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The elasticity of demand for labor varies inversely with the elasticity of demand for the product it is used to produce.

A) True
B) False

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In percentage terms,which occupation is expected to be the fastest growing from 2008 to 2018?


A) Photographic processing machine operators
B) Sewing machine operators
C) Home health aides
D) Biomedical engineers

E) A) and B)
F) A) and C)

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Occupational licensing is a means of decreasing the supply of specific kinds of labor.

A) True
B) False

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A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

A) True
B) False

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True

A craft union:


A) creates a bilateral monopoly of unskilled and skilled workers in an industry.
B) organizes workers who have similar skills or jobs in an industry.
C) is most concerned with increasing the supply for workers.
D) is most effective in a purely competitive industry.

E) C) and D)
F) B) and D)

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What reason for wage differentials would best explain why superstar athletes in a professional sport are paid significantly more than regular athletes?


A) Noncompeting groups
B) Compensating differences
C) Market imperfections
D) Principal-agent problems

E) A) and D)
F) A) and C)

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Refer to the above graph,which shows the supply and demand for unionized manufacturing workers.The initial equilibrium point is point 1.There is an increase in the demand for manufactured goods while at the same time health benefits for unionized manufacturing workers also increase.Which point would represent the new equilibrium? A) 3 B) 4 C) 5 D) 6 Refer to the above graph,which shows the supply and demand for unionized manufacturing workers.The initial equilibrium point is point 1.There is an increase in the demand for manufactured goods while at the same time health benefits for unionized manufacturing workers also increase.Which point would represent the new equilibrium?


A) 3
B) 4
C) 5
D) 6

E) A) and D)
F) B) and C)

Correct Answer

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If a minimum wage is set at W,what will happen to employment in the monopsonistic labor market shown in the diagram above? A) Employment will decrease. B) Employment will increase. C) Employment will stay the same. D) Employment may increase but usually it tends to stay the same. If a minimum wage is set at W,what will happen to employment in the monopsonistic labor market shown in the diagram above?


A) Employment will decrease.
B) Employment will increase.
C) Employment will stay the same.
D) Employment may increase but usually it tends to stay the same.

E) A) and B)
F) B) and C)

Correct Answer

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Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would:


A) increase unemployment in the labor market.
B) increase firms' demand for labor.
C) decrease the supply of labor.
D) cause firms to substitute labor for capital.

E) B) and C)
F) A) and C)

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The wages of plumbers are likely to increase when:


A) licensing standards for the occupation are increased.
B) there is an increase in the cost of plumbing supplies.
C) the length of the training period for plumbers is decreased.
D) more do-it-yourself home improvement centers open across the nation.

E) A) and B)
F) None of the above

Correct Answer

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The marginal revenue product of labor in a competitive market decreases as a firm increases the quantity of labor used because of the:


A) law of diminishing returns.
B) law of diminishing marginal utility.
C) homogeneity of the product.
D) free mobility of resources.

E) All of the above
F) None of the above

Correct Answer

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Critics of the minimum wage contend that imposing a wage higher than the equilibrium wage in a competitive industry would:


A) decrease the number of workers employed in that industry.
B) decrease the quantity of labor supplied to that industry.
C) increase the demand for labor in the industry.
D) increase employment in that industry.

E) C) and D)
F) A) and B)

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Immobile resources contribute to wage differentials.

A) True
B) False

Correct Answer

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The best example of a craft union would be the:


A) United Auto Workers.
B) United Steelworkers.
C) Teamsters.
D) International Brotherhood of Electrical Workers.

E) A) and D)
F) B) and C)

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D

Refer to the above graph.It shows a firm that buys its inputs and sells its output in competitive markets.If the firm develops a new technology that increases labor productivity,the equilibrium level of employment for this firm is expected to be: A) L<sub>0</sub>. B) zero. C) lower than L<sub>0</sub>. D) higher than L<sub>0</sub>. Refer to the above graph.It shows a firm that buys its inputs and sells its output in competitive markets.If the firm develops a new technology that increases labor productivity,the equilibrium level of employment for this firm is expected to be:


A) L0.
B) zero.
C) lower than L0.
D) higher than L0.

E) None of the above
F) A) and C)

Correct Answer

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Other things being equal,which would tend to increase the mobility of labor?


A) A reduction in job information services
B) Fewer opportunities for job training
C) A reduction in discrimination at work
D) Increased licensing requirements by occupational groups

E) B) and D)
F) None of the above

Correct Answer

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The marginal revenue product curve for an input is downward sloping because of the law of diminishing returns.

A) True
B) False

Correct Answer

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True

Minimum wage laws have contributed to higher unemployment levels among teenagers and minorities.

A) True
B) False

Correct Answer

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A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits.It is currently operating in the elastic range of its MRP curve.If the wage rate increases,its total spending on wages at the new equilibrium will:


A) be larger.
B) be smaller.
C) be unchanged.
D) change,but it is impossible to determine the direction.

E) All of the above
F) A) and D)

Correct Answer

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A firm has a single wage rate.At present 10 workers are employed at $50 per day.Wages are raised to $55 per day to attract an extra worker.The marginal labor cost per day is:


A) $5.
B) $10.
C) $55.
D) $105.
The 11th worker costs $55,but all 10 other workers require a $5 increase in wage.Thus,the total increase is $105.

E) C) and D)
F) None of the above

Correct Answer

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