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1 | |
The labor force participation rate gives the fraction of the |
| | A) | population that is in the labor force. |
| | B) | percent of people in the labor force who are employed. |
| | C) | the percent of people in the entire population (aged 16 or more) that is employed. |
| | D) | the percent of people not in the labor force who are employed. |
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2 | |
The unemployment rate is |
| | A) | the fraction of the population that is not working. |
| | B) | calculated as the number of unemployed divided by the number of employed plus the number of unemployed. |
| | C) | both (A) and (B). |
| | D) | neither (A) nor (B). |
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3 | |
The term hidden unemployment indicates that many workers who are |
| | A) | unemployed are often unwilling to apply for government assistance and are not counted in the calculation of the unemployment rate. |
| | B) | working are employed fewer hours than they desire and thus have unemployed hours that are not counted in the calculation of the unemployment rate. |
| | C) | unemployed become discouraged and leave the labor force and are not counted in the calculation of the unemployment rate. |
| | D) | none of the above. |
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4 | |
The marginal utility of leisure is |
| | A) | the change in utility for an additional hour of leisure holding consumption constant. |
| | B) | the change in leisure as hours worked increases, holding consumption fixed. |
| | C) | both (A) and (B). |
| | D) | neither (A) nor (B). |
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5 | |
Under normal conditions, the marginal rate of substitution |
| | A) | diminishes as the quantity of leisure consumed increases. |
| | B) | is equal to the absolute value of the slope of the indifference curve. |
| | C) | is defined by |MUL/MUC|. |
| | D) | all of the above. |
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6 | |
Suppose Larry's wage (W) is $50 an hour, consumption (C) is measured in dollars, non-labor income (V) is $10 a day, and he has 16 hours in the day to work (H) or leisure (L). When consumption is graphed on the y-axis, the slope of the budget constraint is |
| | A) | 50. |
| | B) | 40. |
| | C) | 16. |
| | D) | 10. |
| | E) | 5. |
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7 | |
Suppose Larry's wage (W) is $6 an hour, his non-labor income (V) is $15 a day, consumption C is measured in dollars, and he has 18 hours in the day to work (H) or leisure (L). The equation of the budget constraint is |
| | A) | C=123-6L. |
| | B) | C=123-6H. |
| | C) | C=108-6L. |
| | D) | C=108-6H. |
| | E) | C=123+6L. |
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8 | |
We know that when an individual is maximizing utility |
| | A) | the ratio of the marginal utilities (MUL/MUC) equals the wage (W) if the individual works. |
| | B) | the ratio of the marginal utilities (MUL/MUC) is greater than the wage (W) if the individual does not work. |
| | C) | each hour of leisure is valued at the level of the (take-home) wage. |
| | D) | both (A) and (B). |
| | E) | all of the above. |
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9 | |
If the wage increases from below Larry's reservation wage to above Larry's reservation wage, |
| | A) | Larry will leisure more. |
| | B) | Larry will work less. |
| | C) | Larry will enter the labor force. |
| | D) | Larry will leave the labor force. |
| | E) | any of the above could be true. |
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10 | |
The reservation wage |
| | A) | is equal to MUL/MUC when the individual does not work. |
| | B) | is the wage such that a wage increase causes an individual to work more while a wage decrease causes the individual to work less. |
| | C) | is the slope of the indifference curve tangent to the budget constraint. |
| | D) | indicates the value of work time. |
| | E) | all of the above |
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