1. An increase in the wage will have a relatively small effect on the quantity o
ID: 1091640 • Letter: 1
Question
1. An increase in the wage will have a relatively small effect on the quantity of labor demanded when:
A. the price elasticity of demand for the final product is relatively small
B. other inputs are close substitutes for this category of labor
C. labor costs are a large share of total costs
D. all of the above
E. none of the above
2. A national labor marketing is more likely to exist when:
A. there are many employers and employees in most regions
B. there are relatively few employers and employees in most regions
C. most high-level positions in firms are filled by promotions within
D. none of the above
3. Over the course of the business cycle, employment is expected to be more stable for those workers who possess large investments in:
A. general training
B. firm-specific training
C. either general or firm-specific training
D. none of the above
4. Statistical discrimination is expected to be _____ in firms that rely on the use of internal labor markets.
A. more likely
B. less likely
C. equally likely
5. An increase in the mandated overtime premium is expected to cause the number of workers employed to:
A. rise as long as the substituion effect outweighs the scale effect
B. rise as long as the scale effect outweighs the substitution effect
C. remain unchanged
D. fall
6. The substitution effect associated with a decrease in the wage is expected to cause the quantity of labor demanded by a typical firm to :
A. increase
B. decrease
C. remain constant
D. change in a manner that cannot be predicted without additional info
7. The scale effect associated with an increase in the wage is expected to cause the quantity of labor demanded nby a typical firm to:
A. increase
B. decrease
C. remain constant
D. change in a manner that cannot be predicted without additional info
8. As the wage rate rises:
A. the substituion effect reduces the quantity of labor demanded
B. the scale effect reduces the quantity of labor demanded
C. both are correct
D. none of the above
9. Which of the following does not correctly characterize the general trends in the labor force participation rates over the past 50 years?
A. labor force participation rate has declined for married women
B. labor force participation rate has declined for males between the ages of 18 and 21.
C. labor force participation rate has declined for males aged 65 and above.
10. Suppose that a union is able to successfully organize a boycott of products produced by workers in foreign sweatshops. Will this affect the own-wage elasticity of labor demand for union workers? If so, how? Which Hicks-Marshall law applies? Does the boycott affect the substitution effect of the scale effect? Explain.
11. Explain how the introduction of a higher minimum wage will affect total employment under each of the following conditions:
perfectly competitive labor market with complete coverage
perfectly competitive labor market with incomplete coverage
a monopsony market
12. Explain the relationship between the wage rate and the marginal factor cost in a monopsony market. Is the wage rate equal to the marginal factor cost? If so, explain why this is they case, or explain why not.
13. Explain the reasons for the increase in the female labor for participation rates since the 1940s.
Explanation / Answer
THREE RESPONSES TO AN INCREASE IN WAGE ($10 to $12 per hour)
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