Econ

Topics: Supply and demand, Economics, Wage Pages: 16 (2337 words) Published: October 29, 2013
Practice Test 18

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____1.Labor markets are different from most other markets because labor demand is a.
represented by a vertical line on a supply-demand diagram.
b.
represented by an upward-sloping line on a supply-demand diagram. c.
such an elusive concept.
d.
derived.

____2.How much of the income in the United States is in the form of wages and fringe benefits? a.
more than 90 percent
b.
about 75 percent
c.
about 50 percent
d.
less than 75 percent

____3.The value of the marginal product of any input is equal to the marginal product of that input multiplied by the a.
additional revenue.
b.
marginal cost of the output.
c.
change in total profit.
d.
market price of the output.

____4.What is the shape of the curve that represents the value of the marginal product of labor? a.
U-shaped
b.
flat
c.
downward sloping
d.
upward sloping

____5.To maximize profit, a competitive firm hires workers up to the point of intersection of the a.
marginal-product curve and the marginal-cost curve.
b.
value-of-marginal-product curve and the wage line.
c.
value-of-marginal-product curve and the marginal-revenue curve. d.
total-revenue curve and the wage line.

____6.A profit-maximizing competitive firm for which the marginal product of labor is diminishing also experiences a.
a perfectly inelastic supply of labor.
b.
a perfectly elastic supply of labor.
c.
a downward-sloping demand for labor.
d.
an upward-sloping demand for labor.

The figure represents the value of marginal product for a firm that sells its product in a competitive market. Use the following figure to answer the following questions.

Figure 18-1

____7.Refer to Figure 18-1. The value of the marginal-product curve shown in this figure is the same as which of the following? a.
the labor-supply curve
b.
the labor-demand curve
c.
the marginal-revenue curve
d.
the total-revenue curve

____8.The value of the marginal product of labor is calculated by multiplying the a.
price of output by the quantity of labor.
b.
price of output by the marginal product of labor.
c.
wage by the quantity of labor.
d.
wage by the marginal product of labor.

____9.The labor supply curve shifts when
a.
employers need to hire more people.
b.
employers develop new technology.
c.
workers change the amount they want to work at any given wage. d.
workers become more productive.

____10.If workers respond to an increase in the opportunity cost of leisure by taking more leisure, then their labor supply curve is a.
upward sloping.
b.
downward sloping.
c.
horizontal.
d.
vertical.

____11.The opportunity cost of an hour of leisure is
a.
60 minutes.
b.
an hour of sleep.
c.
an hour's worth of wear and tear on your TV, exercise equipment, etc. d.
your hourly wage.

Use the following information to answer the following questions.

Scenario 18-3
In 1997, Albania experienced a civil war. The civil unrest sent thousands of refugees across the Adriatic Sea to Italy where they sought relief from the fighting.

____12.Refer to Scenario 18-3. The Italian government started to patrol the Adriatic Sea and had a policy of returning all refugees to Albania. This policy would contribute to a.
an increase in the supply of labor in Italy.
b.
an increase in the demand labor in Italy.
c.
a decrease in the demand for labor in Italy.
d.
prevention of an increase in the supply of labor in Italy.

Refer to the diagram below to answer the following questions.

Figure 18-3

____13.Refer to Figure 18-3. If the relevant labor supply curve is S2 and the current wage is W1, a.
there is a surplus of labor.
b.
the quantity of labor demanded exceeds the quantity of labor supplied. c.
an increase in the minimum wage could be employed to restore equilibrium...
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