Question 1

When the price of computer software rises, the value of the marginal product of computer programmers will:

Accepted Answer

When the price of computer software rises, the demand for programmers will increase, as more programmers will be needed to produce the software. As the demand for programmers increases, the value of the marginal product of computer programmers will also increase, leading to higher wages and an increase in their value to the firm. Therefore, the correct answer is B, rise.

Question 2

If consumers demand more abalone, the value of the marginal product of labour for abalone fishers will:

Accepted Answer

If consumers demand more abalone, the price of abalone will likely increase, which will increase the revenue generated by fishing. This will lead to an increase in the value of the marginal product of labour for abalone fishers.

Question 3

Suppose that a change to early retirement laws leads to a decrease in labour supply. This means that:

Accepted Answer

A decrease in labor supply, assuming demand remains constant, would lead to a shortage of workers. This shortage increases the bargaining power of workers, leading to higher wages. The assumption that the supply curve is downward-sloping is standard in economic models, reflecting that as wages increase, more individuals are willing to work, and vice versa.

Question 4

Assume that the South African labour market was in equilibrium before the Zimbabwean situation. At the equilibrium wage that prevailed in South Africa prior to the Zimbabwean situation, what would the post-war status of the labour market be?

Accepted Answer

The influx of workers from Zimbabwe would increase the supply of labor in South Africa, leading to a surplus of labor at the pre-existing equilibrium wage, as the supply of labor would exceed the demand at that wage level.

Question 5

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-Refer to the information provided. Assume that Amy has an upward-sloping labour supply curve. Amy's crocodile zoo employer is considering an increase in her wage. If Amy is offered $16 per hour, it is likely that she will:

Accepted Answer

Since Amy has an upward-sloping labour supply curve, an increase in her hourly wage for her winter job will likely incentivize her to work more hours. Therefore, choice A is the best choice.

Question 6

The South African government started to patrol the border and had a policy of returning all refugees to Zimbabwe. This policy would:

Accepted Answer

Returning refugees to Zimbabwe would prevent them from entering the labor market in South Africa, thus preventing an increase in the supply of Zimbabwean labor in South Africa.

Question 7

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, if Amy takes fewer hours of leisure in the summer than in the winter we can assume that her labour supply curve:

Accepted Answer

If Amy takes fewer hours of leisure in the summer than in the winter, it implies that the opportunity cost of leisure in the summer is higher than in the winter. Therefore, she would prefer to work more hours in the summer and earn more money. This means that her labour supply curve slopes upward.

Question 8

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, what is Amy's opportunity cost of taking an hour off from work and going surfing during the summer months?

Accepted Answer

The opportunity cost of taking an hour off during the summer is the wage she would earn as an English tutor, which is $18 per hour.

Question 9

Jack the physical therapist invents a new wrist-brace that allows assembly line labourers to work without suffering the effects of carpal-tunnel syndrome, thus making the workers more productive. The demand for assembly line workers will:

Accepted Answer

Because the invention of the wrist-brace allows assembly line workers to work without developing carpal-tunnel syndrome, it increases productivity and therefore the demand for assembly line workers will rise.

Question 10

Which of the following events would cause an increase in the labour supply curve?

Accepted Answer

If more married women decide to work, this would increase the labour supply curve as there are more individuals available and willing to work. A lower retirement age (option A) would decrease the labour supply curve as fewer people would be available to work. Fewer married men deciding to work (option C) would also decrease the labour supply curve as there are fewer individuals available and willing to work. Tighter restrictions on immigration policy (option D) would not necessarily affect the domestic labour supply curve, as it would only restrict the supply of foreign labour.

Question 11

Which of the following factors would lead to an increase in the supply of labour?

Accepted Answer

An increase in immigrant labour would lead to an increase in the supply of labour in the country. This is because there would be more people available and willing to work. B, C, and D would all lead to a decrease in the supply of labour. An increase in the price of a firm's final product could lead to an increase in demand for labour, but it would not impact the supply of labour.

Question 12

In 2005, Zimbabwe was an unstable place to live or work. The civil unrest sent thousands of refugees across the border to South Africa, where they sought relief from the dangers. From the information provided, in which of the following ways might the Zimbabwean situation possibly affect South African labour markets?

Accepted Answer

The civil unrest in Zimbabwe could affect South African labor markets in multiple ways, including decreasing wages, increasing total employment due to the influx of refugees seeking employment, and decreasing the marginal product of labor due to the greater supply of labor.

Question 13

Bob has been a private school caretaker for 30 years. For practical purposes, assume that Bob's productivity never changes. What then, if anything, will decrease the value of the labour that Bob performs?

Accepted Answer

Bob's productivity staying constant means that his labor is producing the same value he has been producing for 30 years. However, a decrease in tuition fees would mean that the amount of revenue the school is generating is decreasing, and therefore, the amount they can afford to pay their employees (including Bob) will decrease. This would lead to a decrease in the value of his labor. A decrease in the productivity of other janitors or a decrease in janitorial unemployment rates would not directly affect the value of Bob's labor.

Question 14

When a labour market experiences a surplus of labour, there is downward pressure on:

Accepted Answer

When there is a surplus of labour, there are more workers than there are available jobs. This means that employers can be more selective in hiring and may offer lower wages due to the abundance of workers willing to take the job. As a result, there is downward pressure on wages.

Question 15

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, if Amy takes more hours of leisure in the summer than in the winter we can assume that the:

Accepted Answer

The income effect suggests that as an individual's income increases, they tend to consume more leisure. If Amy is taking more hours of leisure in the summer when her income is not typically higher than in the winter, it implies that the income effect is dominating the substitution effect.

Question 16

What happens to the labour supply curves in both countries when New Zealand workers immigrate to the Australia?

Accepted Answer

When New Zealand workers immigrate to Australia, labour supply in Australia increases because there are more workers available to work. At the same time, labour supply in New Zealand decreases because some of its workforce has migrated to Australia.

Question 17

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-According to the information provided, what is Amy's opportunity cost of taking an hour off work to go cycling during the winter months?

Accepted Answer

Amy's opportunity cost of taking an hour off work to go cycling during the winter months is the amount of money she would have earned if she had worked during that hour. Since she earns $15 an hour as a tour guide during the winter, her opportunity cost of taking an hour off work to go cycling is $15.

Question 18

Which of the following events would shift the labour supply curve?

Accepted Answer

All the options listed (changes in tastes, changes in the number of women willing to work, and changing attitudes towards work) can influence individuals' willingness or ability to work, thereby shifting the labor supply curve.

Question 19

What happens to the labour supply in the pear-picking market when the apple pickers get a wage rise?

Accepted Answer

When the apple pickers get a wage rise, they will have less incentive to switch to pear picking, resulting in a decrease in the labour supply in the pear-picking market. Therefore, the best choice is letter A.

Question 20

Amy has two jobs, one for the winter and one for the summer. In the winter, she works as a tour guide at a crocodile zoo and earns $15 an hour. During the summer, Amy works as an English tutor and earns $18 an hour.
-Refer to the information provided. Assume that Amy has an upward-sloping labour supply curve. If the opportunity cost of Amy's leisure time increases, she will respond by:

Accepted Answer

Since Amy has an upward-sloping labour supply curve, an increase in the opportunity cost of her leisure time leads to a higher wage rate. Therefore, Amy would respond by working more hours to take advantage of the higher wage rate.

Quiz 19: The Markets for the Factors of Production