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Multiple Choice Quiz
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1.
Marginal product of labour is a measure of the __________ output associated with __________.
A)extra; hiring an extra worker
B)average; the average worker
C)extra; the total employment level
D)average; hiring an extra worker
E)extra; the average worker
2.
The optimal number of workers for a perfectly competitive firm to hire occurs when:
A)total labour costs equal total revenues.
B)the lowest possible wage is accepted by workers.
C)the wage rate equals the marginal product of the last worker.
D)the wage rate equals the value of marginal product of the last worker.
E)the largest output is achieved.
3.
To derive the labour demand curve for a particular market, one
A)adds up the value of marginal product curves at all labour usage levels.
B)adds up the marginal product curves at the various wage rates.
C)adds up the value of marginal product curves at the various wage rates.
D)adds up the available workers at the various wage rates.
E)subtracts the value of marginal product curves from the various wage rates.
4.
Josie has an undergraduate degree in economics and has been working as a utility rate analyst at the local electricity utility. If she continues on her present career path, the present value of her lifetime earnings is €250,000. If she takes two years off and gets an MS degree in economics, the present value of her lifetime earnings is €275,000. The annual cost of an MS degree in economics is €15,000 and the interest rate is 8%. Based on the discounted (present value) benefit and cost of acquiring a MS degree in economics, Josie should:
A)get the MS degree because her lifetime earning will increase €25,000.
B)get an MS degree because the present value of the benefit exceeds the present value of the cost.
C)not get the MS degree because the total cost exceeds the total benefit.
D)not get the MS degree because the present value of cost exceeds the present value of benefit.
E)not enough information to decide.
5.
Which of the following is not a reason why union firms can successfully compete with non-union firms?
A)Employee morale is possibly higher at union firms.
B)Union firms are legally protected from price competition from non-union firms.
C)Labour turnover is lower at union firms.
D)Communication between management and workers is more formal and hence improved at union firms.
E)Union employees tend to have higher productivity.
6.
Jobs that possess a higher risk of injury or death will:
A)include better insurance benefits than similar jobs.
B)pay less than otherwise similar jobs.
C)require regulation by the government.
D)pay the same as otherwise similar jobs.
E)pay more than otherwise similar jobs.
7.
Assume that the average male wage rate is 20% higher than the average female wage rate. One can infer that:
A)this is evidence of discrimination.
B)employers undervalue female employees.
C)customers overvalue male employers.
D)this is evidence of discrimination only if all factors affecting productivity are equal.
E)employers overvalue male employees.
8.
A winner-take-all labour market is one where
A)small differences in human capital translate into large differences in wages.
B)one worker receives all of the available compensation and the rest receive nothing.
C)small differences in human capital translate into small differences in wages.
D)large differences in human capital translate into small differences in wages.
E)the best employers get all of the workers.
9.
The Lorenz curve:
A)shows the income share of succeeding percentiles of households
B)shows the cumulative share of succeeding percentiles of households
C)shows an absolutely equal distribution of incomes between households
D)is the inverse of the Gini curve
E)shows the amount of tax each percentile of households would pay under a proportionate tax structure.
10.
Trades unions can increase the level of employment
A)never
B)most of the time
C)only where the employer has market power in the relevant labour market
D)only where the employer has market power in the market for the goods produced
E)only if the Government agrees to introduce a minimum wage.





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