Question 1

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. If the wage is $20, there will be a _________ of _________ workers.

Accepted Answer

At a wage of $20, L_S = 3(20) + 20 = 80 and L_D = 80 - 2(20) = 40. Therefore, there is a surplus of 80 - 40 = 40 workers.

Question 2

Mary decides that worker turnover is too high at her firm. She hopes that, by paying above-market wages, workers will stay longer. This may create:

Accepted Answer

The answer of Mary decides that worker turnover is too...

Question 3

Companies outsource their operations because:

Accepted Answer

Companies outsource their operations to take advantage of lower labor costs in other countries. This allows them to save money on production and increase profits.

Question 4

Your sister complains that you get paid considerably more as a caterer than she is paid as a chef, even though the careers are similar. What might explain this situation?

Accepted Answer

The fact that there are many chefs in town but few caterers suggests that there is higher demand for catering services and therefore, caterers are able to command a higher fee. This may be due to the fact that catering involves more specialized skills and equipment, and is often used for larger events where there are more complexities involved.

Question 5

Which of the following situations describes a monopsony?

Accepted Answer

A monopsony is a market situation where there is only one buyer (employer) for a particular kind of labor or product. In this case, as there is only one university within a 300-mile radius, the college instructor has limited options for finding employment, giving the university some degree of monopsony power.

Question 6

Economic rent is:

Accepted Answer

The answer of Economic rent is:
...

Question 7

As iPads become more popular, we can expect the wages of Apple workers to _________ relative to PC workers.

Accepted Answer

As iPads become more popular, the demand for Apple products will increase, leading to higher revenues for the company. This, in turn, can lead to higher wages for its workers. Therefore, we can expect the wages of Apple workers to increase relative to PC workers.

Question 8

Which company has the ability to outsource its operations and have its good or service produced in another country?

Accepted Answer

The answer of Which company has the ability to outsource...

Question 9

What is the best economic explanation for the high pay earned by National Hockey League stars?

Accepted Answer

The high pay of NHL stars is primarily because fans desire to watch exceptional talent, leading team owners to offer higher compensation to attract and retain the best players. This demand for skilled players directly influences their earnings.

Question 10

In theory, some people might lose in the short run from outsourcing, but in the long run, all should benefit. Which option demonstrates that this theory might not be true?

Accepted Answer

The option E suggests that inadequate transition programs hinder the ability of domestic workers, who lost their jobs to outsourcing, to obtain new jobs. This implies that outsourcing may not necessarily benefit all individuals in the long run, especially those who lose their jobs due to outsourcing.

Question 11

A company that produces simple textiles outsources its operations to Indonesia. Wages for Indonesian workers will _________ and their employment will _________.

Accepted Answer

Outsourcing operations to a country typically increases demand for labor in that country, leading to higher wages and increased employment in the outsourced industry.

Question 12

In the distant future, companies will be using technology that can replicate food. What will happen to the equilibrium wage and quantity of cooks?

Accepted Answer

The introduction of technology that can replicate food reduces the demand for cooks, as firms can achieve the same output with less human labor. This leads to a decrease in the equilibrium wage for cooks because their labor becomes less valuable. Additionally, the quantity of cooks employed will decrease because firms won't need as many cooks to produce food, leading to a surplus of cooks in the market.

Question 13

Outsourcing is when:

Accepted Answer

Outsourcing refers to the practice of a company hiring a third-party firm to perform certain business processes, such as manufacturing or customer service. This often involves relocating production to overseas facilities where labor costs are lower. Therefore, option C is the best choice as it accurately describes outsourcing.

Question 14

Which position is most easily outsourced?

Accepted Answer

Customer service representative roles often involve standardized procedures and scripted responses, which can be easily taught and outsourced to offshore companies. Additionally, many cable companies already outsource their customer service positions to call centers in other countries. The other positions listed require more specialized skills or the physical presence of the worker, making them less easily outsourced.

Question 15

In the short run, wages in the home country will _________ when a company outsources its operations because labor demand in the home country has _________.

Accepted Answer

When a company outsources its operations, it means that it is hiring workers in another country at a cheaper wage rate compared to the home country. This reduces the demand for labor in the home country, leading to a surplus of labor supply, resulting in lower wages. Therefore, wages in the home country will fall when a company outsources its operations.

Question 16

A situation with only one buyer of labor is called a(n):

Accepted Answer

A monopsony occurs when there is only one buyer of labor in a particular market. This allows the monopsonist to exert market power over workers and potentially pay lower wages than would exist in a more competitive labor market.

Question 17

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium wage in this labor market is:

Accepted Answer

To find the equilibrium wage, we need to set the labor demand equal to the labor supply and solve for W: L_S = L_D 3W + 20 = 80 - 2W 5W = 60 W = 12 Therefore, the equilibrium wage is $12, which is option B.

Question 18

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium number of workers in this labor market is:

Accepted Answer

The answer of The labor supply curve is given by...

Question 19

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

Accepted Answer

The answer of You have recently been trained as a...

Question 20

Maxine finds that she is consistently unable to fill all of the open positions at her bakery. This indicates that the wage she is offering is:

Accepted Answer

Since Maxine is consistently unable to fill all of the open positions at her bakery, it suggests that the wage she is offering is below the market rate, which is why potential employees are likely seeking opportunities elsewhere that pay better.

Quiz 14: The Demand and Supply of Resources

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. If the wage is $20, there will be a _ of _ workers.

Mary decides that worker turnover is too high at her firm. She hopes that, by paying above-market wages, workers will stay longer. This may create:

Companies outsource their operations because:

Your sister complains that you get paid considerably more as a caterer than she is paid as a chef, even though the careers are similar. What might explain this situation?

Which of the following situations describes a monopsony?

Economic rent is:

As iPads become more popular, we can expect the wages of Apple workers to _________ relative to PC workers.

Which company has the ability to outsource its operations and have its good or service produced in another country?

What is the best economic explanation for the high pay earned by National Hockey League stars?

In theory, some people might lose in the short run from outsourcing, but in the long run, all should benefit. Which option demonstrates that this theory might not be true?

A company that produces simple textiles outsources its operations to Indonesia. Wages for Indonesian workers will _ and their employment will _.

In the distant future, companies will be using technology that can replicate food. What will happen to the equilibrium wage and quantity of cooks?

Outsourcing is when:

Which position is most easily outsourced?

In the short run, wages in the home country will _ when a company outsources its operations because labor demand in the home country has _.

A situation with only one buyer of labor is called a(n) :

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium wage in this labor market is:

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium number of workers in this labor market is:

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

Maxine finds that she is consistently unable to fill all of the open positions at her bakery. This indicates that the wage she is offering is:

Quiz 14: The Demand and Supply of Resources

The labor supply curve is given by the equation LS = 3W + 20 and the labor demand curve is given by the equation LD = 80 − 2W. If the wage is $20, there will be a _________ of _________ workers.

Mary decides that worker turnover is too high at her firm. She hopes that, by paying above-market wages, workers will stay longer. This may create:

Companies outsource their operations because:

Your sister complains that you get paid considerably more as a caterer than she is paid as a chef, even though the careers are similar. What might explain this situation?

Which of the following situations describes a monopsony?

Economic rent is:

As iPads become more popular, we can expect the wages of Apple workers to _________ relative to PC workers.

Which company has the ability to outsource its operations and have its good or service produced in another country?

What is the best economic explanation for the high pay earned by National Hockey League stars?

In theory, some people might lose in the short run from outsourcing, but in the long run, all should benefit. Which option demonstrates that this theory might not be true?

A company that produces simple textiles outsources its operations to Indonesia. Wages for Indonesian workers will _________ and their employment will _________.

In the distant future, companies will be using technology that can replicate food. What will happen to the equilibrium wage and quantity of cooks?

Outsourcing is when:

Which position is most easily outsourced?

In the short run, wages in the home country will _________ when a company outsources its operations because labor demand in the home country has _________.

A situation with only one buyer of labor is called a(n) :

The labor supply curve is given by the equation LS = 3W + 20 and the labor demand curve is given by the equation LD = 80 − 2W. The equilibrium wage in this labor market is:

The labor supply curve is given by the equation LS = 3W + 20 and the labor demand curve is given by the equation LD = 80 − 2W. The equilibrium number of workers in this labor market is:

You have recently been trained as a highly specialized medical physician. There is only one hospital that needs your services. You can expect your wages to be _________ compared to what your wages would be in a situation of perfect competition.

Maxine finds that she is consistently unable to fill all of the open positions at her bakery. This indicates that the wage she is offering is:

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. If the wage is $20, there will be a _ of _ workers.

A company that produces simple textiles outsources its operations to Indonesia. Wages for Indonesian workers will _ and their employment will _.

In the short run, wages in the home country will _ when a company outsources its operations because labor demand in the home country has _.

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium wage in this labor market is:

The labor supply curve is given by the equation L_S = 3W + 20 and the labor demand curve is given by the equation L_D = 80 − 2W. The equilibrium number of workers in this labor market is: