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| 1.
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As wages increase: |
| | A) | the opportunity cost of leisure decreases. |
| | B) | the opportunity cost of leisure increases. |
| | C) | more individuals are likely to travel long distance by bus rather than by plane. |
| | D) | more individuals are likely to prepare their meals "from scratch" rather than using prepared foods. |
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| 2.
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The supply curve of labor: |
| | A) | does not exist. People cannot be studied as if they were ordinary commodities. |
| | B) | is vertical since everyone has to work. |
| | C) | is horizontal since everyone is paid the going wage. |
| | D) | is normally upward sloping (up to a point). |
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| 3.
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The demand curve for labor: |
| | A) | does not exist. You can't apply the tools of economics to the study of human interaction. |
| | B) | is downward sloping. |
| | C) | is vertical since firms have to have employees to get the job done no matter what. |
| | D) | is horizontal since employees get paid the going market wage. |
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| 4.
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When we say that the demand for labor is a derived demand, we mean: |
| | A) | the demand is based on commonly derived ethical norms applicable to our society. |
| | B) | the demand is derived from commonly understood rules of economic theory. |
| | C) | the demand is derived from or based on the value of the additional goods and services that are produced when a firm hires labor. |
| | D) | that the demand is a derivative of the overall socio-economic and political system including all of its philosophical aspects. |
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| 5.
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Highly-paid professional athletes are generally: |
| | A) | paid a salary approximating their marginal revenue product. |
| | B) | paid considerably more than their marginal revenue product. |
| | C) | paid an amount equal to their wage potential in their best alternative career. |
| | D) | None of the above is true. |
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| 6.
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The demand curve for labor is downward sloping because: |
| | A) | firms are greedy and only hire more workers if they can get a deal. |
| | B) | average productivity is rising. |
| | C) | marginal productivity is rising. |
| | D) | marginal productivity is falling. |
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| 7.
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A firm will only hire an additional worker if: |
| | A) | marginal revenue product is less than average revenue product. |
| | B) | marginal revenue product is increasing; otherwise, the additional worker will diminish productivity. |
| | C) | marginal revenue product is less than the additional cost associated with hiring the worker. |
| | D) | marginal revenue product is greater than or equal to the additional cost associated with hiring the worker. |
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| 8.
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If a firm hires an additional worker: |
| | A) | total output will rise provided marginal product is greater than zero. |
| | B) | total output will increase only if marginal product is also increasing. |
| | C) | total output will increase but only if marginal product is negative. |
| | D) | All of the above are true. |
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| 9.
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The demand curve for labor: |
| | A) | lies above and to the right of the marginal revenue product for labor. |
| | B) | is vertical since all firms must hire workers to get the job done. |
| | C) | is identical to the marginal revenue product of labor curve. |
| | D) | is derived from the marginal product of labor curve but is generally more elastic than the marginal revenue product curve. |
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| 10.
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An increase in the minimum wage tends to have the following effects: |
| | A) | increases the wages of workers and the number of workers with jobs. |
| | B) | causes a shortage of workers since increased numbers of workers seek jobs. |
| | C) | decreases the number of workers obtaining jobs while increasing the number of workers seeking jobs. |
| | D) | None of the above is true. |
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| 11.
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The supply of labor curve relates the quantity of labor supplied to the: |
| | A) | quantity demanded. |
| | B) | wage rate. |
| | C) | number of workers. |
| | D) | None of the above is true. |
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| 12.
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Initially, as wages increase ______ labor is supplied. |
| | A) | more |
| | B) | less |
| | C) | the same amount of |
| | D) | None of the above is true. |
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| 13.
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The demand for labor is a ______ demand. |
| | A) | fixed |
| | B) | variable |
| | C) | derived |
| | D) | constant |
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| 14.
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The law of diminishing returns says that marginal product will ______ as more workers are added. |
| | A) | increase |
| | B) | decrease |
| | C) | not change |
| | D) | None of the above is true. |
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| 15.
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Over time an increase in the number of workers hired will tend to _______ marginal physical product. |
| | A) | increase |
| | B) | decrease |
| | C) | not change |
| | D) | double |
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| 16.
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The change in total revenue from adding one more resource is called: |
| | A) | marginal physical product. |
| | B) | marginal revenue product. |
| | C) | marginal revenue. |
| | D) | marginal cost. |
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| 17.
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A minimum wage ______ the quantity of labor supplied and ______ the quantity of labor demanded. |
| | A) | increases; increases |
| | B) | decreases; decreases |
| | C) | increases; decreases |
| | D) | decreases; increases |
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| 18.
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A minimum wage tends to create a market: |
| | A) | equilibrium. |
| | B) | surplus. |
| | C) | shortage. |
| | D) | None of the above is true. |
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| 19.
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In terms of annual earnings, which is the highest paid major for college graduates? |
| | A) | Engineering |
| | B) | Accounting |
| | C) | Sociology |
| | D) | Economics |
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| 20.
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When total output decreases, marginal physical product is ______. |
| | A) | positive |
| | B) | negative |
| | C) | constant |
| | D) | None of the above is true. |
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| 21.
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Which of the following does not illustrate the concept of derived demand? |
| | A) | An increase in the demand for shoes will increase the demand for leather. |
| | B) | Fewer people want to build houses in the spring, therefore the demand for lumber decreases then. |
| | C) | The development of an alternative fuel made from corn leads to an increase in the demand for corn. |
| | D) | An increased use of robots leads to an increase in the demand for labor. |
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| 22.
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Which of the following terms measures the change in total revenue that occurs when one additional worker is hired? |
| | A) | marginal physical product |
| | B) | marginal revenue product |
| | C) | marginal cost |
| | D) | marginal revenue |
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| 23.
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If the President of the U.S. was paid on the basis of his marginal revenue product, his salary would be about: |
| | A) | $0. |
| | B) | $50,000. |
| | C) | $400,000. |
| | D) | $38-58 million. |
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| 24.
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The federal minimum wage is currently _____ per hour and was last raised in _____. |
| | A) | $4.75; 1996 |
| | B) | $5.00; 1999 |
| | C) | $5.15; 1997 |
| | D) | $6.00; 2000 |
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| 25.
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According to one of the Headlines in the chapter, many young women say they don't have enough _____ and would be willing to give up some _____ to get it. |
| | A) | income; leisure time |
| | B) | leisure time; income |
| | C) | Both of the above are true. |
| | D) | None of the above is true. |
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