Question 1

If the quantity demanded for labor is more than the quantity supplied,there will be unemployment.

Accepted Answer

When the quantity demanded for labor is more than the quantity supplied, it indicates a labor shortage, not unemployment.

Question 2

In a perfectly competitive labor market,the minimum wage policy adopted by the government raises employment.

Accepted Answer

In a perfectly competitive labor market, the wages are determined by the market supply and demand forces. If the government imposes a minimum wage, it creates a price floor above the market equilibrium wage rate. This causes an excess supply of labor, leading to a decrease in employment as employers hire fewer workers at the higher wage rate. Therefore, the minimum wage policy does not raise employment in a perfectly competitive labor market.

Question 3

If the minimum wage is set above the equilibrium wage by the government,there is an excess supply of labor in the market.

Accepted Answer

A minimum wage set above the equilibrium wage would create a situation where employers would demand less labor while more workers would be willing to work at that higher wage rate, resulting in a surplus or excess supply of labor. This means that some workers who want to work at the higher wage may be unable to find jobs, leading to potential unemployment or underemployment.

Question 4

Getting the work done by some other firm at lower costs,when the firm is situated in some other country is called outsourcing.

Accepted Answer

The answer of Getting the work done by some other...

Question 5

A compensating wage differential is a wage difference attributable to the difference in the marginal productivity of workers.

Accepted Answer

A compensating wage differential is a wage difference designed to compensate workers for the non-monetary aspects of a job, such as risk or unpleasant working conditions. It is not directly related to the productivity of individual workers.

Question 6

The quantity of labor supplied by a particular wage earner will always increase as long as the wage rate increases.

Accepted Answer

The relationship between wage rates and labor supply is not always direct; beyond a certain point, higher wages can lead to a decrease in labor supply as individuals may prefer leisure over additional work, illustrating the backward-bending supply curve of labor.

Question 7

If an employer is a monopsonist,the imposition of a minimum wage set at a level that is less than the marginal revenue product but greater than the wage rate that the monopsonist wants to pay may actually increase the level of employment.

Accepted Answer

This is because the monopsonist has market power in the labor market and can hire workers at a lower wage rate than in a competitive labor market. However, a minimum wage that is set above the monopsonist's preferred wage rate but below the marginal revenue product may attract more workers to the market, thereby increasing the pool of available labor. As a result, the monopsonist may increase employment levels to take advantage of the larger pool of workers.

Question 8

Illegal immigrants to the U.S.usually charge higher wages than their American counterparts.

Accepted Answer

Generally, illegal immigrants are willing to work for lower wages than American workers, which is one of the reasons why they are often employed in jobs that pay minimum wage or below.

Question 9

People tend to remain in those occupations that require continuous time and financial commitments to remain productive.

Accepted Answer

The answer of People tend to remain in those occupations...

Question 10

Since we all like to get richer,so when wage rate increases we always like to work longer hours to make more income.

Accepted Answer

This statement is not necessarily true for everyone. Some individuals may prioritize their leisure time or work-life balance over earning more income, so they may not choose to work longer hours even if their wage rate increases.

Question 11

Offshoring does not affect the percentage of U.S.workers employed in manufacturing.

Accepted Answer

Offshoring often leads to a decrease in the percentage of U.S. workers employed in manufacturing, as production shifts to other countries with lower labor costs.

Question 12

The distortions created by income taxes could be minimized by changing the progressive tax system to a flat tax system.

Accepted Answer

A progressive tax system creates disincentives for individuals to earn more income, as they will face higher tax rates. This can lead to reduced work effort and investments. On the other hand, a flat tax system applies the same tax rate to all taxpayers, regardless of income level, thus minimizing the disincentives caused by progressive tax rates.

Question 13

Wage differentials exist because not all workers and all jobs are alike.

Accepted Answer

Wage differentials exist because there are variations in the skills, education, experience, productivity, and demand for different types of jobs in different geographic locations and industries. Therefore, workers with more valuable skills or in high demand jobs typically earn higher wages than those with less marketable skills or in less in-demand jobs.

Question 14

People leave their home country and go to another country to live primarily because they seek a higher quality of life.

Accepted Answer

This statement is generally true. Many people leave their home country to seek better job opportunities, better education, better healthcare, political stability, or a safer living environment in another country, which all contribute to a higher quality of life. However, there may be other reasons why people emigrate, such as reuniting with family members, exploring new cultures or pursuing personal interests.

Question 15

An increase in the wage rate lowers the opportunity cost of leisure and induces people to enjoy more leisure.

Accepted Answer

An increase in the wage rate increases the opportunity cost of leisure, as working becomes more attractive in terms of potential earnings. Therefore, people are likely to work more and enjoy less leisure time.

Question 16

The labor-market-supply curve illustrates that,as the wage rate increases,the number of number of hours that each person is willing and able to work rises.

Accepted Answer

This is the basic concept behind the labor-market-supply curve. As the wage rate increases, individuals have a greater incentive to work and are willing to supply more labor (i.e. more hours worked) at that higher wage.

Question 17

An example of human capital is the purchase of a computer to help accountants.

Accepted Answer

Human capital refers to the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country. Purchasing a computer is an investment in physical capital, not human capital.

Question 18

A wage differential between skilled and unskilled workers exists because skilled workers have higher marginal products than unskilled workers.

Accepted Answer

Skilled workers are generally more productive and efficient than unskilled workers, which leads to higher demand for their labor and higher wages. Thus, they have a higher marginal product than unskilled workers, which creates a wage differential between the two groups.

Question 19

The greater the opportunity cost of any particular occupation,the smaller the number of people who will select that occupation.

Accepted Answer

This statement is true because when the opportunity cost of an occupation increases, it means that the alternative options become more attractive, leading to a decreased supply of labor in that particular occupation. People will choose occupations that provide them with the highest benefit, given the available options.

Question 20

The principal argument against comparable worth is that:

Accepted Answer

The principal argument against comparable worth is that the market allocates scarce resources to their most highly valued uses in the most efficient manner. Those who oppose comparable worth argue that men and women differ largely in terms of their productivities, and that artificially raising wages for certain jobs based on gender rather than market demand will lead to an inefficient allocation of resources.

Quiz 15: The Labor Market