to point A2, which indicates the substitution effect is dominating. The income effect is the movement from point A1 to point A2, and it creates an inverse relationship between the wage rate and the quantity of labor supplied. However, in this case, the substitution effect is stronger, leading to an overall increase in the quantity of labor supplied.

Question 15

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Accepted Answer

This is because jobs that require close monitoring tend to be more stressful and offer less autonomy, leading to lower job satisfaction. Thus, to attract workers to such jobs, employers must offer higher wages to compensate for the undesirable aspects of the work environment.

Question 16

Exhibit 12-4  In Exhibit 12-4, when the wage rate rises above $12, the substitution effect outweighs the income effect.

Accepted Answer

The answer of Exhibit 12-4  In Exhibit 12-4, when...

Question 17

Exhibit 12-4  In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

Accepted Answer

The answer of Exhibit 12-4  In Exhibit 12-4, how...

Question 18

Exhibit 12-1  Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change just equal the substitution effect?

Accepted Answer

The income effect of a wage change is positive, meaning that as wages increase, individuals will have more income to spend and may choose to work fewer hours (the leisure effect). The substitution effect of a wage change is negative, meaning that as wages increase, individuals will choose to work more hours since the opportunity cost of leisure time increases.

Therefore, as the wage increases, the two effects work in opposite directions. At some point, the income effect will just equal the substitution effect, and labor supply will no longer change (the labor supply curve becomes backward bending). This occurs between points b and c in Exhibit 12-1.

Question 19

Which of the following statements regarding labor supply is false?

Accepted Answer

The false statement is option A. Jerry's labor supply curve can never bend backward because when the wage rate is increased, the income effect always works in the direction of increasing labor supply. Therefore, the labor supply curve always slopes upwards.

Question 20

Sharon wants a career as an accountant.During the summer she turns down a job painting houses at $6 an hour to work in an accounting office for $4 an hour.Which of the following would not explain her choice?

Accepted Answer

The law of diminishing marginal utility is not relevant to her decision between painting houses and working in an accounting office. The other reasons listed all provide valid explanations for her choice.

Quiz 12: Labor Markets and Labor Unions

Exhibit 12-3 In Exhibit 12-3, which of the following is true at a wage rate of $7?

A person who wins a large sum of money in the state lottery is likely to

Exhibit 12-3 In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

Exhibit 12-3 In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

Exhibit 12-4 Consider Exhibit 12-4.If the wage rate is $9, how many hours per week will this person work?

Exhibit 12-2 In Exhibit 12-2, which of the following is true at a wage rate of $20?

Exhibit 12-2 In Exhibit 12-2, which of the following is true at a wage rate of $14?

College students often spend summers in internships that pay little or no income because internships provide benefits in the form of higher future incomes.

Which of the following would reduce the supply of an athletic trainer's services at today's wage rate, other things constant?

A large inheritance from a relative will tend to

Which of the following suggests that people have no control over the number of hours they work?

Bob and Mary each have a Ph.D.in economics.Bob has a job in private industry at which he earns $90, 000 a year.Mary earns half that much as a college professor.Which of the following could not explain Mary's career choice?

Exhibit 12-2 In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Exhibit 12-4 In Exhibit 12-4, when the wage rate increases from $9 to $12, the substitution effect outweighs the income effect.

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Exhibit 12-4 In Exhibit 12-4, when the wage rate rises above $12, the substitution effect outweighs the income effect.

Exhibit 12-4 In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

Exhibit 12-1 Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change just equal the substitution effect?

Which of the following statements regarding labor supply is false?

Sharon wants a career as an accountant.During the summer she turns down a job painting houses at $6 an hour to work in an accounting office for $4 an hour.Which of the following would not explain her choice?