Labor Economics
Test Preparation
Course Introduction
Labor Economics explores the functioning and dynamics of labor markets, examining how labor is supplied, demanded, and compensated within an economy. The course covers topics such as wage determination, employment, unemployment, labor mobility, human capital investment, discrimination, and the impact of unions and government policies. Students analyze the behavior of both employers and workers using economic theories and empirical methods, gaining insights into real-world labor issues and policy debates.
Recommended Textbook Microeconomics 9th Edition by William Boyes
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22 Chapters
2413 Verified Questions
2413 Flashcards
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Chapter 1: Economics: The World Around You
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Sample Questions
Q1) A haircut at an upscale beauty salon would be regarded as a good in economics.
A)True
B)False
Answer: False
Q2) The good for which has no scarcity is called:
A)a necessity.
B)an economic good.
C)a free good.
D)an economic bad.
E)a social bad.
Answer: C
Q3) Which of the following statements is in the realm of positive economics?
A)The president should propose a tax cut because taxes are too high.
B)Studies show that if taxes are cut,unemployment falls.
C)The budget deficit is too high and should be lowered.
D)Studies show that a national debt of over a trillion dollars is bad for the country and should not be allowed to occur.
E)The share of defense spending in the budget ought to be changed.
Answer: B
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Page 3
Chapter 2: Choice, opportunity Costs, and Specialization
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Sample Questions
Q1) Which of the following would not cause any kind of an outward shift of a nation's production possibilities curve [PPC]?
A)An improvement in the general level of education
B)Technological innovation
C)Discovery of a new source of energy
D)An increase in the size of the labor force
E)A flood that renders thousands of acres of farmland unusable
Answer: E
Q2) If the resources within a nation are not being fully or efficiently utilized,it means:
A)that nation is operating at a point inside its production possibilities curve.
B)that nation is operating at a point outside its production possibilities curve.
C)that nation is operating at a point along its production possibilities curve.
D)that nation is probably technologically advanced.
E)the government of that nation should seize ownership of the resources in order to attain the necessary efficiencies.
Answer: A
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Chapter 3: Markets, Demand and Supply, and the Price System
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98 Flashcards
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Sample Questions
Q1) Empirical evidence suggests that more digital cameras are being sold today than one year ago,and the selling price has decreased.The probable reason for this could have been an increase in supply.
A)True
B)False
Answer: True
Q2) The removal of a price ceiling in a market results in:
A)an increase in the market price.
B)a shortage in the market.
C)over-production of the commodity and a surplus.
D)a fall in the market price.
E)abnormal profits for producers.
Answer: A
Q3) Most markets involve the use of money for transactions because:
A)goods and services can be exchanged more easily with money than without it.
B)goods and services cannot be exchanged without money.
C)using money requires a double coincidence of wants.
D)the transaction costs of using money are very high.
E)the value of money remains same across countries over time.
Answer: A
Page 5
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Chapter 4: The Market System and the Private and Public Sector
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Sample Questions
Q1) 'Walkmans' that played audio cassettes were withdrawn from the market by Sony Corporations soon after MP3 players became popular among consumers.Which of the following factors is most likey to have led to this outcome?
A)Scarcity
B)Corporate governance
C)Consumer sovereignty
D)Corporate social responsibility
E)Tragedy of Commons
Q2) In a market economy,_____ own(s) all the basic resources or factors of production.
A)households
B)the federal government
C)the Federal Reserve bank
D)the local government
E)business firms
Q3) An unmarried couple holding joint title to their condominium constitutes a household.
A)True
B)False
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Chapter 5: Elasticity: Demand and Supply
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Sample Questions
Q1) Consider a medical breakthrough that led to the discovery of a simple microchip which when inserted inside the human ear could prevent certain chronic diseases.The price elasticity of demand for that microchip would most likely be _____.
A)very elastic
B)very inelastic
C)infinite
D)negative only for high prices
E)positive only for high prices
Q2) Which of the following is true with respect to the price elasticity of demand?
A)The coefficient of price elasticity of demand will change with changes in the units of measurement (for instance,going from pounds to ounces).
B)Elasticity of demand will be equal to the slope of the demand curve.
C)Elasticity measures the sensitivity of total expenditure to a change in price.
D)Elasticity will tend to be greater for a relatively expensive product than for a cheaper one.
E)A coefficient of 1 means that the percentage change in total expenditure is equivalent to the percentage change in price.
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Chapter 6: Consumer Choice
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Sample Questions
Q1) The law of diminishing marginal utility states that as additional units are consumed,satisfaction per unit will decline.
A)True
B)False
Q2) The term _____ refers to the idea that the value people place on money depends on where that money comes from.
A)decision making
B)psychological pricing
C)mental accounting
D)marketing mix
E)anchoring
Q3) The substitution effect occurs because when the price of one good increases,consumers will buy fewer substitute goods.
A)True
B)False
Q4) The law of diminishing marginal utility does not hold good when the good is free or priced at zero dollars.
A)True
B)False
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Chapter 7: Supply: The Costs of Doing Business
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106 Verified Questions
106 Flashcards
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Sample Questions
Q1) In Table 7.4,at 4 units of output,
A)AFC = $6.25 and AVC = $10
B)AFC = $6.25 and AVC = $40
C)AFC = $40 and AVC = $6.25
D)AFC = $25 and AVC = $40
E)AFC and AVC cannot be determined from the information provided.
Q2) In the short run when output is zero,total cost is:
A)equal to total variable cost.
B)greater than total fixed cost.
C)equal to total fixed cost.
D)less than total fixed cost.
E)less than total variable cost.
Q3) If the total cost of producing 2 pounds of cheese is $6 and the total cost of producing 4 pounds of cheese is $8,then:
A)total cost is declining.
B)average total cost is declining.
C)average total cost is increasing.
D)average total cost is constant.
E)total cost is constant.
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Page 9
Chapter 8: Profit Maximization
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Sample Questions
Q1) A monopolistically competitive firm faces a relatively steeper demand curve than a perfectly competitive firm.
A)True
B)False
Q2) The firm will always maximize profit where average total costs are minimized.
A)True
B)False
Q3) The equity capital of a privately owned firm includes:
A)the owner's own dollars put into the firm.
B)the cost of raw materials.
C)the cost of labor resource used in production.
D)economic rent only.
E)the value added at each stage of production.
Q4) Profit is the difference between:
A)total output and total cost.
B)total revenue and total cost.
C)total revenue and total sunk cost.
D)total output and total sunk cost.
E)total revenue and opportunity cost.
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Chapter 9: Perfect Competition
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Sample Questions
Q1) According to the information in Table 9.1,this firm will maximize profit when total output is equal to _____ units.
A)nine
B)eight
C)seven
D)six
E)five
Q2) If significant barriers to entry exist in a market,then the market is best described through the model of perfect competition.
A)True
B)False
Q3) Given a perfectly competitive market structure at the profit-maximizing output level,a firm's total fixed cost is $10,total variable cost is $100,marginal revenue is $4,and the quantity demanded is 50.The total profit earned by the firm is:
A)$70.
B)$65.
C)$90.
D)$75.
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11
Chapter 10: Monopoly
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118 Flashcards
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Sample Questions
Q1) Which of the following is true of a firm that can successfully practice price discrimination?
A)Its total revenue is often reduced.
B)It appropriates a part of the consumer surplus.
C)It has no way of distinguishing between types of customers.
D)It has no market power in the industry.
E)It must be a perfectly competitive firm.
Q2) According to Table 10.1,at what level of output is marginal revenue equal to $14?
A)1
B)2
C)3
D)4
E)5
Q3) For a monopolist with a linear demand curve,total revenue is maximum when:
A)marginal revenue is positive.
B)marginal revenue is at its maximum.
C)the price elasticity of demand is greater than unity.
D)the price elasticity of demand is equal to unity.
E)the marginal revenue is at its minimum.
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Page 12
Chapter 11: Monopolistic Competition and Oligopoly
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114 Verified Questions
114 Flashcards
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Sample Questions
Q1) Oligopolies can arise as a result of both natural barriers and governmentally created barriers.
A)True B)False
Q2) Firms develop brand names in order to make the demand for their product more elastic.
A)True B)False
Q3) In the short run,a monopolistically competitive firm:
A)can earn only a normal profit.
B)will produce at the point where marginal revenue is greater than marginal cost,in order to maximize profits.
C)will produce at the point at which price equals minimum ATC to maximize profits.
D)will be able to enter another monopolistically competitive industry.
E)will shut down temporarily if price is less than AVC.
Q4) A monopolistically competitive firm maximizes profit at the point at which price is equal to marginal cost.
A)True B)False
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Chapter 12: Antitrust and Regulation
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100 Flashcards
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Sample Questions
Q1) One reason that governments may intervene in the operation of a business through regulation is to:
A)increase monopoly profits.
B)reduce the amount of information consumers have about a product.
C)increase negative externalities.
D)promote competitive behavior.
E)decrease positive externalities.
Q2) Antitrust policies are a set of measures which are taken to liberate the economy from unnecessary governmental controls.
A)True
B)False
Q3) If the tax rate increases with an increase in the tax base,the tax is said to be:
A)regressive in nature.
B)a progressive tax.
C)a proportional tax.
D)an indirect tax.
E)inequitable in nature .
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Chapter 13: Market Failures, Government Failures, and Rent
Seeking
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121 Verified Questions
121 Flashcards
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Sample Questions
Q1) Private costs exceed social cost when external benefits are created.
A)True
B)False
Q2) Production becomes more efficient if a common property is turned into a private property.
A)True
B)False
Q3) Why are cows and chickens less prone to become extinct?
A)They are usually consumed in huge numbers
B)They are mainly privately owned
C)They are a part of common resources
D)Poaching these animals for their meat is banned by the government
E)They are not used for commercial purposes
Q4) A good that is both excludable and rivalrous is a(n):
A)public good.
B)club good.
C)private good.
D)inferior good.
E)necessary good.
Page 15
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Chapter 14: Resource Markets
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112 Flashcards
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Sample Questions
Q1) The price of a resource declines when:
A)both the demand for and the supply of the resource declines in the same proportion.
B)demand remaining constant,supply of the resource declines.
C)supply remaining constant,the demand for the resource declines.
D)both the demand for and the supply of the resource increases in the same proportion.
E)both the demand for and the supply of the resource declines,but supply falls by a greater proportion than demand.
Q2) The resource market is the same as the product market except that,in the resource market:
A)the demand curve slopes upward.
B)the households are the sellers and the firms are the buyers.
C)there is no substitution effect.
D)the supply curve is perfectly inelastic.
E)there is no income effect.
Q3) A monopsonist firm faces a negatively sloped marginal factor cost curve.
A)True
B)False
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16
Chapter 15: The Labor Market
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Sample Questions
Q1) In Figure 15.4,the price and quantity of the good if produced by India would be _____ and _____ respectively.
A)P<sub>3</sub>; Q<sub>3</sub>
B)P<sub>4</sub>; Q<sub>4</sub>
C)P<sub>1</sub>; Q<sub>1</sub>
D)P<sub>5</sub>; Q<sub>5</sub>
E)P<sub>2</sub>; Q<sub>2</sub>
Q2) Why does the labor market have more than one equilibrium wage rate?
A)Workers differ in their productivities.
B)Productivity of the workers initially increase but later decline.
C)The labor demand curve is backward bending.
D)Marginal revenue product of the different inputs used by firms vary.
E)Employers compete among themselves to hire the best workers.
Q3) The ratio of the median income of college-to high school-educated workers is called the _____.
A)college income premium
B)college income differential
C)college income benefit
D)college income compensation
E)education income gap
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Chapter 16: Capital Markets
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100 Flashcards
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Sample Questions
Q1) Which of the following factors affects the quantity demanded of a company's stock?
A)The prices of other companies' stocks
B)The price of the company's stock
C)The returns on other possible investments
D)Expectations regarding stock price movements
E)Income of the investors
Q2) If the P/E ratio is equal to 50,it implies that investors in the stock are willing to pay:
A)$25 for every $2 of the earnings that the company generates during a period.
B)$100 for every $1 of the earnings that the company generates during a period.
C)$500 for every $1 of the earnings that the company generates during a period.
D)$50 for every $1 of the earnings that the company generates during a period.
E)$5 for every $1 of the earnings that the company generates during a period.
Q3) The equity market is said to be an efficient market because it is difficult for an investor to continually earn above-normal profits.
A)True
B)False
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Chapter 17: The Land Market and Natural Resources
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55 Flashcards
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Sample Questions
Q1) Privatization of common property leads to overexploitation of natural resources.
A)True
B)False
Q2) Unproductive actions designed to increase income or wealth are known as:
A)transfer search.
B)incorporation.
C)profit seeking.
D)income search.
E)rent seeking.
Q3) In the market for hardwood,everything else held constant,if the rate of interest increases:
A)the price of the hardwood will fall today.
B)the lumberjacks will harvest fewer trees today.
C)prices of boats and furniture will increase in the present period.
D)the lumberjacks will harvest all the trees leaving nothing for the future.
E)the price of the hardwood will fall in the future.
Q4) An increase in economic rent is accompanied by an increase in the quantity supplied of a resource.
A)True
B)False
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Chapter 18: Aging, Social Security and Health Care
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Sample Questions
Q1) The high cost of hospital care in the U.S.is primarily attributable to:
A)the way in which capital purchases are financed.
B)the increased occupancy rate in the hospitals.
C)the lack of sufficient hospital beds.
D)the greater availability of physicians.
E)the increased malpractice by the physicians.
Q2) Why is health care considered to be an economic good and is subject to the laws of economics?
A)Health care at times can be obtained even without paying a price for it.
B)Health care is easily available.
C)The supply of health care is greater than its demand.
D)Health care is a social good available at subsidized rates to the poor.
E)Supply of health care is scarce compared to its demand.
Q3) If the ratio of those working to those retired increases it implies that "The World is Aging."
A)True
B)False
Q4) The social security tax proceeds are often used to purchase government bonds.
A)True
B)False
Page 20
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Chapter 19: Income Distribution,Poverty and Government Policy
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115 Verified Questions
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Sample Questions
Q1) If those who are poor at any one time are poor only temporarily,then their plight is only temporary.This statement is based on which of the following assumptions?
A)Many spells of poverty are relatively short-lived.
B)Government spending in the economy is inadequate.
C)All phases of the business cycle are temporary.
D)Education infrastructure in the economy is poor.
E)Once people fall below the poverty line,it is almost impossible for them to rise above it.
Q2) It has been observed that the most prosperous nations are those which have enjoyed stable democratic governments.This implies there is a link between a history of stable democracy and national well-being.
A)True
B)False
Q3) Someone who has the desire to work but has no exceptional abilities and has not acquired the skills necessary for a well-paying job is likely to escape poverty completely.
A)True
B)False
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Chapter 20: World Trade Equilibrium
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Sample Questions
Q1) Dutch Disease is associated with a dramatic decline in the demand for a primary commodity produced by a country.
A)True
B)False
Q2) Suppose France can produce 9,000 potatoes or 3,000 lemons per day,and that Italy can produce 3,000 potatoes or 3,000 lemons per day.Which of the following statements in this context is true?
A)France has an absolute advantage in producing lemons.
B)Italy has a comparative advantage in producing potatoes.
C)Italy would be willing to trade one lemon for anything greater than one potato.
D)Both countries would be willing to trade at a rate of one lemon for one potato.
E)France has a comparative advantage in producing lemons.
Q3) The comparative advantage in a specific good can shift over time from one country to another,as the other countries can produce it at a cheaper cost after imitating the technology.
A)True B)False
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Chapter 21: International Trade Restrictions
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109 Flashcards
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Sample Questions
Q1) If international trade is restricted by the government:
A)domestic consumers are benefited.
B)domestic producers are adversely affected.
C)consumers in the importing country are required to pay higher prices for the goods.
D)consumers can access to better quality product at lower prices.
E)the resources are allocated to their highest paid uses.
Q2) Creating conditions for fair trade by limiting imports will make the domestic consumers better off,as they will be required to pay low prices for the products.
A)True
B)False
Q3) One danger associated with calls for fairness based on reciprocity is that,calls for fair trade may be invoked in cases where,foreign restrictions on U.S.imports do not actually exist.
A)True
B)False
Q4) Every country imposes tariffs on at least some imports.
A)True
B)False
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23
Chapter 22: Exchange Rates and Financial Links Between Countries
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Sample Questions
Q1) When an exchange rate is established as a fixed peg,active intervention may be required to maintain the target-pegged rate.
A)True
B)False
Q2) Assume a U.S.investor buys a Mexican bond with a face value of MXP 1,000 and a 20 percent annual interest yield while the exchange rate is MXP 10 per dollar.What is the dollar return from the bond if the exchange rate at the end of the year is MXP 11 per dollar?
A)9.1%
B)10.0%
C)18.2%
D)20.0%
E)32.0%
Q3) An upward-sloping supply curve of Korean won in terms of Canadian dollars indicates that:
A)the higher the dollar price of Korean won,the more won will be demanded.
B)the higher the dollar price of Korean won,the fewer won will be supplied.
C)the lower the dollar price of Korean won,the more won will be demanded.
D)the lower the dollar price of Korean won,the fewer won will be supplied.
Page 24
E)the Korean economy is stronger than the Canadian economy.
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