Question 1

The backward-bending labor supply curve has its shape because,at
A) low wages,the income effect dominates the substitution effect,but the reverse occurs at high wages.
B) high wages,the substitution effect dominates the income effect,but the reverse occurs at low wages.
C) low wages,the substitution effect dominates the income effect,but the reverse occurs at high wages.
D) all wages,the income effect dominates the substitution effect.
E) all wages,the substitution effect dominates the income effect.

Accepted Answer

The backward-bending labor supply curve has its shape because at low wages, the substitution effect dominates the income effect, but the reverse occurs at high wages. This means that at low wages, individuals work more as wages increase because they need the additional income, but at high wages, individuals work less as wages increase because they have a higher opportunity cost of leisure. Therefore, the labor supply curve bends backward as it crosses the vertical axis.

Question 2

When Noah's wage rises and he decides to work more hours,we know that the ________ effect has dominated the ________ effect.
A) substitution; income
B) labor; leisure
C) income; substitution
D) leisure; labor
E) substitution; leisure

Accepted Answer

When Noah's wage rises, the substitution effect suggests that he will choose to work more hours because the reward for working has increased relative to leisure time. The income effect suggests that he may choose to work fewer hours because he can now afford to enjoy more leisure time. In this scenario, we can assume that the income effect is small enough that the substitution effect dominates, leading to Noah's decision to work more hours. Therefore, the best choice would be A, substitution dominating income.

Question 3

Refer to the following graphs to answer the following questions:
A.  
B.
C. 
D.
E.
-Which graph shows the income effect dominating the substitution effect of higher wages?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

The answer of Refer to the following graphs to answer...

Question 4

Labor supply is the relationship between
A) wages and willingness to hire workers.
B) price of output and amount of output for sale.
C) price of capital and amount of capital for sale.
D) wages and willingness to work.
E) wages and amount of output for sale.

Accepted Answer

Labor supply refers to the amount of work that workers are willing and able to provide at different wage levels. Therefore, the relationship being explored is between wages (a measure of compensation) and workers' willingness to work. Thus, the correct choice is D.

Question 5

No matter how high his wage rises,Johann will always work more.His labor supply curve is
A) downward-sloping.
B) horizontal.
C) vertical.
D) upward-sloping.
E) upward-sloping at an increasing rate.

Accepted Answer

Johann's labor supply curve is upward-sloping because he is willing to work more hours as his wage increases, indicating a positive relationship between wage and labor supply.

Question 6

Immigration is when
A) foreign persons enter another country.
B) foreign persons leave another country.
C) citizens move to another country.
D) citizens move within their own country.
E) foreign persons move within their own country.

Accepted Answer

Immigration specifically refers to the act of foreign persons entering another country, so the correct choice is A. B and E refer to emigration and internal migration, respectively. C and D involve movement within or out of one's own country, which are not specific to immigration.

Question 7

Refer to the following graphs to answer the following questions:
A.  
B.
C. 
D.
E.
-Choose the graph that reflects this scenario: Roman decides that he values income much more strongly because he uses the money to buy goods he can enjoy more than free time.
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

Graph A likely shows a scenario where Roman chooses to work more hours, thus increasing his income, because he values income more than free time.

Question 8

Refer to the following graphs to answer the following questions:
A.  
B.
C. 
D.
E.
-Which graph shows the substitution effect dominating the income effect of higher wages?
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

In graph A, the labor supply increases as wages increase, showing a positively sloped labor supply curve. This suggests that the substitution effect is dominating, as individuals are substituting leisure time for work due to the higher wages, resulting in an increase in labor supply. In contrast, a negatively sloped labor supply curve (as seen in graphs B, C, D, and E) would suggest that the income effect is dominating, as individuals are valuing the increased income more than their leisure time and are therefore working more.

Question 9

More job opportunities open up in the South,prompting labor supply curves in northern states to ________ and in southern states to ________.
A) remain unchanged; shift right
B) shift right; shift right
C) shift left; shift right
D) shift left; remain unchanged
E) shift left; shift left

Accepted Answer

With more job opportunities opening up in the South, labor supply increases in southern states, leading to a rightward shift of the labor supply curve. At the same time, workers in northern states may choose to move to the South in search of better job opportunities, resulting in a leftward shift of the labor supply curve in northern states due to a decrease in the number of available workers.

Question 10

If you know that the substitution effect dominates the income effect when Jasper's wage rises,you can tell that his labor supply curve is
A) upward-sloping.
B) downward-sloping.
C) vertical.
D) upward-sloping at an increasing rate.
E) downward-sloping at an increasing rate.

Accepted Answer

The substitution effect refers to the tendency for workers to increase their hours of work when their wage increases, as the opportunity cost of leisure time becomes more expensive relative to the wage. Therefore, an upward-sloping labor supply curve indicates that Jasper is willing to supply more labor as his wage increases.

Question 11

When people make more money,they sometimes take more vacation time.Based on this information,we can say that leisure is a(n)________ good.
A) substitute
B) complement
C) inferior
D) Giffen
E) normal

Accepted Answer

The fact that people take more vacation time when they make more money suggests that leisure is a normal good, meaning that as income increases, the demand for leisure also increases.

Question 12

The minimum wage is increased to $15.This higher wage might ________ labor force participation,shifting the labor supply curve to the ________.
A) decrease; right
B) increase; left
C) decrease; left
D) increase; right
E) not change; right

Accepted Answer

Increasing the minimum wage to $15 could make entering the workforce more attractive to people who were previously not working or looking for work, thus potentially increasing labor force participation. This increase in labor force participation would shift the labor supply curve to the right, as more people are willing to work at the higher wage.

Question 13

When the opportunity cost of leisure is high,people tend to work ________ hours.When it is low,people tend to work ________ hours.
A) the same; fewer
B) more; fewer
C) fewer; more
D) more; the same
E) fewer; the same

Accepted Answer

When the opportunity cost of leisure is high (i.e when someone is giving up a lot by not working), people tend to work more hours to maximize their income. On the other hand, when the opportunity cost of leisure is low (i.e when someone is not giving up much by not working), people tend to work fewer hours and use their time for leisure activities. Therefore, option B is correct.

Question 14

Refer to the following graphs to answer the following questions:
A.  
B.
C. 
D.
E.
-Which graph shows a person who has a fixed quantity of hours that he or she is willing to work per week? 
A) Graph A
B) Graph B
C) Graph C
D) Graph D
E) Graph E

Accepted Answer

The answer of Refer to the following graphs to answer...

Question 15

Rowan is deciding whether to pick up more hours at work or to take a vacation.This decision best describes
A) her hours decision.
B) her labor force participation decision.
C) the value she places on income.
D) the labor-leisure trade-off.
E) the necessity of income.

Accepted Answer

Rowan is facing a trade-off between working more hours to earn more income and taking a vacation to enjoy leisure time. This decision best describes the labor-leisure trade-off, which is a fundamental concept in economics that underlies all labor market decisions. Rowan must consider the opportunity cost of her time, balancing the benefits of earning more income against the benefits of having more leisure time.

Question 16

Ummal travels back in time to deposit $100 in a high-interest-bearing savings account.When she returns to the present,she is a billionaire.We can expect Ummal to work ________ hours because of the ________ effect.
A) more; substitution
B) more; income
C) fewer; substitution
D) more; labor-leisure
E) fewer; income

Accepted Answer

The income effect suggests that as people become wealthier (in this case, Ummal becoming a billionaire), they can afford to work less and enjoy more leisure time, hence "fewer" hours due to the "income" effect.

Question 17

The citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Robbinsville ________ and the labor supply in Deville to ________.
A) shift right; shift right
B) shift left; shift left
C) remain unchanged; shift right
D) shift left; shift right
E) shift right; shift left

Accepted Answer

If the wages in Deville are higher, the citizens of Robbinsville will have an incentive to leave Robbinsville and find work in Deville, causing the labor supply in Robbinsville to decrease (shift left). At the same time, the higher wages in Deville will attract more workers from outside of Deville to come and work in Deville, causing the labor supply in Deville to increase (shift right). Therefore, we would expect a leftward shift of the labor supply curve in Robbinsville and a rightward shift of the labor supply curve in Deville.

Question 18

When Franklin earns more income but still works less,leisure is a ________ good for him.
A) substitute
B) complement
C) luxury
D) necessity
E) normal

Accepted Answer

The answer of When Franklin earns more income but still...

Question 19

When their wages rise,Raymond works more and Brandi works less.We can infer that Raymond values income ________ than Brandi.
A) less
B) the same
C) more
D) half as much
E) a third more

Accepted Answer

Since Raymond works more as their wages rise, it indicates that he values income more than Brandi, who works less. Hence, option C is the correct answer.

Question 20

Migration is when
A) foreign persons enter a country.
B) foreign persons leave a country.
C) citizens move to another country.
D) citizens move within their own country.
E) foreign persons move within their own country.

Accepted Answer

Migration refers to movement of people from one place to another. In the given options, option D is the only one that refers to movement within a country, therefore it is the best choice for migration.

Quiz 14: The Demand and Supply of Resources

The backward-bending labor supply curve has its shape because,at

When Noah's wage rises and he decides to work more hours,we know that the effect has dominated the effect.

Labor supply is the relationship between

No matter how high his wage rises,Johann will always work more.His labor supply curve is

Immigration is when

More job opportunities open up in the South,prompting labor supply curves in northern states to and in southern states to .

If you know that the substitution effect dominates the income effect when Jasper's wage rises,you can tell that his labor supply curve is

When people make more money,they sometimes take more vacation time.Based on this information,we can say that leisure is a(n) ________ good.

The minimum wage is increased to $15.This higher wage might labor force participation,shifting the labor supply curve to the .

When the opportunity cost of leisure is high,people tend to work hours.When it is low,people tend to work hours.

Rowan is deciding whether to pick up more hours at work or to take a vacation.This decision best describes

Ummal travels back in time to deposit $100 in a high-interest-bearing savings account.When she returns to the present,she is a billionaire.We can expect Ummal to work hours because of the effect.

The citizens of Robbinsville notice that their friends and family in the neighboring city of Deville are earning higher wages.We would expect the labor supply in Robbinsville and the labor supply in Deville to .

When Franklin earns more income but still works less,leisure is a ________ good for him.

When their wages rise,Raymond works more and Brandi works less.We can infer that Raymond values income ________ than Brandi.

Migration is when