Public Policy Analysis Review Questions
Course Introduction
Public Policy Analysis explores the systematic evaluation of government policies and programs, equipping students with the theoretical frameworks and practical tools necessary to assess policy alternatives, effectiveness, and outcomes. Through case studies and applied methodologies, the course examines policy formulation, implementation, and evaluation processes, focusing on evidence-based decision-making and the impact of political, economic, and social factors. Students learn to critically analyze policy problems, utilize quantitative and qualitative analysis techniques, and develop recommendations to address complex public issues in diverse institutional contexts.
Recommended Textbook
Modern Labor Economics Theory and Public Policy 11th Edition by Ronald G. Ehrenberg
16 Chapters
594 Verified Questions
594 Flashcards
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Page 2
Chapter 1: Introduction
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Sample Questions
Q1) Economists generally assume that workers maximize
A) their income.
B) their leisure time.
C) their utility.
D) their nonpecuniary benefits.
Answer: C
Q2) Public goods are
A) goods donated by their owner for public use.
B) goods that are available to an additional consumer at no cost.
C) goods that are not scarce.
D) goods that can only be produced by the government.
Answer: B
Q3) Which of the following is a positive statement?
A) mutually beneficial trade is good
B) minimum wage laws are not Pareto efficient
C) all workers should earn, at a minimum, a living wage
D) all persons who cannot produce enough to earn a living wage should not be allowed to work
Answer: B
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Page 3
Chapter 2: Overview of the Labor Market
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Sample Questions
Q1) Because workers choose between various employers offering the same type of job based primarily on wages,
A) the market demand curve for chefs is downward sloping.
B) the market supply curve for chefs is upward sloping.
C) the firm supply curve for chefs is vertical.
D) the firm supply curve for chefs is horizontal.
Answer: D
Q2) If every worker wants ten dollars more per hour to work, then wages will
A) go up by $10.
B) go up by more than $10.
C) go up by less than $10.
D) go down as employment falls.
Answer: C
Q3) During the twentieth century, the unemployment rate in the United States
A) has remained roughly constant.
B) has consistently been higher than in other industrialized countries.
C) has generally decreased.
D) has become more stable.
Answer: D
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Page 4
Chapter 3: The Demand for Labor
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Sample Questions
Q1) The marginal product of labor tells us
A) which employee is the most productive.
B) the average output produced by each employee.
C) the additional output produced by the last employee hired.
D) how much money the firm can make from hiring each employee.
Answer: C
Q2) If two inputs are substitutes in production and an increase in the price of one input shifts the demand curve for the other input to the left then
A) the scale effect is greater than the substitution effect and the two are gross complements.
B) the scale effect is less than the substitution effect and the two are gross complements.
C) the scale effect is greater than the substitution effect and the two are gross substitutes.
D) the scale effect is less than the substitution effect and the two are gross substitutes.
Answer: A
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5
Chapter 4: Labor Demand Elasticities
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Sample Questions
Q1) In a simple economy, there are 100 workers. 50 workers produce clothing: one worker produces one unit of clothing. The other 50 workers produce food: one worker produces one unit of food. By trading goods, each person consumes 0.5 unit of clothing and 0.5 unit of food. A technological improvement enables one worker to produce two units of clothing. The results are that 40 workers will be producing 80 units of clothing and 60 workers will be producing food and that each person consumes 0.8 units of clothing and 0.6 units of food. Which of the following is true?
A) Workers in the sewing industry are worse off.
B) Workers in the clothing industry are worse off.
C) The increase in the productivity of clothing workers shifted the demand for clothing workers rightward.
D) The increase in the productivity of clothing workers had a net negative effect on the demand for clothing workers.
Q2) Own wage elasticity of labor demand tends to
A) increase with skill level.
B) decrease with skill level.
C) be unrelated to skill level.
D) remain unchanged with skill level.
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Page 6
Chapter 5: Frictions in the Labor Market
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Sample Questions
Q1) Members of certain groups have the right to sue employers if discriminated against. Other things the same, then according to the model of quasi-fixed costs, this right will tend to
A) reduce their wage.
B) reduce their employment.
C) increase their turnover rate.
D) reduce their unemployment rate.
Q2) Which of the following event will likely lead a firm to use overtime rather than hire new workers
A) the firm gets rid of its pension plan.
B) the firm starts to pay for health insurance.
C) the marginal productivity of all workers, new and current, increases 20%.
D) both overtime and base pay increase 20%.
Q3) General training is usually paid for by
A) the employer.
B) the employee.
C) both the employer and the employee.
D) neither the employer nor the employee.
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7
Chapter 6: Supply of Labor to the Economy: the Decision to Work
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Sample Questions
Q1) A country has no welfare program. Then it introduces the following program: every one gets $4000 if they work more than 1000 hours a year (on top of what they earn). The effect of this event will be to ________ the labor force participation and the effect of this event on those were working more than 1000 hours will be to ________ hours of work.
A) increase, increase B) decrease, increase
C) increase, decrease D) decrease, decrease
Q2) A subsidy to pay for a portion of childcare costs will cause women who are participating in the labor force to work ________ hours.
A) more B) fewer
C) the same number of D) at least as many
Q3) A decrease in the implicit tax rate on welfare benefits serves as A) an incentive to work fewer hours.
B) an incentive to work more hours.
C) a way to decrease the incomes of welfare recipients.
D) a way to decrease spending on benefits.
Page 8
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Chapter 7: Labor Supply: Household Production, the Family, and
the Life Cycle
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Sample Questions
Q1) The "discouraged worker" effect occurs during recessions because
A) the labor force tends to grow during recessions.
B) the expected payoff from looking for work falls relative to the expected payoff from household production.
C) one spouse is discouraged by the job prospects of the other and decides to look for a job.
D) workers are discouraged by their depleted savings and decide to look for a job.
Q2) If the decision-making process in a household is by partners bargaining with each other, then which of the following would be expect to see (compared to a household where one of the partners makes all the decisions)
A) one of the partners is likely to drop out of the labor market and stay at home.
B) women with fewer economic resources are likely to be better treated by their husband.
C) holding household income constant, expenditures patterns will usually favor the partner making the most income.
D) no differences between these two types of households.
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Chapter 8: Compensating Wage Differentials and Labor Markets
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Sample Questions
Q1) Workers' indifference curves for wage rates versus benefits will be
A) downward sloping.
B) upward sloping.
C) downward sloping and concave.
D) upward sloping and convex.
Q2) Firm A offers the same pension to all workers, regardless of how many hours they work. Workers value the pension at $10,000 a year (and it costs Firm A $10,000 to provide the benefit). Firm B does not offer a pension but is like Firm A in all other job characteristics. The labor market is competitive and all workers have comparable skills. If there are workers in both jobs, then
A) workers that prefer working shorter hours are more likely to work for Firm B.
B) all workers will prefer working for Firm A.
C) all workers will be indifferent between working for Firm A and Firm B.
D) workers that prefer working long hours are more likely to work for Firm B.
Q3) Along an isoprofit curve
A) the difference between total costs and total revenues is constant.
B) the firm's level of safety is constant.
C) the firm's level of wages is constant.
D) the firm's safety costs are constant.
Page 10
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Chapter 9: Investments in Human Capital: Education and Training
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Sample Questions
Q1) Nina (age 19) would be more likely to obtain a college education if
A) her discount rate was lower.
B) the supply of others with a college education was greater.
C) she expected to retire at a younger age.
D) she was older.
Q2) Which of the following best explains why the most rapid increase in a person's wages usually occur at younger ages, giving a concave shape to the age/earnings profile?
A) Oon-the-job training is free.
B) On-the-job training usually declines with age.
C) People who have more human capital are more likely to acquire more on-the-job training.
D) People with children cut back their hours of work.
Q3) Firms use signals to estimate productivity so that they can
A) pay a low wage to all workers.
B) pay the same wage to all workers.
C) save on the costs of more accurate estimates.
D) minimize labor costs.
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Chapter 10: Worker Mobility: Migration, Immigration, and Turnover
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45 Verified Questions
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Sample Questions
Q1) In a competitive industry, it takes a fixed ratio of one skilled worker and two unskilled workers to produce a unit of output. If the immigration of unskilled workers lowers the wage of unskilled workers, it will likely
A) increase the demand for skilled workers due to the scale effect.
B) increase the demand for skilled workers due to the substitution effect.
C) decrease the wage but increase the employment of domestic unskilled workers.
D) All of the above will occur.
Q2) Quit rates rise as
A) wages increase.
B) firm size decreases.
C) workers age.
D) the unemployment rate increases.
Q3) The deportation of illegal aliens may create jobs on a one-to-one basis for native workers if
A) the minimum wage is above the equilibrium wage.
B) the minimum wage is below the equilibrium wage.
C) the labor supply curve is very steep.
D) the labor supply curve is very flat.
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Chapter 11: Pay and Productivity: Wage Determination
Within the Firm
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Sample Questions
Q1) Which of the following would NOT (even if true) explain why wages rise with job tenure?
A) Workers become more productive the longer they are with the firm.
B) Over time, the firm is able to dismiss less productive workers.
C) Workers acquire more specific human capital the longer they are with the firm.
D) Starting with a lower wage and then letting wages rise with job tenure reduces the present value of wages paid to a worker by an employer.
Q2) The manager of Mel's Diner feels that most of his waiters are rude to customers and don't hustle enough. He proposes that all tips should be placed in one pot and divided on the basis of the number of customers served. This plan is likely to ________ hustle and ________ rudeness.
A) increase; decrease
B) increase; increase
C) decrease; decrease
D) decrease; increase
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13
Chapter 12: Gender, Race, and Ethnicity in the Labor Market
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Sample Questions
Q1) In a given market, women with the same skills as men earn less. Which of the following would suggest that the main source of the discrimination are the managers that must work with them?
A) Managers working with women must be paid more.
B) Companies with managers who hire more women make a larger profit.
C) Companies hiring women offer more day care and other amenities favored by women.
D) All of the above.
Q2) Occupational discrimination
A) occurs when secretaries are paid less than truck drivers.
B) is when the distribution of jobs within one group is different from the distribution of jobs within another group.
C) is keeping one group in lower-paying jobs although their potential productivity is equal to that of those who have access to higher-paying jobs.
D) is the desire of those in one group to work in different jobs than those in another group.
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Chapter 13: Unions and the Labor Market
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Sample Questions
Q1) Which of the following statements is generally true about unions?
A) Unions raise wages in the range from 30 to 40%.
B) Public sector unions raise wages more than private sector unions.
C) The union wage advantage is higher in Europe than it is in the United States.
D) Unions reduce the dispersion of earnings among workers.
Q2) Estimating the effect of unions on wages is difficult because
A) data on wages in union and non-union jobs are scarce.
B) relative wage effects are often indeterminate.
C) there is no way to estimate what wages would be if unions did not exist.
D) unions have no effect on the non-union segment of the labor market.
Q3) Which of these probably has played the LEAST important role in the drop in unionization rates in the United States over the past 20 years.
A) The increase in the share of employment by female workers.
B) The increase in the share of employment in sunbelt states.
C) Resistance to unionization by employers.
D) Increased competitive pressures within product markets.
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Page 15
Chapter 14: Unemployment
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Sample Questions
Q1) If unemployment insurance were perfectly experience rated then
A) unemployment would probably rise.
B) unemployment would probably fall.
C) unemployment could either rise or fall.
D) unemployment would be unchanged.
Q2) Experience rating is
A) assigning a higher UI tax to employers who lay off workers frequently.
B) assigning a higher UI tax to employers who have a large number of experienced workers.
C) assigning a higher UI tax to employers who have a large number of inexperienced workers.
D) assigning a higher UI tax to employers who have not been in business for very long, because these businesses are likely to fail.
Q3) A retraining program to teach unemployed auto workers how to program computers would help to reduce ________ unemployment.
A) frictional
B) cyclical
C) seasonal
D) structural
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Page 16
Chapter 15: Inequality in Earnings
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Sample Questions
Q1) The Gini coefficient in a society where all families have equal incomes would be
A) 0.
B) 0.5.
C) 1.0.
D) 2.0.
Q2) Technological change
A) is the equivalent of a decrease in the price of capital.
B) is the equivalent of an increase in international trade.
C) will always decrease the demand for less-educated workers.
D) will always decrease the demand for well-educated workers.
Q3) The greatest growth of earnings disparities within an occupation in the 1980s occurred
A) within the sales profession.
B) among government workers.
C) within the teaching profession.
D) among assembly line workers.
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Chapter 16: The Labor Market Effects of International Trade and
Production Sharing
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Sample Questions
Q1) When companies outsource jobs to foreign countries, the price of the outsourced inputs is effectively reduced. The cross-wage effect on the demand for other workers will be positive
A) if the substitution effect dominates the scale effect.
B) only if the substitution effect is positive.
C) if the scale effect dominates the substitution effect.
D) only if the reduction in prices increases the real wage of all workers.
Q2) Nation X produces and consumes only one good. This good is produced only with labor and all workers are exactly alike. One worker produces one unit of this good every day. One worker in Nation Y can produce two units of the goods a day (and this is the only good they consume). What will happen if there is open trade between the countries?
A) Nation X will import from Nation Y.
B) Nation X will outsource the production of the good to Nation Y.
C) Nation Y will import the good from Nation X.
D) No trade or outsourcing will take place.
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