The market wage increases from 9 to 11

The market wage increases from $9 to $11 and the firm responds by reducing its labor force by 16%. The wage elasticity coefficient is: 8. 00, 0. 80, 1. 25, 1. 60, a) b) c) d) 1 2 3 4 indicating 5 elastic demand inelastic demand

Which of the following can be predicted to increase the demand for labor? An increase in the price of a gross substitute for labor A increase in the price of a gross complement in production A decrease in product demand A decrease in the number of firms a) b) c) d) 1 2 3 4 5

As a result of an increase in the market supply of labor, suppose the wage rate falls by 10%. After adjusting their employment levels, firms in the market find that their total wage bills (=Wx. L) have increased. This result indicates that: labor demand is inelastic over this range of wage rates labor demand is elastic over this range of wage rates. labor demand, was inelastic at the old wage, but is elastic at the new, higher wage. labor demand, was elastic at the old wage, but is inelastic at the new, higher wage. a) b) c) d) 1 2 3 4 5

Suppose workers in labor market X are qualified to work in an alternative labor market Y and vice-versa. If an increase in labor demand causes an increase in the wage rate to workers in market Y, this will tend to: increase labor supply and reduce the wage rate in X. increase labor demand reduce the wage rate in X reduce labor supply and increase the wage rate in X reduce labor demand reduce the wage in X. a) b) c) d) 1 2 3 4 5

A monopsonist tends to hire too _____ workers because ______: a) b) c) d) 1 few; marginal revenue product exceeds the value of marginal product. few; marginal wage costs exceeds the wage rate many; marginal revenue product exceeds the value of marginal product many; marginal wage costs exceeds the wage rate. 2 3 4 5

At wage rate W 1 there is an: a) b) c) d) 1 excess 2 3 4 supply of labor and the wage rate will fall supply of labor and the wage rate will rise demand for labor and the wage rate will fall demand for labor and the wage rate will rise 5

For the supply and demand curves in the diagram, the level of employment will be highest at wage rate W 1 a wage rate higher than W 1 wage rate W 2 a wage rate lower than W 2 a) b) c) d) 1 2 3 4 5

The employer’s share of the Social Security and Medicare components of the payroll tax has increased, from 6. 13% in 1980 to its current rate of 7. 65%. Because employers pay no payroll tax on many fringe benefits, this change in tax rates has effectively a) b) c) d) 1 reduced the "price" of fringe benefits, rotating the wage-fringe isoprofit line inward increased the "price" of fringe benefits, rotating the wage-fringe isoprofit line inward reduced the "price" of fringe benefits, rotating the wage-fringe isoprofit line outward increased the "price" of fringe benefits, rotating the wage-fringe isoprofit line outward 2 3 4 5

The principal-agent problem arises primarily because principals and agents work in a team, leading to free-rider problems principals and agents have common interests agents pursue some of their own objectives that may conflict with the objectives of the principals a) b) c) d) 1 2 3 4 5

Compensation paid in proportion to the value of sales best describes piece rates time rates commissions bonuses a) b) c) d) 1 2 3 4 5

A firm might choose to pay its employees a wage higher than that which would clear the market because: the higher wage raises the opportunity cost of shirking the higher wage may shift the labor demand curve to the left the firm will have higher turnover, allowing new workers to invigorate the work place the higher wage solves the free -rider problem a) b) c) d) 1 2 3 4 5

Which one of the following conditions is required for allocative efficiency? Marginal revenue product exceeds the value of marginal product by the greatest amount Marginal revenue product equals the wage rate Value of marginal product equals the marginal wage cost Value of marginal product is the same in all alternative employments of labor a) b) c) d) 1 2 3 4 5