Question 1

In general output per hour rises at _____ real wages.

Accepted Answer

In general, output per hour, or productivity, tends to rise at about the same rate as real wages over the long term, as increases in productivity often lead to higher wages.

Question 2

If the legal minimum wage is set below the equilibrium wage rate

Accepted Answer

When the legal minimum wage is set below the equilibrium wage rate, it does not directly affect employment levels because employers would naturally pay the equilibrium wage or higher. The minimum wage in this scenario does not act as a binding constraint on wages.

Question 3

As wage rates rise to extremely high levels,

Accepted Answer

When wage rates rise to extremely high levels, the income effect, which represents the change in an individual's consumption resulting from a change in their income, becomes stronger than the substitution effect. This is because as individuals earn more, they may opt to work less and enjoy more leisure time, reflecting a stronger preference for leisure over labor due to their increased ability to afford leisure.

Question 4

In the year 2020,suppose the average college graduate could get a job starting at $100,000/year.How would the real wages earned by the average college graduate in 2010 compare with that of today's average college graduate?

Accepted Answer

Real wages take into account the purchasing power of money, which can be affected by inflation, cost of living changes, and other economic factors over time. Without information on these factors from 2010 to 2020, it's impossible to determine how real wages compare.

Question 5

If the legal minimum wage is set above the equilibrium wage rate

Accepted Answer

When the legal minimum wage is set above the equilibrium wage rate, employers will be forced to pay a higher wage to workers. This will increase the cost of labor for employers, making it more expensive to hire workers. As a result, employers may choose to reduce their workforce, leading to a decrease in employment. Therefore, employment will tend to be lower than it otherwise would have been.

Question 6

Conservative economists would like to help younger workers get work experience by

Accepted Answer

Conservative economists believe that lowering the minimum wage rate would incentivize employers to hire younger, less experienced workers who may not be worth the higher wage. This would help younger workers gain valuable work experience and skills, ultimately leading to higher wages and better job opportunities in the future. However, it is important to note that this approach is not without controversy and there are differing opinions on its effectiveness.

Question 7

Suppose your economics professor earns an equal annual salary of $40,000.The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year.Your professor is earning annual economic rent of

Accepted Answer

Economic rent is the difference between what someone is paid and what they would need to be paid to stay in the same job. In this case, the professor is currently earning $40,000 but would be willing to stay in the job for $15,000. Thus, the economic rent is $25,000.

Question 8

If there is an increase in the nominal (money),the real wage

Accepted Answer

An increase in nominal wage will not necessarily result in an increase in real wage, which is the wage adjusted for inflation. If the consumer price index rises at the same or a higher rate than the nominal wage, the real wage will not increase or may even decrease. Therefore, option C is the correct choice.

Question 9

A rise in the wage rate would cause

Accepted Answer

The MRP (Marginal Revenue Product) schedule of labor is determined by the productivity of labor and the price of the output, not by the wage rate. Therefore, a change in the wage rate does not affect the MRP schedule.

Question 10

A decrease in economic rent would cause

Accepted Answer

A decrease in economic rent does not directly affect the MRP (marginal revenue product) schedule of labor, which is determined by the productivity and price of the output. However, changes in economic rent could indirectly influence labor demand if they affect the overall cost structure or profitability of a firm.

Question 11

Which statement is true?

Accepted Answer

Economic rent refers to earnings that exceed the minimum amount necessary to keep a factor of production in its current use. High-paid athletes earn more than what would be necessary to keep them playing their sport, thus earning economic rent.

Question 12

Who is most likely to be earning economic rent?

Accepted Answer

The answer of Who is most likely to be earning...

Question 13

-Which statement is false?

Accepted Answer

Economic rent refers to earnings that exceed the minimum amount necessary to keep a factor of production in its current use. Many individuals, especially those with unique skills or talents, can earn economic rent. Therefore, the statement that virtually no one today earns economic rent is false.

Question 14

-The above graph is

Accepted Answer

The supply of labor curve typically slopes upwards, reflecting that as wages increase, workers are willing to supply more labor.

Question 15

-Which statement is false?

Accepted Answer

The dual labor market theory posits that the labor market is divided into two segments: the primary and the secondary labor markets. The primary market offers good wages, job security, and opportunities for advancement, while the secondary market is characterized by low wages, high turnover, and little advancement. Statement C is false because, according to this theory, most poorer people tend to find jobs in the secondary labor market, not the primary.

Question 16

If the legal minimum wage rate is set at $1/hour instead of at the equilibrium rate,

Accepted Answer

The answer of If the legal minimum wage rate is...

Question 17

There is _____ relationship between the rise in real wages and the rise in productivity.

Accepted Answer

There is typically a strong relationship between the rise in real wages and the rise in productivity. As productivity increases, it often leads to higher real wages because workers can produce more value, which in turn can lead to higher pay.

Question 18

-The income effect and the substitution effect offset each other at point

Accepted Answer

The income effect and the substitution effect offset each other at point J because at this point, the price of the good has decreased, which leads to an increase in the quantity demanded due to the substitution effect. However, the decrease in price also leads to a decrease in the consumer's real income, which leads to a decrease in the quantity demanded due to the income effect. The two effects offset each other at point J, resulting in no change in the quantity demanded.

Question 19

The amount a person earns over and above the amount she/he would be willing to work for is called

Accepted Answer

Economic rent is the amount earned by a factor of production (such as labor) over and above the minimum amount required to keep it in its current use. It represents the surplus or extra earnings that the individual receives due to their unique abilities or circumstances, and is often used to describe the earnings of individuals in specialized or high-skilled professions.

Question 20

-Which statement is true?

Accepted Answer

Productivity is a significant factor in determining wages because it reflects the value an employee adds to their organization. However, it's not the only factor; wage differentials can also be influenced by market demand, the industry, location, experience, education, and negotiation skills. Therefore, while productivity is important, it only partially explains wage differentials.

Quiz 28: Labor Markets and Wage Rates

In general output per hour rises at _____ real wages.

If the legal minimum wage is set below the equilibrium wage rate

As wage rates rise to extremely high levels,

In the year 2020,suppose the average college graduate could get a job starting at $100,000/year.How would the real wages earned by the average college graduate in 2010 compare with that of today's average college graduate?

If the legal minimum wage is set above the equilibrium wage rate

Conservative economists would like to help younger workers get work experience by

Suppose your economics professor earns an equal annual salary of $40,000.The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year.Your professor is earning annual economic rent of

If there is an increase in the nominal (money) ,the real wage

A rise in the wage rate would cause

A decrease in economic rent would cause

Which statement is true?

Who is most likely to be earning economic rent?

-Which statement is false?

-The above graph is

-Which statement is false?

If the legal minimum wage rate is set at $1/hour instead of at the equilibrium rate,

There is _____ relationship between the rise in real wages and the rise in productivity.

-The income effect and the substitution effect offset each other at point

The amount a person earns over and above the amount she/he would be willing to work for is called

-Which statement is true?