Question 1

Refer to the total product curve shown in the graph, and assume a competitive labor market. If the firm can sell widgets for $12, then what is the maximum amount it will pay the fourth worker each day?

Accepted Answer

A)  $24
B)  $48
C)  $61
D)  $732E) A) and B)
F) B) and C)

Question 2

Since 1960, real hourly compensation in the United States has approximately

Accepted Answer

A)  remained the same.
B)  risen by 40 percent.
C)  doubled.
D)  tripled.E) None of the above
F) C) and D)

Question 3

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

Accepted Answer

A)  "purchases" labor in a purely competitive labor market.
B)  is a monopsonist.
C)  faces a perfectly inelastic labor supply curve.
D)  has a perfectly elastic labor demand curve.E) A) and D)
F) All of the above

Question 4

Commissions or royalties may be an inexpensive way of reducing shirking on a job when the costs of monitoring work performance are high.

Accepted Answer

A) True 
 B)False

Question 5

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Accepted Answer

A) True 
 B)False

Question 6

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

Accepted Answer

A)  $6
B)  $7
C)  $8
D)  $9E) A) and D)
F) A) and C)

Question 7

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

Accepted Answer

A)  "purchases" labor in a purely competitive labor market.
B)  is a monopsonist.
C)  faces a perfectly inelastic labor supply curve.
D)  has a perfectly elastic labor demand curve.E) All of the above
F) A) and B)

Question 8

If the nominal wages of carpenters rose by 1 percent in 2019 and the price level increased by 4 percent, then the real wages of carpenters

Accepted Answer

A)  decreased by 4 percent.
B)  decreased by 3 percent.
C)  increased by 3 percent.
D)  increased by 5 percent.E) A) and B)
F) B) and D)

Question 9

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Accepted Answer

A)  be unaffected.
B)  rise by 4 percent.
C)  rise by 8 percent.
D)  fall by 4 percent.E) B) and C)
F) None of the above

Question 10

Other things constant, which of the following is inversely related to inflation?

Accepted Answer

A)  nominal wage only
B)  real wage only
C)  average price level in the economy
D)  both nominal wage and real wageE) All of the above
F) A) and C)

Question 11

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day?

Accepted Answer

A)  3
B)  4
C)  6
D)  5E) A) and B)
F) A) and C)

Question 12

Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of

Accepted Answer

A)  total output.
B)  stock of capital.
C)  output per worker.
D)  international trade.E) A) and B)
F) None of the above

Question 13

A profit-maximizing firm will

Accepted Answer

A)  expand employment if marginal revenue product exceeds marginal resource cost.
B)  reduce employment if marginal revenue product exceeds marginal resource cost.
C)  expand employment if marginal revenue product equals marginal resource cost.
D)  reduce employment if marginal revenue product equals marginal resource cost.E) A) and D)
F) None of the above

Question 14

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table.  If the wage rate decreases from $17 to $13, by how much will the firm expand employment?

Accepted Answer

A)  5 workers
B)  4 workers
C)  3 workers
D)  2 workersE) A) and D)
F) A) and B)

Question 15

Refer to the given data. This firm's product price is

Accepted Answer

A)  $8.
B)  $4.
C)  $3.
D)  $12.E) A) and D)
F) A) and C)

Question 16

Education is a form of human capital, and it helps explain wage differentials.

Accepted Answer

A) True 
 B)False

Question 17

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

Accepted Answer

A) True 
 B)False

Question 18

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $0.5 per day?

Accepted Answer

A)  4
B)  5
C)  7
D)  6E) B) and C)
F) A) and D)

Question 19

Marginal revenue product (MRP) of labor refers to the

Accepted Answer

A)  increase in total revenue resulting from selling an additional unit of output.
B)  amount by which a firm's total resource cost increases when it employs one more unit of labor.
C)  increase in total revenue resulting from hiring one more unit of labor.
D)  price at which additional units of labor can be employed in a monopsonized labor market.E) All of the above
F) C) and D)

Question 20

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

Accepted Answer

A) True 
 B)False

Exam 17: Wage Determination

Refer to the given data. This firm's product price is

Correct AnswerverifiedShow Answer

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

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Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of

Correct AnswerverifiedShow Answer

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Correct AnswerverifiedShow Answer

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

Correct AnswerverifiedShow Answer

Commissions or royalties may be an inexpensive way of reducing shirking on a job when the costs of monitoring work performance are high.

Correct AnswerverifiedShow Answer

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table. If the wage rate decreases from $17 to $13, by how much will the firm expand employment?

Correct AnswerverifiedShow Answer

Education is a form of human capital, and it helps explain wage differentials.

Correct AnswerverifiedShow Answer

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

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Marginal revenue product (MRP) of labor refers to the

Correct AnswerverifiedShow Answer

Since 1960, real hourly compensation in the United States has approximately

Correct AnswerverifiedShow Answer

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $0.5 per day?

Correct AnswerverifiedShow Answer

If the nominal wages of carpenters rose by 1 percent in 2019 and the price level increased by 4 percent, then the real wages of carpenters

Correct AnswerverifiedShow Answer

Refer to the total product curve shown in the graph, and assume a competitive labor market. If the firm can sell widgets for $12, then what is the maximum amount it will pay the fourth worker each day?

Correct AnswerverifiedShow Answer

A profit-maximizing firm will

Correct AnswerverifiedShow Answer

Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm

Correct AnswerverifiedShow Answer

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day?

Correct AnswerverifiedShow Answer

Other things constant, which of the following is inversely related to inflation?

Correct AnswerverifiedShow Answer

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

Correct AnswerverifiedShow Answer

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

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