Question 1

The nonmoney benefits a person may receive in a job are sometimes referred to by economists as

Accepted Answer

Nonpecuniary benefits refer to the benefits received from a job that are not in the form of money. These can include things like job satisfaction, work environment, and flexible hours.

Question 2

If the wage rate increases from $15 to $17 and, as a result, the quantity demanded of labor decreases from 700 workers to 650 workers, then the absolute value of the elasticity of demand for labor is

Accepted Answer

The answer of If the wage rate increases from $15...

Question 3

If the demand for a product that labor produces is highly elastic, a small percentage increase in price will __________ quantity demanded of the product by a relatively __________ percentage, which, in turn, will __________ the demand for the labor that produces the product.

Accepted Answer

When the demand for a product is highly elastic, a small percentage increase in price leads to a large percentage decrease in quantity demanded. This significant reduction in product demand decreases the demand for the labor that produces the product.

Question 4

The market supply curve of labor

Accepted Answer

The market supply curve of labor typically slopes upward, indicating that as the wage rate increases, workers are willing to supply more labor, motivated by higher earnings.

Question 5

Which of the following can cause an increase in real wages?

Accepted Answer

Real wages can increase due to a technological advance that enhances the quality of capital goods (making labor more productive) and higher demand for labor, which can push wages up. An increase in the price level would decrease real wages, not increase them, as real wages are adjusted for inflation.

Question 6

The lower the elasticity of demand for a product,

Accepted Answer

The lower the elasticity of demand for a product, the less sensitive consumers are to price changes. This implies that the demand for the labor that produces such a product is also less elastic because producers are less sensitive to wage changes when the product's demand is inelastic. They can pass on higher costs to consumers without significantly reducing quantity sold.

Question 7

Suppose a sailboat factory and a fishing boat factory exist in the same town. Employees at both factories have the same skills and are initially paid the same wage rate. If the sailboat manufacturer increases the hourly wage paid to his employees, then the

Accepted Answer

When the sailboat manufacturer increases wages, more workers will be attracted to work there, increasing the quantity supplied of labor at the sailboat factory.

Question 8

The marginal productivity theory states that

Accepted Answer

The answer of The marginal productivity theory states that
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Question 9

If, at a particular wage rate in a competitive market, the quantity demanded of labor exceeds the quantity supplied of labor, then

Accepted Answer

In a competitive market, if the quantity demanded of labor exceeds the quantity supplied, it indicates a shortage of labor at the current wage rate. The natural market response would be for wages to rise to equilibrate supply and demand, not for the supply and demand curves to shift as described in any of the options. None of the provided choices accurately describe the economic adjustment process to a labor shortage.

Question 10

Suppose there are two labor markets, A and B, and labor is homogeneous between markets. The wage rate in labor market A falls relative to the wage rate in labor market B. What happens in labor market B?

Accepted Answer

When the wage rate in labor market A falls relative to the wage rate in labor market B, workers will find labor market B more attractive, leading to an increase in the supply of labor in market B, hence the supply curve of labor shifts rightward.

Question 11

A decrease in the wage rate

Accepted Answer

A decrease in the wage rate decreases the quantity supplied of labor because workers are less willing to work at lower wages, which does not shift the supply curve but moves along it.

Question 12

Which of the following is a reason why wage rates differ?

Accepted Answer

Wage rates differ due to a variety of factors: demand conditions vary across labor markets, jobs offer different nonpecuniary benefits or drawbacks, and labor is not homogeneous, meaning workers have different skills, experiences, and qualifications.

Question 13

If, at a particular wage rate in a competitive market, the quantity supplied of labor exceeds the quantity demanded of labor, then

Accepted Answer

In a competitive market, if the quantity supplied of labor exceeds the quantity demanded, it indicates a surplus of labor. To eliminate this surplus, wages would typically decrease, making it more attractive for employers to hire more workers, thus moving towards an equilibrium where supply meets demand. Choices A, B, and D do not correctly describe the adjustment process in response to a labor surplus.

Question 14

Suppose it has just been discovered that working for long periods of time at a computer terminal causes eye strain, poor posture, and stress. We would expect, ceteris paribus, that the supply curve of computer programmers would shift __________ and the wage rate paid to programmers would __________.

Accepted Answer

The supply curve of computer programmers would shift leftward because fewer people would be willing to work under these conditions at current wages, leading to a decrease in supply. As a result, the wage rate paid to programmers would increase to attract more workers despite the adverse working conditions.

Question 15

Firm A has a higher labor cost-total cost ratio than Firm B. If both firms employ the same type of labor, and the wage rate rises by $1, then Firm A's product price will most likely ____________ than Firm B's product price.

Accepted Answer

Since Firm A has a higher labor cost-total cost ratio than Firm B, an increase in the wage rate will have a larger impact on Firm A's total costs. Therefore, to maintain profitability, Firm A is more likely to increase its product price by more than Firm B.

Question 16

Assume the following conditions hold: (1) the demand for every type of labor is the same, (2) there are no special nonpecuniary aspects to any job, (3) all labor is ultimately homogeneous and can costlessly be trained for different types of employment, (4) all labor is mobile at zero cost. Given these conditions,

Accepted Answer

Under these conditions, wage rates would equalize across all labor markets because there would be no barriers or differences to create wage disparities.

Question 17

Suppose that all the necessary conditions exist for the realization of equal wage rates in every labor market, but that currently the wage rate in market X is higher than the wage rate in market Y. We expect that eventually the wage rate

Accepted Answer

Under the assumption of equalizing wage rates across labor markets, if the wage in market X is higher than in market Y, workers would tend to move from market Y to X, increasing the labor supply in X and decreasing it in Y. This would lead to a decrease in wages in X due to the higher supply, and an increase in wages in Y due to the reduced supply, until equilibrium is reached.

Question 18

Which of the following conditions is not necessary for wage rates to be identical in every labor market in both the short run and the long run?

Accepted Answer

All of the above are necessary conditions for wage rates to be identical in every labor market in both the short run and the long run.

Question 19

Which of the following assumptions is not likely to be met in the real world?

Accepted Answer

Each of the assumptions listed (A through D) is unlikely to be met in the real world. Labor markets differ significantly in demand due to various factors such as location, industry, and skill requirements. Nonpecuniary factors, such as job satisfaction and work environment, also vary widely across jobs. Labor is not homogeneous; workers have different skills, experiences, and preferences. Lastly, there are often significant costs associated with labor mobility, including relocation expenses and the loss of social networks.

Question 20

Which of the following statements is true?

Accepted Answer

The answer of Which of the following statements is true?
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Quiz 26: Factor Markets With Emphasis on the Labor Market