Chapter 15: The Labor Market

Chapter 15: The Labor Market

LABOR SUPPLY

1. The labor-supply ur!e "ep# ts the: A$ Mar%#&al ut#l#ty o' (ork asso #ate" (#th alter&at#!e &u)bers o' hours o' (ork. B$ *ua&t#t#es o' labor suppl#e" at alter&at#!e (a%e rates. C$ *ua&t#t#es o' labor asso #ate" (#th alter&at#!e le!els o' pro"u t#o&. +$ *ua&t#t#es o' labor suppl#e" at alter&at#!e le!els o' "e)a&" 'or labor. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -1-

.. A& up(ar"-slop#&% labor-supply ur!e #llustrates: A$ The opportu&#ty ost o' labor as le#sure t#)e #& reases. B$ /& reas#&% total ut#l#ty o' #& o)e as a perso& (orks )ore hours. C$ The "#re t relat#o&sh#p bet(ee& 0ua&t#ty o' labor suppl#e" a&" the (a%e rate. +$ All o' the abo!e. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -1-

-. Other th#&%s be#&% e0ual1 a& up(ar"-slop#&% labor-supply ur!e #llustrates that: A$ The supply o' labor a&" the (a%e rate are #&!ersely relate". B$ The 0ua&t#ty suppl#e" o' labor a&" the hours o' (ork per (eek are "#re tly relate". C$ The 0ua&t#ty suppl#e" o' labor a&" the hours o' (ork per (eek are #&!ersely relate". +$ There #s a %reater 0ua&t#ty o' labor suppl#e" at h#%her (a%e rates. A&s(er: + Type: +e'#&#t#o& Pa%e: -1-

2. A& #&"#!#"ual3s labor-supply ur!e re'le ts h#s or her: A$ MRP. B$ MPP. C$ 40u#l#br#u) (a%e. +$ Cho# e bet(ee& (ork a&" le#sure. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1-

5. A& up(ar"-slop#&% supply ur!e o' labor re'le ts: A$ The #& reas#&% opportu&#ty ost o' labor. B$ The #& rease #& 0ua&t#ty suppl#e" as pr# es 'all. C$ The #& reas#&% )ar%#&al ut#l#ty o' #& o)e as a perso& (orks )ore hours. +$ All o' the abo!e. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -1-

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Chapter 15: The Labor Market

5. The opportu&#ty ost o' (ork#&% #s the: A$ 6a%e rate. B$ 4ar&#&%s that oul" be )a"e #& a& alter&at#!e 7ob. C$ 8alue o' le#sure t#)e that )ust be %#!e& up. +$ A)ou&t o' o&su)pt#o& that #s )a"e poss#ble. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -1-

9. The opportu&#ty ost o': A$ Le#sure #s the !alue o' (a%es that )ust be %#!e& up. B$ 6ork#&% #s the a)ou&t o' le#sure that )ust be %#!e& up. C$ Labor #s re'le te" #& the supply ur!e o' labor. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1-

:. The !alue o' a& hour o' le#sure a& best be est#)ate" as: A$ ;ero s#& e &o #& o)e #s ear&e". B$ The hourly (a%e that oul" ha!e bee& ear&e". C$ Total re reat#o&al e,pe&"#tures "#!#"e" by hours o' le#sure. +$ The !alue o' a&y pro"u t#!e (ork1 althou%h su h a !alue #s lo(er tha& (hat oul" ha!e bee& ear&e". A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -1-

<. As )ore hours are (orke"1 the )ar%#&al ut#l#ty o' le#sure t#)e te&"s to: A$ /& rease. B$ +e rease. C$ Stay the sa)e. +$ +e rease #&#t#ally1 but the& #& rease. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -12

1=. /' you ha!e "#)#&#sh#&% )ar%#&al ut#l#ty 'or #& o)e1 the& as you (ork )ore to )ake %reater #& o)e your: A$ Total ut#l#ty 'or #& o)e "#)#&#shes. B$ Mar%#&al ut#l#ty 'or le#sure #& reases. C$ Mar%#&al ut#l#ty o' #& o)e !ar#es pos#t#!ely (#th the )o&ey you ear&. +$ 6a%e 'alls. A&s(er: B Type: +e'#&#t#o& Pa%e: -12

11. >a&e lo!es to (ork. She "oes &ot re e#!e a&y e&7oy)e&t 'ro) le#sure t#)e. The last "ollar that she ear&s ea h year )ea&s 7ust as )u h to her as the '#rst "ollar. 6h# h o' the 'ollo(#&% best "es r#bes the shape o' >a&e3s labor supply ur!e? A$ Up(ar" slop#&%. B$ Ba k(ar" slop#&%. C$ +o(&(ar" slop#&%. +$ @or#Ao&tal. A&s(er: + Type: Co)ple, U&"ersta&"#&% Pa%e: -12

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Chapter 15: The Labor Market

1.. Be&"ra lo!es to (ork. She also lo!es to spe&" t#)e h#k#&%. /& or"er to %et Be&"ra to (ork )ore hours1 she )ust be pa#" a h#%her (a%e rate. 6h# h o' the 'ollo(#&% best "es r#bes the shape o' Be&"ra3s labor supply ur!e? A$ Up(ar" slop#&%. B$ Ba k(ar" slop#&%. C$ +o(&(ar" slop#&%. +$ @or#Ao&tal. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -12

1-. The &u)ber o' hours that a (orker #s (#ll#&% to (ork #s "eter)#&e" by the tra"e-o'' bet(ee& the #& reas#&%: A$ Mar%#&al ut#l#ty o' #& o)e a&" the "e reas#&% )ar%#&al ut#l#ty o' le#sure. B$ Mar%#&al ut#l#ty o' le#sure a&" the "e reas#&% )ar%#&al ut#l#ty o' #& o)e. C$ Total ut#l#ty o' le#sure a&" the "e reas#&% total ut#l#ty o' #& o)e. +$ Mar%#&al ut#l#ty o' both #& o)e a&" le#sure. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -12

12. 6orkers typ# ally re0u#re h#%her (a%es #& or"er to (ork a""#t#o&al hours be ause o' the: A$ /& reas#&% opportu&#ty ost o' labor. C$ +e reas#&% )ar%#&al ut#l#ty o' #& o)e. B$ /& reas#&% !alue o' le#sure t#)e 'or%o&e. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -12

15. Other th#&%s be#&% e0ual1 as the (a%e rate r#ses alo&% a& up(ar"-slop#&% supply ur!e1 the: A$ Supply o' labor #& reases. C$ *ua&t#ty o' labor suppl#e" #& reases. B$ Mar%#&al ut#l#ty o' le#sure "e reases. +$ Mar%#&al ut#l#ty o' (ork "e reases. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -12

15. Cor a& up(ar"-slop#&% supply ur!e1 the 0ua&t#ty o' labor suppl#e" !ar#es "#re tly, ceteris paribus1 (#th: A$ The (a%e rate. C$ The !alue o' le#sure t#)e. B$ Payroll ta,es. +$ The "er#!e" "e)a&" 'or labor. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -12

19. 6h# h o' the 'ollo(#&% e,pla#&s (hy h#%her (a%es are &e essary to e&t# e (orkers to (ork lo&%er hours1 ceteris paribus? A$ La( o' "#)#&#sh#&% )ar%#&al ut#l#ty. C$ La( o' "e)a&". B$ La( o' "#)#&#sh#&% phys# al pro"u t. +$ Pr# e elast# #ty o' "e)a&". A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -12

1:. At !ery h#%h (a%e rates1 #t #s l#kely that a& #&"#!#"ual3s labor-supply ur!e: A$ Be o)es hor#Ao&tal. B$ Be&"s ba k(ar". C$ Be&"s out(ar". +$ +#sappears. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -15

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Chapter 15: The Labor Market

1<. The labor-supply ur!e '#rst starts to be&" ba k(ar" abo!e the po#&t (here the: A$ /& o)e e''e t e0uals the subst#tut#o& e''e t. B$ Opportu&#ty ost o' le#sure e, ee"s the opportu&#ty ost o' labor. C$ Mar%#&al ut#l#ty o' labor e0uals the )ar%#&al ut#l#ty o' le#sure. +$ Total ut#l#ty o' le#sure out(e#%hs the total ut#l#ty o' labor. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -15

.=. The subst#tut#o& e''e t o' (a%es re'ers to the o& ept that: A$ @#%her (a%e rates e& oura%e people to (ork )ore. B$ As #& o)e r#ses1 #&"#!#"uals (#ll be )ore (#ll#&% to subst#tute le#sure 'or labor. C$ As (a%es r#se1 #&"#!#"uals (#sh to subst#tute le#sure 'or labor. +$ The )ar%#&al ut#l#ty o' le#sure "#)#&#shes as hours (orke" #& rease. A&s(er: A Type: +e'#&#t#o& Pa%e: -15

.1. The #& o)e e''e t o' (a%es re'ers to the 'a t that: A$ /& o)e #s #&!ersely relate" to (a%es. B$ As the (a%e rate r#ses1 #& o)e 'alls (h#le hours (orke" re)a#& u& ha&%e". C$ As the (a%e rate 'alls1 the hours (orke" "e rease. +$ @#%her (a%e rates allo( a perso& to re"u e the hours (orke" (#thout los#&% #& o)e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -15

... /' Re%%#e3s subst#tut#o& e''e ts out(e#%h h#s #& o)e e''e ts1 h#s labor-supply ur!e (#ll: A$ Appear hor#Ao&tal. B$ Slope up(ar". C$ Be&" ba k(ar". +$ Appear !ert# al. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -15

.-. At the po#&t (here #& o)e e''e ts out(e#%h subst#tut#o& e''e ts1 the labor-supply ur!e: A$ Appears hor#Ao&tal. B$ Slopes up(ar". C$ Starts to be&" ba k(ar". +$ Appears !ert# al. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -15

.2. /' >aso&3s #& o)e e''e ts out(e#%h h#s subst#tut#o& e''e ts1 th#s )ea&s that he (#ll supply: A$ Less labor at h#%her (a%es. C$ More labor at all (a%e rates. B$ More labor at h#%her (a%es. +$ Less labor at lo(er (a%es. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -15

MARB4T SUPPLY

.5. The "eter)#&a&ts o' the )arket supply o' labor #& lu"e: A$ Ta,es. C$ The )arket (a%e rate.

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Chapter 15: The Labor Market

B$ The &u)ber o' e)ployers. A&s(er: A Type: +e'#&#t#o& Pa%e: -15

+$ The )ar%#&al re!e&ue pro"u t o' labor.

.5. The "eter)#&a&ts o' the )arket supply o' labor #& lu"e: A$ Tastes. B$ /& o)e a&" (ealth. C$ 4,pe tat#o&s. A&s(er: + Type: +e'#&#t#o& Pa%e: -15

+$ All o' the abo!e.

.9. /' househol" #& o)e a&" (ealth #& reases1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -15

.:. /' househol" #& o)e a&" (ealth "e reases1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -15

.<. /' the pr# es o' o&su)er %oo"s #& rease1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -15

-=. /' househol" pre'ere& es or tastes 'or le#sure "e reases1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -15

-1. /' le#sure a t#!#t#es be o)e )ore attra t#!e1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't.

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Chapter 15: The Labor Market

A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -15

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Chapter 15: The Labor Market

-.. /' there #s a& #& rease #& #& o)e tra&s'er pro%ra)s1 there (#ll be a: A$ Le't(ar" sh#'t o' the labor supply ur!e. B$ R#%ht(ar" sh#'t o' the labor supply ur!e. C$ Mo!e)e&t up the labor supply ur!e to the r#%ht. +$ Mo!e)e&t "o(& the labor supply ur!e to the le't. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -15

--. Ceteris paribus1 #' #))#%rat#o& to the U&#te" States #& reases the &u)ber o' (orkers1 the labor-supply ur!e (#ll sh#'t to the: A$ R#%ht a&" the e0u#l#br#u) (a%e rate (#ll 'all. C$ Le't a&" the e0u#l#br#u) (a%e rate (#ll 'all. B$ R#%ht a&" the e0u#l#br#u) (a%e rate (#ll r#se. +$ Le't a&" the e0u#l#br#u) (a%e rate (#ll r#se. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -15

-2. /& 1:<=1 the a!era%e (orker #& the U.S. (as e)ploye" 5= hours per (eek at s#%&#'# a&tly lo(er real (a%es tha& to"ay3s (orker1 (ho (orks less tha& -5 hours a (eek. 6hat #s the best e,pla&at#o& 'or th#s ha&%e? A$ The #& o)e e''e t )ust be "o)#&a&t 'or U.S. (orkers at h#%her (a%e rates. B$ The subst#tut#o& e''e t )ust be "o)#&a&t 'or U.S. (orkers at h#%her (a%e rates. C$ The supply o' labor )ust ha!e "e rease". +$ The supply o' labor )ust ha!e #& rease". A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -15

-5. The respo&s#!e&ess o' (orkers to a ha&%e #& (a%e rates1 ceteris paribus1 #s )easure" by the: A$ Mar%#&al phys# al pro"u t. C$ Labor-"e)a&" ur!e. B$ 4last# #ty o' labor supply. +$ /& o)e e''e t. A&s(er: B Type: +e'#&#t#o& Pa%e: -19

-5. The elast# #ty o' labor supply #s e0ual to: A$ Cha&%e #& total output ha&%e #& 0ua&t#ty o' labor. B$ Per e&ta%e ha&%e #& 0ua&t#ty o' labor suppl#e" per e&ta%e ha&%e #& (a%e rate. C$ Cha&%e #& total re!e&ue ha&%e #& 0ua&t#ty o' labor. +$ Cha&%e #& output per u&#t o' labor ost o' a& #&put. A&s(er: B Type: +e'#&#t#o& Pa%e: -19

-9. The elast# #ty o' labor supply #s e0ual to: A$ The ha&%e #& 0ua&t#ty o' labor suppl#e" "#!#"e" by the ha&%e #& the (a%e rate. B$ The ha&%e #& the (a%e rate "#!#"e" by the ha&%e #& 0ua&t#ty o' labor suppl#e". C$ The per e&ta%e ha&%e #& the (a%e rate "#!#"e" by the per e&ta%e ha&%e #& the 0ua&t#ty o' labor suppl#e". +$ The per e&ta%e ha&%e #& 0ua&t#ty o' labor suppl#e" "#!#"e" by the per e&ta%e ha&%e #& the (a%e rate. A&s(er: + Type: +e'#&#t#o& Pa%e: -19

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Chapter 15: The Labor Market

-:. The elast# #ty o' labor supply )easures: A$ The opportu&#ty ost o' labor. B$ The )a%&#tu"e o' the subst#tut#o& e''e t o' labor. C$ The )a%&#tu"e o' the #& o)e e''e t o' labor. +$ @o( the 0ua&t#ty o' labor suppl#e" respo&"s to ha&%es #& the (a%e rate. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -19

-<. The elast# #ty o' labor supply "oes not "epe&" o&: A$ The "e)a&" 'or labor. B$ /& o)e a&" (ealth. A&s(er: A Type: A&alyt# al Pa%e: -19

C$ The pr# es o' o&su)er %oo"s. +$ 4,pe tat#o&s 'or #& o)e or o&su)pt#o&.

2=. 6he& a labor supply ur!e #s ba k(ar" be&"#&%1 the elast# #ty o' labor supply #& the ba k(ar"-be&"#&% port#o& #s: A$ De%at#!e. B$ Pos#t#!e1 but less tha& o&e. C$ Ereater tha& o&e. +$ ;ero. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -19

21. B#ll hates to (ork. @e re e#!es a %reat "eal o' e&7oy)e&t 'ro) le#sure t#)e. B#ll3s elast# #ty o' labor supply #s: A$ @#%h. B$ Lo(1 perhaps e!e& &e%at#!e. C$ O&e. +$ @#%hly &e%at#!e. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -19

2.. /' the elast# #ty o' labor #s =.9=1 a 5 per e&t #& rease #& the (a%e rate (#ll #&"u e a: A$ -.5 per e&t "e rease #& the 0ua&t#ty o' labor suppl#e". B$ -.5 per e&t #& rease #& the 0ua&t#ty o' labor suppl#e". C$ =.12 per e&t "e rease #& the 0ua&t#ty o' labor suppl#e". +$ =.12 per e&t #& rease #& the 0ua&t#ty o' labor suppl#e". A&s(er: B Type: A&alyt# al Pa%e: -19

2-. /' the elast# #ty o' labor #s =.21 a 1= per e&t #& rease #& (a%e rates (#ll #&"u e a: A$ 2.= per e&t #& rease #& the 0ua&t#ty o' labor suppl#e". B$ 2.= per e&t "e rease #& the 0ua&t#ty o' labor suppl#e". C$ 1=.= per e&t #& rease #& the 0ua&t#ty o' labor suppl#e". +$ ..5 per e&t #& rease #& the 0ua&t#ty o' labor suppl#e". A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -19

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Chapter 15: The Labor Market

LABOR +4MAD+

22. The "e)a&" 'or 'a tors o' pro"u t#o& #s: A$ +er#!e" 'ro) the "e)a&" 'or the %oo"s a&" ser!# es they pro"u e. B$ A 'u& t#o& o' "#)#&#sh#&% )ar%#&al phys# al pro"u t. C$ The 0ua&t#t#es o' the 'a tor e)ployers are (#ll#&% a&" able to h#re at alter&at#!e (a%e rates #& a %#!e& t#)e per#o"1 ceteris paribus. +$ All o' the abo!e. A&s(er: + Type: +e'#&#t#o& Pa%e: -19

25. The "e)a&" 'or labor a&" other 'a tors o' pro"u t#o& typ# ally "e l#&es #& a re ess#o& be ause those 'a tors: A$ @a!e be o)e relat#!ely s ar e. B$ Are &o lo&%er o''ere" 'or sale #& 'a tor )arkets. C$ Are "er#!e" 'ro) the "e)a&" 'or '#&al output1 (h# h also "e l#&es #& a re ess#o&. +$ All o' the abo!e. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -19

25. Assu)e the apple )arket #s o)pet#t#!e. /' o&su)ers (a&t (a%es a&" the &u)ber o' a!a#lable 7obs 'or apple p# kers to #& rease1 the best strate%y (oul" be to: A$ /&s#st that the %o!er&)e&t establ#sh a )#&#)u) (a%e 'or apple p# kers. B$ Boy ott apples u&t#l (a%es #& rease". C$ Buy )ore apples. +$ /&s#st that the sellers ra#se the pr# e o' apples. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -19

29. A '#r)3s "e)a&" 'or labor #s re'erre" to as a "er#!e" "e)a&" be ause: A$ /t #s "er#!e" 'ro) the MPP o' labor. B$ /t #s "er#!e" 'ro) the "e)a&" 'or the pro"u t that the labor #s pro"u #&%. C$ The 0ua&t#ty o' %oo"s a&" ser!# es labor a& pur hase #s "er#!e" 'ro) the (a%es labor re e#!es 'ro) the '#r). +$ /t #s "er#!e" 'ro) the supply o' labor. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -19

2:. /' the "e)a&" 'or labor #s a "er#!e" "e)a&"1 the "e)a&" 'or (eb pa%e "es#%&ers "epe&"s o& the: A$ Popular#ty o' the /&ter&et. C$ Cost o' h#r#&% (eb pa%e "es#%&ers. B$ A!era%e #& o)e o' (eb pa%e "es#%&ers. +$ Supply o' (eb pa%e "es#%&ers. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -19

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Chapter 15: The Labor Market

2<. The 0ua&t#ty o' labor "e)a&"e" a& ha&%e (#thout sh#'t#&% the labor "e)a&" ur!e (he& there #s a ha&%e #&: A$ 4last# #ty o' labor supply. C$ /& o)e a&" (ealth o' labor. B$ 6a%e rate. +$ C#,e" osts #& the pro"u t#o& pro ess. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -19

5=. Other th#&%s be#&% e0ual1 h#%her (a%e rates (#ll: A$ +e rease the supply o' labor. B$ /& rease the supply o' labor. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1:

C$ +e rease the "e)a&" 'or labor. +$ +e rease the 0ua&t#ty "e)a&"e" o' labor.

51. The 0ua&t#ty "e)a&"e" o' labor "epe&"s o& the: A$ Supply o' labor. B$ Mar%#&al ost o' output. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1:

C$ Pre!a#l#&% rate o' #&terest.

+$ 6a%e rate.

5.. The 0ua&t#ty "e)a&"e" o' labor "epe&"s o& the: A$ Mar%#&al ost o' output. B$ Supply o' labor. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -1:

C$ 6a%e rate.

+$ Pre!a#l#&% rate o' #&terest.

5-. 6h# h o' the 'ollo(#&% (oul" not sh#'t the )arket "e)a&" 'or labor1 ceteris paribus? A$ The (a%e pa#" to labor. C$ The "e)a&" 'or '#&al pro"u ts. B$ The pro"u t#!#ty o' labor. +$ All o' the abo!e. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -1:

52. 6h# h o' the 'ollo(#&% (oul" sh#'t the )arket "e)a&" 'or labor1 ceteris paribus? A$ The )ar%#&al phys# al pro"u t. C$ The "e)a&" 'or '#&al pro"u ts. B$ The pro"u t#!#ty o' labor. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1:

55. The "eter)#&a&ts o' labor "e)a&" #& lu"e: A$ Mar%#&al phys# al pro"u t#!#ty. B$ Labor shorta%es. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -1:

C$ Labor e,pe tat#o&s. +$ The le#sure-labor tra"eo''.

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Chapter 15: The Labor Market

55. The )ar%#&al phys# al pro"u t o' labor #s e0ual to: A$ Total output "#!#"e" by the 0ua&t#ty o' labor. B$ The per e&ta%e ha&%e #& total output "#!#"e" by the per e&ta%e ha&%e #& 0ua&t#ty o' labor. C$ The ha&%e #& total output "#!#"e" by the ha&%e #& 0ua&t#ty o' labor. +$ The ha&%e #& total re!e&ue asso #ate" (#th o&e a""#t#o&al u&#t o' #&put. A&s(er: C Type: +e'#&#t#o& Pa%e: -1<

59. The )ar%#&al phys# al pro"u t o' labor #s e0ual to: A$ Cha&%e #& total output ha&%e #& 0ua&t#ty o' labor. B$ Per e&ta%e ha&%e #& 0ua&t#ty o' labor suppl#e" per e&ta%e ha&%e #& (a%e rate. C$ Cha&%e #& total re!e&ue ha&%e #& 0ua&t#ty o' labor. +$ Cha&%e #& output per u&#t o' labor ost o' a& #&put. A&s(er: A Type: +e'#&#t#o& Pa%e: -1<

5:. The ha&%e #& total output "#!#"e" by the ha&%e #& 0ua&t#ty o' labor )easures labor3s: A$ MRP. B$ MPP. C$ 4last# #ty o' labor supply. +$ Cost e''# #e& y. A&s(er: B Type: +e'#&#t#o& Pa%e: -1<

5<. The ha&%e #& total output "#!#"e" by the ha&%e #& 0ua&t#ty o' labor )easures labor3s: A$ MPP. B$ MRP. C$ MR. +$ MC. A&s(er: A Type: +e'#&#t#o& Pa%e: -1<

5=. 6he& the MPP o' labor #s Aero1 ceteris paribus: A$ 4)ploy)e&t a& be #& rease" o&ly by o''er#&% a h#%her (a%e rate. B$ Do 'urther #& reases #& output a& be a h#e!e" by us#&% a""#t#o&al u&#ts o' labor. C$ MRP #s at a )a,#)u). +$ A""#t#o&al u&#ts o' labor )ust be e)ploye" be ause other 'a tors o' pro"u t#o& are be#&% (aste". A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -1<

51. The )ar%#&al re!e&ue pro"u t o' labor #s e0ual to: A$ Cha&%e #& total output ha&%e #& 0ua&t#ty o' labor. B$ Per e&ta%e ha&%e #& 0ua&t#ty o' labor suppl#e" per e&ta%e ha&%e #& (a%e rate. C$ Cha&%e #& total re!e&ue ha&%e #& 0ua&t#ty o' labor. +$ Cha&%e #& output per u&#t o' labor ost o' a& #&put. A&s(er: C Type: +e'#&#t#o& Pa%e: -1<

5.. The ha&%e #& total re!e&ue asso #ate" (#th o&e a""#t#o&al u&#t o' #&put )easures labor3s: A$ 4last# #ty o' labor supply. B$ Cost e''# #e& y. C$ MPP. +$ MRP.

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Chapter 15: The Labor Market

A&s(er: + Type: +e'#&#t#o& Pa%e: -1<

5-. The )ar%#&al re!e&ue pro"u t establ#shes: A$ A& upper l#)#t to the (a%e rate a& e)ployer #s (#ll#&% a&" able to pay. B$ A lo(er l#)#t to pro'#t o& the sale o' a u&#t o' output. C$ A lo(er l#)#t to the pro"u t#!#ty o' a (orker. +$ A lo(er l#)#t to the (a%e-rate "e)a&"s o' laborers. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -1<

52. MRP 'or a per'e tly o)pet#t#!e '#r) #s e0ual to: A$ MPP t#)es the (a%e rate. B$ MPP "#!#"e" by the (a%e rate. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -1<

C$ MPP "#!#"e" by )ar%#&al re!e&ue. +$ MPP t#)es the pr# e o' the pro"u t.

55. /& o)pet#t#!e )arkets1 the )ar%#&al re!e&ue pro"u t ur!e a&" )ar%#&al phys# al pro"u t ur!e ha!e s#)#lar shapes be ause: A$ The "e)a&" ur!e 'or the pro"u t slopes "o(&(ar" #& a or"a& e (#th the la( o' "#)#&#sh#&% retur&s. B$ MRP F P MPP. C$ The la( o' "#)#&#sh#&% )ar%#&al ut#l#ty a&" the la( o' "#)#&#sh#&% retur&s #)ply a "o(&(ar"-slop#&% "e)a&" ur!e #& the pro"u t )arket. +$ All o' the abo!e. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -1<

55. /' a ha#r a& be sol" 'or G.= a&" #t takes a (orker . hours to )ake a ha#r1 the )ar%#&al re!e&ue pro"u t o' th#s (orker #s: A$ G5 per hour. B$ G1= per hour. C$ G.= per hour. +$ G. per hour. A&s(er: B Type: A&alyt# al Pa%e: -1<

59. The )ar%#&al re!e&ue pro"u t o' labor #s e0ual to: A$ The )ar%#&al phys# al pro"u t )ult#pl#e" by the )ar%#&al re!e&ue o' the output. B$ The ha&%e #& the 0ua&t#ty o' labor "#!#"e" by the ha&%e #& total re!e&ue. C$ The ha&%e #& total output "#!#"e" by the ha&%e #& the 0ua&t#ty o' labor. +$ The per e&ta%e ha&%e #& total re!e&ue "#!#"e" by the per e&ta%e ha&%e #& the 0ua&t#ty o' labor. A&s(er: A Type: +e'#&#t#o& Pa%e: -1<

5:. The "e)a&" 'or labor #s "o(&(ar" slop#&% be ause o': A$ R#s#&% MPP. B$ Call#&% MC. C$ +#)#&#sh#&% retur&s to labor. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -1<

+$ R#s#&% P.

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Chapter 15: The Labor Market

5<. The la( o' "#)#&#sh#&% retur&s states that1 ceteris paribus1 the: A$ MPP o' labor "e l#&es as a""#t#o&al la&"1 ra( )ater#als1 a&" other 'a tors o' pro"u t#o& are e)ploye". B$ MPP o' labor "e l#&es as the (a%e rate 'alls. C$ MPP o' labor "e l#&es as pro"u t pr# e "e l#&es. +$ MPP o' labor "e l#&es as )ore labor #s e)ploye". A&s(er: + Type: +e'#&#t#o& Pa%e: -.=

9=. The la( o' "#)#&#sh#&% retur&s #s "ue to: A$ The "e l#&#&% ut#l#ty o' a %oo" as (e o&su)e )ore o' #t. B$ Cro("#&% or o!eruse o' 'a tors that are hel" o&sta&t as pro"u t#o& #s #& rease". C$ The "e l#&e #& the "e)a&" ur!e 'or a pro"u t. +$ The "e l#&e #& the )ar%#&al re!e&ue ur!e 'or a pro"u t. A&s(er: B Type: +e'#&#t#o& Pa%e: -.=

91. As a""#t#o&al labor #s e)ploye"1 the la( o' "#)#&#sh#&% retur&s )ea&s there (#ll be: A$ +#)#&#sh#&% )ar%#&al ut#l#ty. C$ /& reas#&% MRP. B$ +#)#&#sh#&% MPP. +$ /& reas#&% opportu&#ty ost. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -.=

9.. The la( o' "#)#&#sh#&% retur&s states that1 ceteris paribus1 the MPP o' labor "e l#&es as: A$ A""#t#o&al la&"1 ra( )ater#als1 a&" other 'a tors o' pro"u t#o& are e)ploye". B$ Pro"u t pr# e "e l#&es. C$ The (a%e rate 'alls. +$ More labor #s e)ploye". A&s(er: + Type: +e'#&#t#o& Pa%e: -.=

A C/RM3S @/R/DE +4C/S/OD

9-. The )ar%#&al re!e&ue pro"u t o' labor ur!e #s the '#r)3s: A$ Labor-supply ur!e. C$ Labor-"e)a&" ur!e. B$ Total re!e&ue ur!e. +$ MPP o' labor ur!e "#!#"e" by the (a%e rate. A&s(er: C Type: +e'#&#t#o& Pa%e: -.-

92. The )ar%#&al re!e&ue pro"u t o' labor ur!e #s the '#r)3s: A$ MPP o' labor ur!e "#!#"e" by the (a%e rate. B$ Mar%#&al re!e&ue ur!e. C$ +e)a&" ur!e 'or labor. +$ Mar%#&al phys# al pro"u t )ult#pl#e" by the (a%e rate. A&s(er: C Type: +e'#&#t#o& Pa%e: -.-

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Chapter 15: The Labor Market

95. At a %#!e& (a%e rate1 the '#r) (#ll be (#ll#&% to h#re a& a""#t#o&al (orker o&ly #': A$ The (orker o&tr#butes at least as )u h to )ar%#&al re!e&ue as to )ar%#&al osts. B$ The labor-"e)a&" ur!e #s ba k(ar"-be&"#&%. C$ The (a%e rate e, ee"s the laborer3s )ar%#&al re!e&ue pro"u t. +$ The '#r) #s )ak#&% a& e o&o)# pro'#t #& the short ru&. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -.-

95. Other th#&%s be#&% e0ual1 a pro'#t-)a,#)#A#&% e)ployer (#ll e)ploy a""#t#o&al labor as lo&% as: A$ The MPP o' labor e, ee"s the MRP o' labor. B$ The (a%e rate e, ee"s )ar%#&al re!e&ue. C$ The ost e''# #e& y o' labor 'alls relat#!e to other #&puts. +$ The MRP o' labor e, ee"s the (a%e rate. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.-

99. /' a '#r) h#res (orkers up to the po#&t (here the MRP o' the last (orker h#re" #s %reater tha& the (a%e rate: A$ Pro'#ts are )a,#)#Ae". B$ The '#r) has h#re" too )a&y (orkers. C$ The '#r) shoul" use )ore ap#tal #& #ts pro"u t#o& pro ess. +$ The '#r) has &ot h#re" e&ou%h (orkers. A&s(er: + Type: Co)ple, U&"ersta&"#&% Pa%e: -.-

9:. A o)pet#t#!e '#r) shoul" o&t#&ue to h#re (orkers u&t#l the MRP #s e0ual to: A$ +e)a&". B$ The &u)ber o' (orkers h#re". C$ The )arket (a%e rate. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.-

+$ ;ero.

9<. /' the MPP o' a& a""#t#o&al u&#t o' labor #s - u&#ts per hour1 pro"u t pr# e #s o&sta&t at G5 per u&#t1 a&" the (a%e rate #s G15 per hour1 the&: A$ The a""#t#o&al u&#t o' labor shoul" be e)ploye". B$ The a""#t#o&al u&#t o' labor shoul" &ot be e)ploye" be ause #t osts )ore tha& #t #s (orth. C$ The e)ployer shoul" lo(er (a%es a&" a ept less e)ploy)e&t o' labor. +$ Pro"u t pr# e )ust be re"u e" #' pro'#ts are to be )a"e. A&s(er: A Type: A&alyt# al Pa%e: -.-

:=. /' the MPP o' a& a""#t#o&al u&#t o' labor #s . u&#ts per hour1 pro"u t pr# e #s o&sta&t at G5 per u&#t1 a&" the (a%e rate #s G1. per hour1 the&: A$ The a""#t#o&al u&#t o' labor shoul" be e)ploye". B$ The a""#t#o&al u&#t o' labor shoul" &ot be e)ploye" be ause #t osts )ore tha& #t #s (orth. C$ The e)ployer shoul" lo(er (a%es a&" a ept less e)ploy)e&t o' labor. +$ Pro"u t pr# e )ust be re"u e" #' pro'#ts are to be )a"e. A&s(er: B Type: A&alyt# al Pa%e: -.-

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Chapter 15: The Labor Market

:1. /' the MPP o' a& a""#t#o&al u&#t o' labor #s 2 u&#ts per hour1 pro"u t pr# e #s o&sta&t at G- per u&#t1 a&" the (a%e rate #s G15 per hour1 the&: A$ A& a""#t#o&al u&#t o' labor shoul" be e)ploye". B$ A& a""#t#o&al u&#t o' labor shoul" &ot be e)ploye". C$ The e)ployer shoul" e,pa&" pro"u t#o&. +$ Pro"u t pr# e )ust be re"u e" #' pro'#ts are to be )a"e. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -.-

:.. As labor pro"u t#!#ty #& reases1 (h# h o' the 'ollo(#&% sh#'ts #& the labor )arket shoul" o ur? A$ Supply o' labor shoul" sh#'t to the le't. C$ +e)a&" 'or labor shoul" sh#'t to the le't. B$ Supply o' labor shoul" sh#'t to the r#%ht. +$ +e)a&" 'or labor shoul" sh#'t to the r#%ht. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.5

:-. As labor pro"u t#!#ty "e reases1 (h# h o' the 'ollo(#&% sh#'ts #& the labor )arket shoul" o ur? A$ Supply o' labor shoul" sh#'t to the le't. C$ +e)a&" 'or labor shoul" sh#'t to the le't. B$ Supply o' labor shoul" sh#'t to the r#%ht. +$ +e)a&" 'or labor shoul" sh#'t to the r#%ht. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.5

:2. /t #s poss#ble 'or (a%es a&" e)ploy)e&t to #& rease at the sa)e t#)e #' the: A$ MRP o' labor #& reases. C$ Pr# e o' the pro"u t #& reases. B$ MPP o' labor #& reases. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.5

MARB4T 4*U/L/BR/UM

:5. The "eter)#&a&ts o' the )arket "e)a&" 'or labor #& lu"e the: A$ Mar%#&al re!e&ue pro"u t o' labor. C$ Market (a%e rate. B$ 6#ll#&%&ess a&" ab#l#ty o' labor to (ork. +$ Du)ber o' (orkers. A&s(er: A Type: +e'#&#t#o& Pa%e: -.5

:5. Other th#&%s be#&% e0ual1 (h# h o' the 'ollo(#&% (oul" #& rease the )arket "e)a&" 'or labor? A$ A 'all #& the (a%e rate. B$ A& #& rease #& the )ar%#&al pro"u t#!#ty o' labor. C$ A "e rease #& the ost e''e t#!e&ess o' labor relat#!e to other #&puts. +$ A "e rease #& the )arket "e)a&" 'or the '#r)3s output. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -.5

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:9. Ceteris paribus1 #' the "e)a&" 'or o)puters #& reases1 the "e)a&" 'or labor #& the o)puter )a&u'a tur#&% #&"ustry (#ll: A$ /& rease be ause the MRP o' labor has #& rease". B$ /& rease be ause the MPP o' labor has #& rease". C$ /& rease be ause the (a%e rate 'or o)puter )a&u'a tur#&% e)ployees has #& rease". +$ +e rease be ause the MRP o' labor has #& rease". A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -.5

::. Ceteris paribus1 #' the "e)a&" 'or !#"eo %a)es "e reases1 the "e)a&" 'or labor #& the !#"eo %a)e )a&u'a tur#&% #&"ustry (#ll: A$ +e rease be ause the MRP o' labor has #& rease". B$ /& rease be ause the MPP o' labor has "e rease". C$ +e rease be ause the (a%e rate 'or !#"eo %a)e )a&u'a tur#&% e)ployees has "e rease". +$ +e rease be ause the MRP o' labor has "e rease". A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.5

:<. At the e0u#l#br#u) (a%e #& a o)pet#t#!e )arket: A$ MRP F (a%e rate. B$ The rat#o o' the MPP to the 'a tor3s pr# e #s the sa)e 'or all 'a tors. C$ The )arket "e)a&" ur!e 'or labor #&terse ts the )arket supply ur!e o' labor. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.5

<=. 6h# h o' the 'ollo(#&% #s true about the e0u#l#br#u) )arket (a%e? A$ All (orkers are sat#s'#e" (#th the (a%e. B$ All e)ployers are sat#s'#e" (#th the (a%e. C$ There #s &o u&e)ploy)e&t #& th#s )arket at the e0u#l#br#u) (a%e. +$ All o' the abo!e. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.5

<1. /' the "e)a&" 'or o)puters #& reases1 the e''e t o& the o)puter )a&u'a tur#&% 7ob )arket (#ll be to: A$ /& rease the "e)a&" 'or labor a&" #& rease e0u#l#br#u) (a%es. B$ Re"u e the supply o' labor a&" #& rease e0u#l#br#u) (a%es. C$ +e rease the "e)a&" 'or labor a&" re"u e e0u#l#br#u) (a%es. +$ @a!e &o #)pa t o& e0u#l#br#u) (a%es. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

<.. /' the "e)a&" 'or bottle" (ater "e reases1 the e''e t o& the bottle" (ater 7ob )arket (#ll be to: A$ /& rease the "e)a&" 'or labor a&" #& rease e0u#l#br#u) (a%es. B$ Re"u e the supply o' labor a&" #& rease e0u#l#br#u) (a%es. C$ +e rease the "e)a&" 'or labor a&" re"u e e0u#l#br#u) (a%es. +$ @a!e &o #)pa t o& e0u#l#br#u) (a%es.

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Chapter 15: The Labor Market

A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

<-. 6he& (orkers are not o&s#"ere" 'or a 7ob be ause o' the#r ra e or se,1 the e''e t o' th#s "#s r#)#&at#o& o& the 7ob )arket (#ll be to: A$ /& rease the "e)a&" 'or labor a&" #& rease (a%es. B$ Re"u e the supply o' labor a&" #& rease (a%es. C$ +e rease the "e)a&" 'or labor a&" re"u e (a%es. +$ @a!e &o #)pa t o& (a%es. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

<2. 6he& there are )ore 0ual#'#e" appl# a&ts tha& 7ob ope&#&%s1 th#s #&"# ates that the: A$ 4 o&o)y )ust be #& a re ess#o&. B$ Labor supply ur!e )ust be ba k(ar" be&"#&%. C$ 6a%es be#&% o''ere" are too h#%h. +$ A!a#lable 7obs )ust be !ery "es#rable a&" pay h#%h (a%es. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

<5. 6he& people are sta&"#&% #& l#&e 'or 7obs a&" there are )ore appl# a&ts tha& 7obs1 the& the labor )arket #s hara ter#Ae" by a: A$ Shorta%e o' 7obs 'ro) the po#&t o' !#e( o' the buyer #& the labor )arket. B$ Surplus o' 7obs 'ro) the po#&t o' !#e( o' the seller #& the labor )arket. C$ Surplus o' labor. +$ Shorta%e o' labor. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

<5. 6he& the %o!er&)e&t sets a )#&#)u) (a%e that e, ee"s the e0u#l#br#u) (a%e: A$ A labor surplus (#ll result. C$ So)e (orkers (#ll e&" up u&e)ploye". B$ So)e (orkers (#ll e&" up (#th h#%her (a%es. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.5

<9. 6h# h o' the 'ollo(#&% pol# #es #s o&s#ste&t (#th surpluses o' labor #& the labor )arket? A$ 6a%e e#l#&%s #& the 'a tor )arket. B$ R#%ht(ar" sh#'ts o' "er#!e" "e)a&" #& u&re%ulate" labor )arkets. C$ M#&#)u) (a%e la(s. +$ La#sseA 'a#re #& labor )arkets. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.9

<:. Cor a )#&#)u) (a%e to ha!e a&y #)pa t o& a labor )arket1 #t )ust be set at a le!el: A$ @#%her tha& the e0u#l#br#u) (a%e. C$ @#%her tha& MPP. B$ @#%her tha& MRP. +$ All o' the abo!e.

Pa%e 19

Chapter 15: The Labor Market

A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -.9

Pa%e 1:

Chapter 15: The Labor Market

<<. 6he& the )#&#)u) (a%e #s ra#se" #& a o)pet#t#!e )arket1 ceteris paribus: A$ All (orkers are better o''. B$ All (orkers are (orse o''. C$ So)e (orkers are better o'' a&" so)e are (orse o''. +$ 6orkers are &ot a''e te" by a )#&#)u) (a%e #& rease1 o&ly by "e reases. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.9

1==. 6he& the )#&#)u) (a%e #s ra#se" #& a o)pet#t#!e )arket1 ceteris paribus: A$ So)e (orkers lose the#r 7obs. B$ There are 'e(er 7obs a!a#lable. C$ 6orkers (#th a )ar%#&al re!e&ue pro"u t belo( the )#&#)u) (a%e (#ll be (orse o''. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.9

1=1. 6hat (#ll happe& to (a%es a&" the le!el o' e)ploy)e&t #& a o)pet#t#!e )arket (he& the %o!er&)e&t el#)#&ates a )#&#)u) (a%e1 ceteris paribus? A$ 6a%es (#ll r#se but e)ploy)e&t (#ll 'all. C$ Both (a%es a&" e)ploy)e&t (#ll 'all. B$ 6a%es (#ll 'all but e)ploy)e&t (#ll r#se. +$ Both (a%es a&" e)ploy)e&t (#ll r#se. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -.9

C@OOS/DE AMODE /DPUTS

1=.. Cost e''# #e& y re'ers to the: A$ A)ou&t o' output asso #ate" (#th a& a""#t#o&al "ollar spe&t o& #&put. B$ 4''e t#!e&ess o' labor #& re"u #&% pro"u t#o& osts. C$ MPP o' labor "#!#"e" by the pro"u t pr# e. +$ Ab#l#ty to pro"u e at a le!el o' output (here the (a%e rate #s e0ual to or less tha& MRP. A&s(er: A Type: A&alyt# al Pa%e: -.:

1=-. The best )easure o' ost e''# #e& y #s e0ual to: A$ Cha&%e #& total output ha&%e #& 0ua&t#ty o' labor. B$ Per e&ta%e ha&%e #& 0ua&t#ty o' labor suppl#e" per e&ta%e ha&%e #& (a%e rate. C$ Cha&%e #& total re!e&ue ha&%e #& 0ua&t#ty o' labor. +$ Cha&%e #& output per u&#t o' labor ost o' a u&#t o' labor. A&s(er: + Type: +e'#&#t#o& Pa%e: -.:

1=2. The ost e''# #e& y o' labor #s e0ual to the: A$ Mar%#&al ost o' output. B$ MPP o' labor t#)es the (a%e rate. C$ MPP o' labor "#!#"e" by the (a%e rate. +$ MRP o' labor "#!#"e" by the u&#t pr# e o' labor. Pa%e 1<

Chapter 15: The Labor Market

A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.:

1=5. /' the pr# e o' ra&berr#es #s G2= per bo,1 the (a%e rate o' ra&berry laborers #s G1= per hour1 a&" a laborer a& p# k - bo,es per hour: A$ MRP #s G-= per hour. C$ MPP #s G-= per hour. B$ Cost e''# #e& y #s -H1= bo, per "ollar. +$ All o' the abo!e. A&s(er: B Type: A&alyt# al Pa%e: -.:

1=5. /' the ost e''# #e& y o' labor e0uals .1 the&: A$ Labor osts 1== per e&t )ore tha& the re!e&ue #t %e&erates. B$ The (a%e rate #s 1== per e&t )ore tha& the pro"u t pr# e. C$ 4a h e,tra "ollar spe&t o& (a%es retur&s . u&#ts o' a""#t#o&al output. +$ The pro"u t pr# e #s .== per e&t o' the (a%e rate. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: -.:

1=9. Suppose that S#l!#a3s +a& e Stu"#o uses both labor a&" ap#tal to tea h "a& e lesso&s. E#!e& her urre&t )#, o' labor a&" ap#tal1 the ost e''# #e& y o' labor #s 5 "a& e lesso&s per "ollar a&" the ost e''# #e& y o' ap#tal #s 1 "a& e lesso& per "ollar. S#l!#a shoul": A$ @#re less labor a&" )ore ap#tal. C$ Use all ap#tal to pro"u e tables. B$ @#re less ap#tal a&" )ore labor. +$ Use all labor to pro"u e tables. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -.:

1=:. A pro"u t#o& pro ess #s "e'#&e" as: A$ The )a&u'a tur#&% o' %oo"s a&" ser!# es. B$ The )#, o' resour es use" to pro"u e output. C$ A )ea&s by (h# h labor %e&erates re!e&ue. +$ A )ea&s by (h# h 7obs are reate" 'or (orkers. A&s(er: B Type: +e'#&#t#o& Pa%e: -.<

1=<. The e''# #e& y "e #s#o& #&!ol!es hoos#&% the #&put o)b#&at#o& or pro ess that: A$ Pro"u es the %reatest output. C$ Results #& the least ost 'or a %#!e& output. B$ Results #& the lo(est output per "ollar o' #&put. +$ @as the lo(est rat#o o' MPP to #&put. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.<

T@4 4CODOMY TOMORRO6

11=. Opportu&#ty (a%e #s "e'#&e" as: A$ The #& o)e e0u#!ale&t o' a !olu&teer (orker.

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Chapter 15: The Labor Market

B$ The !alue o' %oo"s or ser!# es that a& #&"#!#"ual a& pur hase (#th the #& o)e ear&e" by (ork#&% 1 hour. C$ The h#%hest (a%e a& #&"#!#"ual (oul" ear& #& h#s or her best alter&at#!e 7ob. +$ The #& o)e a (orker loses (he& he or she 0u#ts a 7ob. A&s(er: C Type: +e'#&#t#o& Pa%e: --1

111. Opportu&#ty (a%e re'ers to the: A$ /& o)e a& #&"#!#"ual loses (he& he or she 0u#ts a 7ob. B$ @#%hest (a%e a& #&"#!#"ual (oul" ear& #& h#s or her best alter&at#!e 7ob. C$ 8alue o' %oo"s a&" ser!# es that oul" be pur hase" (#th a erta#& #&"#!#"ual3s #& o)e. +$ /& o)e e0u#!ale&t o' a !olu&teer (orker. A&s(er: B Type: +e'#&#t#o& Pa%e: --1

11.. The opportu&#ty (a%e #s o'te& a better )easure o' e,e ut#!e pay tha&: A$ MPP be ause e,e ut#!es "o &ot ha!e a& MPP. B$ MRP be ause o' the "#''# ulty #& 0ua&t#'y#&% e,e ut#!e output. C$ +er#!e" "e)a&" be ause the elast# #ty o' supply 'or a& #&"#!#"ual #s %reater tha& 1.=. +$ Opportu&#ty osts o' e,e ut#!e le#sure. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: --1

11-. 6he& a& #&"#!#"ual3s MRP #s &ot )easurable1 h#s or her )arket (a%e #s usually "eter)#&e" by: A$ The #&"#!#"ual3s MPP. C$ @#s or her opportu&#ty (a%e. B$ The sell#&% pr# e o' h#s or her output. +$ The #&"#!#"ual3s o)parable (orth. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: --1

112. 6he& a (orker3s MRP #s "#''# ult to )easure1 e.%. a olle%e pro'essor or orporate C4O1 (a%es a& be "eter)#&e" by the: A$ Supply o' labor alo&e. B$ M#&#)u) (a%e. C$ 6a%es the (orker (oul" re e#!e #& h#s or her best alter&at#!e 7ob. +$ A!era%e (a%e o' %o!er&)e&t (orkers. A&s(er: C Type: Bas# U&"ersta&"#&% Pa%e: --1

Use the 'ollo(#&% to a&s(er 0uest#o&s 115-11:: Assu)e that the pro"u t pr# e #s G2 per u&#t a&" that the hourly (a%e 'or (orkers #s G1.. De#ther pr# e &or (a%e ha&%es (#th output. Table 15.1

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Chapter 15: The Labor Market

N um ber of w orkers (p e r h o u r) 1 . 2 5

T o ta l o u tp u t (p e r h o u r) 2 1= 15 1< ..

M a rg in a l p h y s ic a l p ro d u c t (o u tp u t per w orker) ---III III III III

T o ta l re v e n u e (d o lla r s p e r ho u r) III III III III III

M a rg in a l re v e n u e p ro d u c t (d o lla r s per w orker) ---III III III III

115. /& Table 15.11 the )ar%#&al phys# al pro"u t o' the th#r" (orker h#re" #s: A$ 15 u&#ts per hour. B$ 2 u&#ts per hour. C$ - u&#ts per hour. +$ 5 u&#ts per hour. A&s(er: + Type: A&alyt# al Pa%e: -1<

115. /& Table 15.11 the )ar%#&al re!e&ue pro"u t o' the se o&" (orker h#re" #s: A$ G2 per hour. B$ G5 per hour. C$ G.2 per hour. +$ G2= per hour. A&s(er: C Type: A&alyt# al Pa%e: -1<

119. /& Table 15.11 the o&tr#but#o& to total re!e&ue o' the 'ourth (orker h#re" #s: A$ G95 per hour. B$ G15 per hour. C$ G2 per hour. +$ G1. per hour. A&s(er: B Type: A&alyt# al Pa%e: -1<

11:. /& Table 15.11 ho( )a&y (orkers shoul" be h#re"? A$ .. B$ -. C$ 2. +$ 5. A&s(er: + Type: A&alyt# al Pa%e: -.-

Use the 'ollo(#&% to a&s(er 0uest#o&s 11<-1.-: The 'ollo(#&% table sho(s ho( )a&y "e&tal appo#&t)e&ts a "e&t#st a& s he"ule per (eek base" o& the &u)ber o' a!a#lable "e&tal ha#rs. /& the spa es pro!#"e"1 o)pute the )ar%#&al phys# al pro"u t JMPP$ o' "e&tal ha#rs1 total re!e&ue1 a&" )ar%#&al re!e&ue pro"u t o' "e&tal ha#rs1 assu)#&% that the "e&t#st har%es G5= per appo#&t)e&t. Table 15.2: Dental Appointments and Re enues
D e n ta l a p p o in tm e n ts (p er w ee k) = -= 2= 25 25 M a rg in a l p h y s ic a l p ro d u c t (a p p o in tm e n ts p e r d e n ta l c h a ir ) ------IIIII IIIII IIIII IIIII T o ta l re v e n u e ( !w e e k ) III III III III III M a rg in a l re v e n u e p ro d u c t ( !d e n ta l c h a ir ) ---III III III III

D e n ta l c h a ir s = 1 . 2

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Chapter 15: The Labor Market

11<. /& Table 15..1 at (hat le!el o' e)ploy)e&t #s the )ar%#&al phys# al pro"u t o' "e&tal ha#rs Aero? A$ 1 "e&tal ha#r. B$ . "e&tal ha#rs. C$ - "e&tal ha#rs. +$ 2 "e&tal ha#rs. A&s(er: + Type: A&alyt# al Pa%e: -1<

1.=. Suppose "e&tal ha#rs a& be lease" 'or G5== per (eek. /& Table 15..1 ho( )a&y "e&tal ha#rs shoul" a pro'#t-)a,#)#A#&% "e&t#st lease? A$ 1 "e&tal ha#rs. B$ . "e&tal ha#r. C$ - "e&tal ha#rs. +$ 2 "e&tal ha#rs. A&s(er: B Type: A&alyt# al Pa%e: -.-

1.1. /& Table 15..1 #' "e&tal ha#rs oul" be lease" 'or G15= per (eek1 ho( )a&y "e&tal ha#rs shoul" a pro'#t)a,#)#A#&% "e&t#st use? A$ 1 "e&tal ha#rs. B$ . "e&tal ha#r. C$ - "e&tal ha#rs. +$ 2 "e&tal ha#rs. A&s(er: C Type: A&alyt# al Pa%e: -.-

1... /& Table 15..1 as )ore "e&tal ha#rs are a""e"1 "e&tal ha#rs: A$ Are hara ter#Ae" by e o&o)#es o' s ale. B$ 4,per#e& e #& reas#&% )ar%#&al phys# al pro"u t#!#ty. C$ @a!e "#)#&#sh#&% retur&s. +$ Cause MRP to #& rease. A&s(er: C Type: A&alyt# al Pa%e: -.1

1.-. /& Table 15..1 the )ar%#&al re!e&ue pro"u t o' "e&tal ha#rs e0uals: A$ MPP P. C$ MPP "#!#"e" by the pr# e o' "e&tal ha#rs. B$ MPP "#!#"e" by the pr# e o' appo#&t)e&ts. +$ P MR. A&s(er: A Type: A&alyt# al Pa%e: -1<

Use the 'ollo(#&% to a&s(er 0uest#o&s 1.2-1.9: Assu)e that #& Table -=-- the ost o' labor #s G2 per u&#t a&" the ost o' ap#tal #s G5 per u&#t. Use the #&'or)at#o& #& the table to a&s(er the #&"# ate" 0uest#o&s. Table 15.!
" u tp u t #u n its $ 1= .5 -: L abor #u n its $ 1 . " u tp u t #u n its $ .= 55 :5 C a p ita l #u n it s $ 1 . -

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Chapter 15: The Labor Market

1.2. /& Table 15.-1 (hat #s the ost e''# #e& y o' the se o&" u&#t o' labor? A$ 52 u&#ts per G1 o' ost. C$ 15 u&#ts per G1 o' ost. B$ .5 u&#ts per G1 o' ost. +$ 2 u&#ts per G1 o' ost. A&s(er: + Type: A&alyt# al Pa%e: -.:

1.5. /& Table 15.-1 (hat #s the ost e''# #e& y o' the th#r" u&#t o' labor? A$ -: u&#ts per G1 o' ost. C$ - u&#ts per G1 o' ost. B$ 1. u&#ts per G1 o' ost. +$ 2: u&#ts per G1 o' ost. A&s(er: C Type: A&alyt# al Pa%e: -.:

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Chapter 15: The Labor Market

1.5. /& Table 15.-1 (hat #s the ost e''# #e& y o' the se o&" u&#t o' ap#tal? A$ 5 u&#ts per G1 o' ost. C$ -5 u&#ts per G1 o' ost. B$ 55 u&#ts per G1 o' ost. +$ <.-- u&#ts per G1 o' ost. A&s(er: A Type: A&alyt# al Pa%e: -.:

1.9. /& Table 15.-1 (hat #s the ost e''# #e& y o' the th#r" u&#t o' ap#tal? A$ -:5 u&#ts per G1 o' ost. C$ 12.-- u&#ts per G1 o' ost. B$ 5 u&#ts per G1 o' ost. +$ -= u&#ts per G1 o' ost. A&s(er: B Type: A&alyt# al Pa%e: -.:

Use the 'ollo(#&% to a&s(er 0uest#o&s 1.:-1-=: %i&ure 15.1

1.:. /& C#%ure 15.11 the )o!e)e&t 'ro) po#&t E to po#&t C alo&% the labor-supply ur!e S #s a result o':
1

A$ The #& o)e e''e t o' h#%her (a%es. B$ The subst#tut#o& e''e t o' a h#%her (a%e rate. A&s(er: + Type: A&alyt# al Pa%e: -15

C$ /& rease" 7ob sat#s'a t#o&. +$ A lo(er (a%e rate.

1.<. /& C#%ure 15.11 the sh#'t #& the labor-supply ur!e 'ro) S to S )ea&s that:
1 .

A$ B$ C$ +$

The )ar%#&al ut#l#ty o' labor has "e rease". 6orkers are be#&% pa#" h#%her (a%e rates1 %#!e& the#r taste 'or (ork. The )ar%#&al ut#l#ty o' labor relat#!e to le#sure has #& rease". The "e)a&" 'or labor has #& rease" a&" th#s e& oura%es )ore labor-'or e part# #pat#o&.

A&s(er: C Type: A&alyt# al Pa%e: -15

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Chapter 15: The Labor Market

1-=. /& C#%ure 15.11 (h# h o' the 'ollo(#&% (oul" not result #& a sh#'t #& the labor-supply ur!e 'ro) S to S 1
1 .

ceteris paribus? A$ A& #& rease #& the (a%e rate. B$ Sa'er a&"Hor )ore pleasa&t (ork#&% o&"#t#o&s. C$ A& #& rease" se&se o' atta h)e&t to the 7ob. +$ Ma&a%e)e&t a t#o&s (h# h #)pro!e the )orale o' (orkers. A&s(er: A Type: A&alyt# al Pa%e: -15

Use the 'ollo(#&% to a&s(er 0uest#o&s 1-1-1-.: %i&ure 15.2

* U A D T /T Y O C L A B O R

1-1. Re'er to C#%ure 15... 6he& a labor supply ur!e #s shape" l#ke the ur!e #& C#%ure 15.. Jrather tha& ba k(ar" be&"#&%$1 #t #s a& #&"# at#o& that the: A$ Subst#tut#o& e''e t "o)#&ates at all (a%e rates. B$ /& o)e e''e t "o)#&ates at all (a%e rates. C$ Subst#tut#o& e''e t "o)#&ates at lo( (a%e rates a&" the #& o)e e''e t "o)#&ates at h#%her (a%e rates. +$ Mar%#&al ut#l#ty o' #& o)e #& reases as a perso& (orks )ore hours. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -15

1-.. The labor supply ur!e #& C#%ure 15.. #s up(ar" slop#&% be ause: A$ /t takes a h#%her (a%e to #&"u e (orkers to o''er )ore labor 'or sale. B$ O' the #& reas#&% opportu&#ty ost o' labor as le#sure t#)e "e reases. C$ The "e reas#&% )ar%#&al ut#l#ty o' #& o)e as a perso& (orks )ore hours. +$ All o' the abo!e. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -15

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Chapter 15: The Labor Market

Use the 'ollo(#&% to a&s(er 0uest#o&s 1---1-2: %i&ure 15.!

T o ta l O u tp u t
O U TPU T

M a r% #& a l P h y s # a l P r o " u t = D U M B 4R O C 6 O RB 4R S

1--. Re'er to C#%ure 15.-. /' (a%es are Aero J(orkers are !olu&teers$1 ho( )a&y (orkers shoul" th#s '#r) h#re? A$ ;ero. S#& e )ar%#&al osts are Aero1 )ar%#&al be&e'#ts shoul" also be Aero. B$ The &u)ber o' (orkers (here the MPP #s at a peak. C$ The &u)ber o' (orkers (here the MPP be o)es Aero. +$ Theoret# ally1 a& #&'#&#te &u)ber o' (orkers. A&s(er: C Type: Co)ple, U&"ersta&"#&% Pa%e: -.1

1-2. /& C#%ure 15.-1 "#)#&#sh#&% retur&s be%#&s (here the: A$ MPP ur!e be%#&s to "e l#&e. C$ Total output ur!e be%#&s to "e l#&e. B$ MPP e0uals Aero. +$ MPP be o)es less tha& Aero. A&s(er: A Type: A&alyt# al Pa%e: -.1

Use the 'ollo(#&% to a&s(er 0uest#o&s 1-5-1-5: %i&ure 15.'

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Chapter 15: The Labor Market

6 A E 4 RAT4

G1==

L a b o r s u p p ly o & 'ro & t#& % '#r)

M a r% #& a l re! e & u e p ro " u t <= * U A D T /T Y O C L A B O R

1-5. Re'er to C#%ure 15.2. Th#s '#r) (#ll h#re )ore (orkers #': A$ 6orker pro"u t#!#ty #& reases. B$ The pr# e o' the pro"u t be#&% pro"u e" #& reases. C$ The (a%e rate "e reases. +$ All o' the abo!e. A&s(er: + Type: Co)ple, U&"ersta&"#&% Pa%e: -.-

1-5. /' (a%es "roppe" belo( G1== per per#o"1 ceteris paribus1 the '#r) "ep# te" #& C#%ure 15.2 shoul": A$ @#re )ore (orkers. B$ @#re 'e(er (orkers. C$ @#re the sa)e &u)ber o' (orkers be ause the !alue o' the (orkers to the '#r) has&3t ha&%e". +$ Dot h#re a&y (orkers. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -.-

Use the 'ollo(#&% to a&s(er 0uest#o&s 1-9-12=: %i&ure 15.5

:=

<=

<5 1=.

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Chapter 15: The Labor Market

1-9. /& C#%ure 15.51 the e0u#l#br#u) (a%e rate #s: A$ G1. per hour. B$ G1= per hour. C$ G: per hour. A&s(er: C Type: A&alyt# al Pa%e: -.5

+$ G5 per hour.

1-:. /& C#%ure 15.51 u&e)ploye" labor at the e0u#l#br#u) (a%e #s e0ual to: A$ -2 (orkers. B$ .: (orkers. C$ ;ero (orkers. +$ 1= (orkers. A&s(er: C Type: A&alyt# al Pa%e: -.5

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Chapter 15: The Labor Market

1-<. /& C#%ure 15.51 a )#&#)u) (a%e o' G1= (#ll result #&: A$ A shorta%e o' := (orkers. C$ A shorta%e o' <= hours. B$ A surplus o' 15 (orkers. +$ A surplus o' 1= (orkers. A&s(er: B Type: A&alyt# al Pa%e: -.5

12=. /& C#%ure 15.51 a )#&#)u) (a%e o' G5 (#ll result #&: A$ A shorta%e o' 15 (orkers. C$ A shorta%e o' .. (orkers. B$ A surplus o' 1= (orkers. +$ Do shorta%e or surplus o' (orkers A&s(er: + Type: A&alyt# al Pa%e: -.5

Use the 'ollo(#&% to a&s(er 0uest#o&s 121-12.: %i&ure 15.(

G 5 .1 5

6 A E 4 RAT4 J" o lla rs p e r h o u r $

G 5 .1 5

L abor "e) a&" <== 15== .===

* U A D T /T Y O C L A B O R J( o rk e rs p e r h o u r$

121. Re'er to C#%ure 15.5. The &u)ber o' (orkers u&e)ploye" #& th#s o)pet#t#!e )arket at a (a%e rate o' G5.15 per hour #s: A$ 9== (orkers. B$ 15== (orkers. C$ 11== (orkers. +$ ;ero (orkers. A&s(er: + Type: Co)ple, U&"ersta&"#&% Pa%e: -.5

12.. The &u)ber o' people u&e)ploye" #& the o)pet#t#!e )arket "ep# te" #& C#%ure 15.5 at a (a%e o' G5.15 per hour #s: A$ 15==. B$ 11==. C$ 9==. +$ ;ero. A&s(er: B Type: Bas# U&"ersta&"#&% Pa%e: -.5

Pa%e -=

Chapter 15: The Labor Market

The 'ollo(#&% )ult#ple- ho# e 0uest#o&s re0u#re r#t# al th#&k#&% about "n the News a&" #orld $iew art# les that appeare" #& the te,t.

12-. O&e #orld $iew art# le #s t#tle" K/& Mos o(1 .51=== Apply 'or 5-= >obs at M +o&al"3s.K Suppose M +o&al"3s re e#!es o&ly 1= appl# a&ts at a (a%e o' 1= rubles per "ay. @o(e!er1 #' #t "oubles the (a%e to .= rubles per "ay1 the &u)ber o' appl# a&ts r#ses to 1==. Cor )ost o' the appl# a&ts1 at .= rubles per "ay (e a& o& lu"e that: A$ The#r "er#!e" "e)a&" #s belo( the labor supply. B$ The#r )ar%#&al ut#l#ty o' #& o)e #s %reater tha& the#r )ar%#&al ut#l#ty o' le#sure. C$ The#r "e reas#&% )ar%#&al ut#l#ty 'or )ore (ork out(e#%hs #& reas#&% opportu&#ty osts o' labor. +$ /& reas#&% opportu&#ty osts o' labor out(e#%h the#r "e reas#&% )ar%#&al ut#l#ty 'or )ore (ork. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -1-

122. O&e #orld $iew art# le #s t#tle" K/& Mos o(1 .51=== Apply 'or 5-= >obs at M +o&al"3s.K Suppose M +o&al"3s re e#!es o&ly 1= appl# a&ts 'or #ts &e( Mos o( M +o&al"3s at a (a%e o' 1= rubles per "ay. @o(e!er1 #' #t "oubles the (a%e to .= rubles per "ay1 the &u)ber o' appl# a&ts r#ses to 1==. /& th#s ase the labor-supply ur!e #s: A$ @or#Ao&tal1 #&"# at#&% a o)pet#t#!e labor )arket. B$ Up(ar" slop#&%. C$ 8ert# al1 #&"# at#&% a& #&elast# )arket. +$ +o(&(ar" slop#&%. A&s(er: B Type: Co)ple, U&"ersta&"#&% Pa%e: -1-

125. O&e #orld $iew art# le #s t#tle" K/& Mos o(1 .51=== Apply 'or 5-= >obs at M +o&al"3s.K The 'a t that s#%&#'# a&tly )ore people appl#e" 'or 7obs tha& there (ere 7obs a!a#lable #)pl#es that the G..5= per hour (a%e be#&% pa#" (as: A$ Abo!e the e0u#l#br#u) (a%e. B$ Belo( the e0u#l#br#u) (a%e. C$ 40ual to the )#&#)u) (a%e be ause the o)pa&y (as able to '#ll all 5-= pos#t#o&s. +$ /)poss#ble to tell 'ro) the #&'or)at#o& pro!#"e". A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: -1-

125. O&e "n the News art# le #s t#tle" KMBA Era"s Seek Challe&%e at 6ork1 Dot >ust B#% Bu ks.K /& the hea"l#&e1 (h# h o' the 'ollo(#&% "eter)#&a&ts o' labor supply #s )ost e,pl# #tly )e&t#o&e"? A$ Tastes. B$ Ta,es. C$ Pr# es o' o&su)er %oo"s. +$ 4,pe tat#o&s re%ar"#&% pr# es o' o&su)er %oo"s. A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -12

129. O&e "n the News art# le #s t#tle" KMa7or#&% #& Mo&ey.K The salar#es ear&e" o' olle%e %ra"uates "epe&"s upo&: A$ The#r MRP o' labor. B$ The#r tastes. C$ The#r e,pe tat#o&s. +$ The elast# #ty o' labor supply.

Pa%e -1

Chapter 15: The Labor Market

A&s(er: A Type: Co)ple, U&"ersta&"#&% Pa%e: -1:

12:. A& "n The News art# le t#tle" KTop +ollars1 Top Coa hesK #&"# ates that u&#!ers#ty 'ootball oa hes are pa#" o&s#"erably )ore tha& u&#!ers#ty pres#"e&ts. Th#s a& be e,pla#&e" by the 'a t that: A$ Coa hes are )ore popular. B$ Coa hes ha!e a h#%her le!el o' e"u at#o&. C$ Coa hes ha!e bee& e)ploye" at u&#!ers#t#es lo&%er tha& the pres#"e&ts. +$ Coa hes br#&% )ore re!e&ue to a u&#!ers#ty tha& the pres#"e&ts. A&s(er: + Type: Bas# U&"ersta&"#&% Pa%e: -.2

12<. A& "n The News art# le t#tle" K6hat3s a Pres#"e&t 6orth?K su%%ests that the pres#"e&t (oul" )ake a lot )ore )o&ey #' he (ere pa#" as C4Os are pa#". Cor )a&y C4Os1 pay #s base" o& the: A$ Opportu&#ty (a%e. C$ 8alue o' the o)pa&y. B$ 40u#l#br#u) (a%e. +$ Supply a&" "e)a&" #& the )arket. A&s(er: A Type: Bas# U&"ersta&"#&% Pa%e: --.

LABOR SUPPLY

C 15=. /& %e&eral1 #t a& be sa#" that le#sure #s a K'ree %oo".K A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -1-

C 151. The opportu&#ty ost o' (ork#&% #s the a)ou&t o' le#sure t#)e that )ust be %#!e& up #& or"er to (ork. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -1-

C 15.. The ost o' a& hour o' (ork a t#!#ty #s the (a%es pa#" 'or that hour o' (ork. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -1-

C 15-. A "e reas#&% )ar%#&al ut#l#ty o' #& o)e o&tr#butes to the up(ar" slope o' a& #&"#!#"ual3s supply ur!e. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -1-

C 152. @#%her (a%e rates are re0u#re" to o)pe&sate 'or the #& reas#&% opportu&#ty ost o' labor. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -1-

Pa%e -.

Chapter 15: The Labor Market

C 155. The )ar%#&al ut#l#ty o' #& o)e a& #& rease as you ear& )ore. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -1-

C 155. /' the #& o)e e''e t "o)#&ates the subst#tut#o& e''e t1 the supply ur!e o' labor (#ll be up(ar" slop#&%. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -15

C 159. /' the #& o)e e''e t "o)#&ates the subst#tut#o& e''e t1 the labor supply ur!e (#ll be ba k(ar" be&"#&%. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -15

MARB4T SUPPLY

C 15:. The "eter)#&a&ts o' labor supply #& lu"e the ost o' other 'a tors o' pro"u t#o&. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -15

C 15<. The elast# #ty o' labor supply #s "eter)#&e" pr#)ar#ly by the "e)a&" 'or labor. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -19

C 15=. /&st#tut#o&al o&stra#&ts1 su h as #))#%rat#o& pol# #es1 a''e t the shape a&" lo at#o& o' the labor supply ur!e. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -19

LABOR +4MAD+

C 151. The "e)a&" 'or labor #s "er#!e" 'ro) the "e)a&" 'or the %oo"s a&" ser!# es labor a& pro"u e. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -19

C 15.. The )ar%#&al phys# al pro"u t o' a 'a tor #s e0ual to the a""#t#o&al re!e&ue %e&erate" 'ro) e)ploy#&% 1 a""#t#o&al u&#t o' the 'a tor. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -1<

Pa%e --

Chapter 15: The Labor Market

C 15-. The )ar%#&al phys# al pro"u t ur!e #s the "e)a&" ur!e 'or labor. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -1<

C 152. The )ar%#&al re!e&ue pro"u t sets a& upper l#)#t to the (a%e rate a& e)ployer (#ll pay. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -1<

C 155. The la( o' "#)#&#sh#&% retur&s )ea&s that )ar%#&al osts (#ll e!e&tually r#se as a '#r) pro"u es )ore. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.=

C 155. /' the MPP #s "e l#&#&%1 ceteris paribus1 the MRP )ust "e l#&e. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.1

C 159. /' )ar%#&al re!e&ue pro"u t #s "e l#&#&%1 the )ar%#&al phys# al pro"u t )ust "e l#&e. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.1

C 15:. The )ar%#&al phys# al pro"u t sets a lo(er l#)#t to the (a%e rate a& e)ployer (#ll pay. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.1

C 15<. As the )ar%#&al phys# al pro"u t #& reases1 e)ployers &ee" 'e(er (orkers a&" (a%e rates 'all. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -..

A C/RM3S @/R/DE +4C/S/OD

C 19=. A pro"u er #& a o)pet#t#!e labor )arket (#ll o&t#&ue h#r#&% (orkers u&t#l (a%e rate 'alls belo( the MRP. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.-

C 191. A '#r) that #s a per'e t o)pet#tor #& the labor )arket a& h#re all the labor #t &ee"s at the pre!a#l#&% )arket (a%e.

Pa%e -2

Chapter 15: The Labor Market

A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.-

C 19.. /' a '#r) '#&"s the MRP #s abo!e the (a%e rate1 #t shoul" ut ba k the &u)ber o' e)ployees. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.-

C 19-. A pro'#t-)a,#)#A#&% '#r) shoul" o&t#&ue to h#re (orkers u&t#l the MRP has "e l#&e" to the le!el o' the )arket (a%e rate #& a o)pet#t#!e labor )arket. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.-

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Chapter 15: The Labor Market

C 192. Cor (a%es to be h#%her (#thout sa r#'# #&% 7obs1 pro"u t#!#ty )ust "e rease. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.5

C 195. A "e rease #& labor pro"u t#!#ty (#ll1 ceteris paribus1 br#&% about a& #& rease #& the 0ua&t#ty o' labor "e)a&"e". A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.5

MARB4T 4*U/L/BR/UM

C 195. The #&terse t#o& o' the labor )arket supply a&" )arket "e)a&" ur!es establ#shes the )#&#)u) (a%e. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.5

C 199. 6he& the )#&#)u) (a%e #s set abo!e the )arket e0u#l#br#u) (a%e1 #t has &o e''e t o& (a%es #& that )arket. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.5

C 19:. 6he& the )#&#)u) (a%e #s set belo( the )arket e0u#l#br#u) (a%e1 #t "oes &ot a''e t the )arket. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.9

C 19<. A& e''e t#!e )#&#)u) (a%e (#ll #& rease the 0ua&t#ty "e)a&"e" o' labor. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.9

C 1:=. A& e''e t#!e )#&#)u) (a%e reates a surplus o' labor a&" #& reases the le!el o' u&e)ploy)e&t. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.9

C@OOS/DE AMODE /DPUTS

C 1:1. Cost e''# #e& y #s a h#e!e" (he& the MPP o' a (orker relat#!e to the (orker3s (a%e #s the sa)e 'or all (orkers. A&s(er: True Type: Bas# U&"ersta&"#&% Pa%e: -.:

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Chapter 15: The Labor Market

C 1:.. The )ost ost-e''# #e&t 'a tor o' pro"u t#o& #s the o&e that pro"u es the %reatest output per u&#t o' #&put. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.:

C 1:-. The )ost ost-e''# #e&t #&put #s the o&e (h# h a& pro"u e the )ost re!e&ue per u&#t o' #&put. A&s(er: Calse Type: Bas# U&"ersta&"#&% Pa%e: -.:

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Chapter 15: The Labor Market

Ans)ers to Table
Table 15.1 Ans)er Number of workers (per hour) 1 . 2 5 Total output (per hour) 2 1= 15 1< .. Marginal physical product (output per worker) ---5 5 2 Total revenue (dollars per hour) 15 2= 5= 95 :: Marginal revenue product (dollars per worker) ---.2 .= 15 1.

Table 15.2: Dental Appointments and Re enues Ans)er Mar%#&al phys# al +e&tal appo#&t)e&ts Jper (eek$ = -= 2= 25 25

+e&tal ha#rs = 1 . 2

pro"u t Jappo#&t)e&ts per "e&tal ha#r$ -= 1= 5 =

Total re!e&ue JGH(eek$ = 15== .=== ..5= ..5=

Mar%#&al re!e&ue pro"u t JGH"e&tal ha#r$ 15== 5== .5= =

Pa%e -: