9-1 Economists say that "the demand for labor is a derived
demand." This means that
A. the demand curve for labor is downward sloping.
B. the demand curve for labor is upward sloping.
C. the demand for labor is based on the demand for products
that labor helps to produce.
D. the demand for labor is based on the supply of labor.
E. variations in demand for different kinds of labor explains
all of the differences in wages.
9-2 The quantity demanded of a resource is inversely related to
its price. This is because
A. cost-conscious firms will substitute other resources
for those resources whose prices go up.
B. product prices will fall as the prices of resources rise. The
lower product price will give consumers the incentive to buy more
product and producers the incentive to hire more resources.
C. product prices will rise as the prices of resources rise. The
higher product price will give producers the incentive to produce
more product also to hire more resources.
D. product prices will fall as the prices of resources rise. The
lower product price will give producers the incentive to make
less product and to hire less resources.
E. the higher price of some resources will force producers to
substitute other resources which are less costly. Thus, product
price will fall and output will be expanded, increasing the producers'
use of all resources.
9-3 The quantity demanded of a resource is inversely related to
its price. This is because
A. cost-conscious firms will use expensive resources rather than
those which become less expensive.
B. product prices will rise as the prices of resources
rise. The higher product price will give consumers the incentive
to buy less product and producers the incentive to hire fewer
resources.
C. product prices will rise as the prices of resources rise. The
higher product price will give producers the incentive to produce
more product also to hire more resources.
D. product prices will fall as the prices of resources rise. The
lower product price will give producers the incentive to make
less product and to hire less resources.
E. the higher price of some resources will force producers to
substitute other resources which are less costly. Thus, product
price will fall and output will be expanded, increasing the producers'
use of all resources.
9-4 The demand of an individual employer for labor is based directly
upon
A. the supply of labor
B. the value of the product produced by the labor and the
productivity of labor.
C. the price of the labor at equilibrium
D. the marginal cost of the workers' time
E. none of the above.
9-5 Which of the following will cause the demand for skilled welders
to increase?
A. A decrease in the wages paid skilled welders.
B. An increase in the number of schools for training welders.
C. A decrease in the number of schools for training welders.
D. A decrease in the demand for products produced by welders.
E. None of the above.
9-6 Which of the following will cause the demand for auto mechanics
to increase?
A. A decrease in the wages paid skilled auto mechanics.
B. An increase in the number of schools for training auto mechanics.
C. A decrease in the number of schools for training auto mechanics.
D. A decrease in the demand for auto repairs.
E. An increase in the demand for auto repairs.
9-7 Which of the following will cause the demand for computer
repair technicians to increase?
A. A decrease in the wages paid computer repair technicians.
B. An increase in the number of schools for training computer
repair technicians.
C. A decrease in the number of schools for training computer repair
technicians.
D. A decrease in the price of new computers (which are a substitute
for computer repairs).
E. A fall in the price of computer upgrades which require
computer repair technicians to install them.
9-8. An employer's demand curve for labor is downward sloping:
A. under no circumstances because the firm supplies jobs on the
market; the firm possesses only a supply curve.
B. due to the law of diminishing marginal returns.
C. due to the law of supply.
D. because the supply curve is upward-sloping.
E. none of the above.
9-9 If other circumstances remain the same, as more workers are
hired by an employer,
A. the value of hiring an additional worker will rise.
B. the value of hiring an additional worker will fall.
C. the productivity of an additional worker will rise.
D. the cost of hiring an additional worker will fall.
E. the demand for labor will fall.
9-10 An employer would be inclined to hire an additional worker
if he or she can:
A. contribute more to the employer's revenue than to the
employer's cost
B. contribute more to the employer's cost than to the employer's
revenue
C. reduce the employer's costs
D . increase the employer's costs
E . make the firm's owner laugh, and make the workplace fun
9-11 Education raises the demand for labor only if it
A. makes labor more productive, and thus more attractive
to employers.
B. keeps young workers out of the labor force and thus reduces
the supply of labor.
C. makes workers more ambitious and leads them to demand more
pay.
D . makes workers literate, but does not "over-educate"
them.
E . results in them saving more of their paychecks.
9-12 A downward-sloping demand curve for labor means that
A. an employer would be willing to hire more workers at
a low wage than at a high wage.
B. workers will be more willing to work at a low wage than at
a high wage.
C. an employer would be willing to hire fewer workers at a low
wage than at a high wage.
D. workers will be less willing to work at a low wage than at
a high wage.
E. none of the above.
9-13 If computers in the workplace make secretaries more productive,
then when the computers are purchased,
A. they will replace secretaries and lower the demand for them.
B. they will raise the demand for secretaries, whether they know
how to use computers or not.
C. they will raise the demand for secretaries that know
how to use computers, but may lower the demand for secretaries
that do not.
D. they will have no effect on the demand for secretaries.
E. they will raise the demand for secretaries that do not know
how to use computers, but may lower the demand for secretaries
that know how to use them.
9-14 Demand for workers would be most likely to decrease over
a time period if
A. the rate of inflation is lower than the growth of wages over
time.
B. output or productivity per labor hour is decreasing.
C. automation is increased.
D . the rate of inflation is generally anticipated to be high.
E . demand for consumer goods relative to demand for capital goods
is increasing.
9-15 Suppose that several years of training are required to become
an electrical engineer. If the demand for electrical engineers
rises and remains high,
A. the wages of electrical engineers will rise immediately, but
the supply of them will stay the same, even years later.
B. the wages of electrical engineers will rise immediately, and
will rise even further in the future.
C. the wages of electrical engineers will rise immediately,
which will cause the supply of them to rise eventually as more
people choose the profession.
D. the wages of electrical engineers will fall.
E. the supply of electrical engineers will increase immediately,
so that the wages of electrical engineers will not change.
9-16 The supply curve of labor is upward sloping because
A. the more hours a person works, the higher is the wage
that is needed to entice him or her to give up other uses of time,
such as leisure.
B. the productivity of labor is inversely related to the wage
rate.
C. the employer is willing to pay greater wages to get less attractive
and less productive employees.
D. the productivity of labor is inversely related to the amount
of labor hired, due to the law of diminishing returns.
E. a greater number of persons will be willing to work if the
wage is low, since they will need the money; as the wage increases,
fewer workers will want to work since they can afford not to.
9-17 Which of the following is most likely to increase the supply
of labor?
A. Workers expect a lower wage to work the same number
of hours as before.
B Holidays make leisure more attractive or valuable to workers.
C. Other pursuits, such as hobbies, become more attractive to
workers.
D. Workers are willing to work fewer hours at every possible wage
rate.
E. Workers value the alternative uses of their time more than
they did before.
9-18 Which of the following is most likely to decrease the supply
of labor?
A. Workers expect a lower wage to work the same number of hours
as before.
B Holidays make leisure more attractive or valuable to
workers.
C. Other pursuits, such as hobbies, become less attractive to
workers.
D. Workers are willing to more more hours at every possible wage
rate.
E. Workers value the alternative uses of their time less than
they did before.
9-19 Which of the following is most likely to raise the average
wages of current American workers without reducing the numbers
employed?
A. The minimum wage is doubled by an act of Congress.
B. Technological progress raises productivity.
C. Automation is outlawed.
D A new law requires all wage rates to double.
E Anew law mandates that persons doing similar work requiring
the same amount of effort earn the same pay.
9-20 In the short run, the supply of a particular kind of skilled
labor is based on
A. the demand for that kind of labor.
B. the opportunity cost of the workers' time.
C. the price of labor.
D. the amount of training required to perform that kind of labor.
E. the demand for the products produced by that kind of labor.
9-21 Two jobs exist that require the same skills and entail the
same sorts of work. Only the working conditions and employee benefits
differ. In which of the following circumstances would you expect
the employee in job 1 to have a greater hourly wage than the employee
in job 2?
A. Job 1 has generous medical, dental, sick leave and pension
benefits; job 2 does not.
B. Job 1 offers paid vacation time; job 2 does not.
C. Job 1 is dangerous; job 2 is not.
D. Job 1 offers flexible work schedules; job 2 does not.
E. Job 1 is regarded as prestigious; job 2 is not.
9-22 Two jobs exist that require the same skills and entail the
same sorts of work. Only the working conditions and employee benefits
differ. In which of the following circumstances would you expect
the employee in job 1 to have a greater hourly wage than the employee
in job 2?
A. Job 1 has no medical, dental, sick leave or pension
benefits; job 2 does.
B. Job 1 offers paid vacation time; job 2 does not.
C. Job 1 is not dangerous; job 2 is.
D. Job 1 offers flexible work schedules; job 2 does not.
E. Job 1 is located in a comfortable location in a safe neighborhood;
job 2 is not.
9-23 Two jobs exist that require the same skills and entail the
same sorts of work. Only the working conditions and employee benefits
differ. In which of the following circumstances would you expect
the employee in job 1 to have a greater hourly wage than the employee
in job 2?
A. Job 1 has medical, dental, sick leave or pension benefits;
job 2 does not.
B. Job 1 offers paid vacation time; job 2 does not.
C. Job 1 is not dangerous; job 2 is.
D. Job 1 imposes inflexible work schedules; job 2's hours
are flexible.
E. Job 1 has a pleasant and comfortable work environment; job
2 does not.
9-24 Two jobs exist that require the same skills and entail the
same sorts of work. Only the working conditions and employee benefits
differ. In which of the following circumstances would you expect
the employee in job 1 to have a greater hourly wage than the employee
in job 2?
A. Job 1 is located near day-care centers; job 2 is not.
B. Job 1 offers no paid vacation time; job 2 does.
C. Job 1 is not dangerous, job 1 does.
D. Job 1 has co-workers that are pleasant and fun to work with;
job 2 does not.
E. Job 1 has a pleasant and comfortable work environment; job
2 does not.
9-25 Two jobs exist that require the same skills and entail the
same sorts of work. Only the working conditions and employee benefits
differ. In which of the following circumstances would you expect
the employee in job 1 to have a greater hourly wage than the employee
in job 2?
A. Job 1 has generous medical, dental, sick leave and pension
benefits; job 2 does not.
B. Job 1 offers paid vacation time; job 2 does not.
C. Job 1 is not dangerous; job 2 is.
D. Job 1 offers flexible work schedules; job 2 does not.
E. Job 1 is not regarded as prestigious; job 2 is.
9-26 Which of the following is false?
A. Differences in worker productivity is one major reason why
individuals' earnings (wages) differ.
B. Even if all workers were identical, differences in job characteristics
(desirability) would cause individuals to have different earnings.
C. Firms seeking to maximize profit will hire very few
minority and female workers.
D .Other things equal, more dangerous jobs will pay higher wages
than less dangerous jobs.
E . Supply and demand together generally determine the earnings
differences between workers.
9-27 Workers who make high wages are usually those who are
A. producing an expensive product.
B. in great demand.
C. in limited supply.
D. highly educated or skilled , and thus more productive.
E. all of the above.
9-28 Other factors the same, the wages of workers will tend to
be high if
A. capital is scarce.
B. output per worker is decreasing over time.
C. profits are low.
D. output per worker is high.
E. workers have little desire to enjoy their leisure.
9-29 If funding increases for programs that encourage and subsidize
undergraduate college education,
A. starting salaries for college graduates are likely to
fall.
B. salaries for college teachers are likely to fall.
C. starting salaries for college graduates are likely to rise.
D. the demand for graduate-level education is likely to fall.
E. the demand will rise for employees that are college graduates.
9-30 What will result if Congress mandates that employers must
provide all full-time employees with free child-care services?
A. If employers can alter wages and salaries, employers will eventually
pass some or all of the cost of child care on to employees in
the form of lower pay.
B. If employers cannot change wages and salaries, the increased
total compensation involved in hiring full-time workers will cause
employers to hire fewer full-time employees.
C. Employers may find it desirable to hire part-time workers in
greater numbers, while hiring fewer full-time workers.
D . The compensation for full-time workers with children will
be higher than for other workers. This may lead to employers discriminating
against hiring potential employees with children.
E . All of the above are possible results.
9-31 A woman who sells machines that automate car washes would
probably like to see the minimum wage law
A. abolished.
B. changed to exempt teenagers from the law.
C. extended to cover all car-wash establishments (including
weekend car washes performed by service clubs and churches).
D . changed to exempt car-washing establishments, but not other
businesses.
E . changed to exempt all service-oriented businesses.
9-32 When the wages of a group of workers (such as teenagers)
is set artificially above equilibrium,
A. employers are more likely to decide which workers to hire based
on factors such as the employee's ability and the wage they will
accept.
B. employers are more likely to decide which workers to hire based
upon the wage they will accept.
C. employers are less likely to decide which workers to
hire based on factors such as the employee's ability and the wage
they will accept.
D . employers will find it harder to discriminate against potential
workers for such things as appearance, background , and other
factors that have nothing to do with the job.
E . employers' tendency to discriminate on factors that have nothing
to do with the job will not be affected.
9-33 Unions have strongly supported minimum wage laws. This is
probably because minimum wage laws
A. increase union labor demand.
B. reduce union labor demand.
C. reduce union labor supply.
D. affect union worker's wages directly, since union members work
for the minimum wage.
E. increase union labor supply.
9-34 Other things remaining the same, increasing the minimum
wage rate will probably result in
A. lower profits and the same level of product prices.
B. greater employment, since more people want to work at the new
wage than at the old, lower wage.
C. reduced employment for unskilled workers, as employers
substitute away from using the (now more expensive) unskilled
labor.
D . great reduction of employment for (usually higher-skilled,
higher wage) union employees.
E . A shortage of labor.
9-35 An increase in the minimum wage will cause
A. unskilled workers to have more difficulty finding jobs.
B. skilled and employed workers to get paid less.
C. fewer people to be unemployed.
D. less job discrimination in the job market.
E. fewer people to be on welfare and unemployment.
9-36 Increases in the minimum wage will probably
A. cause a shortage of labor.
B. Increase employment opportunities for unskilled workers.
C. eliminate poverty.
D. create some unemployment.
E. increase the demand for uneducated workers.
9-37 Which of the following are most likely to benefit from increases
in the minimum wage?
A. Inexperienced workers.
B. Uneducated workers.
C. Unproductive workers.
D. Skilled union workers.
E. Teenagers looking for their first job.
9-38 If all workers had identical preferences, abilities, skills,
education, and experience, the highest-paying jobs would be the
A. easiest
B. most pleasant
C. most dangerous
D most prestigious
E. safest
9-39 Unions can increase the wages of their members by
A. increasing labor supply.
B. decreasing demand for the product produced by their members.
C. decreasing the productivity of their members.
D. decreasing the supply of labor services offered by their
members.
E. increasing the employment of other, non-union workers.
9-40 A union can be a source of inefficiency if
A. it causes more than an efficient quantity of labor to be employed.
B. it causes less than an efficient quantity of labor to
be employed.
C. it causes more than an efficient quantity of output. to be
produced
D. workers are paid less than their marginal contribution to the
employer's revenue.
E. workers are paid more than their marginal contribution to the
employer's revenue.
9-41 The pretzel industry was recently unionized by the United
Pretzel Twisters Federation of America. If the labor union acts
to maximize the economic rents (producer surplus) of its members,
what can you say about employment (amount of labor hired) in the
pretzel industry?
A. It will be more than it would be if there were no union.
B. It will be less than it would be if there were no union.
C. It will be the same as it would be if there were no union.
D . We cannot tell what will happen to employment, but wages will
be higher than they would be without the union.
E . We cannot tell what will happen to employment, but wages will
be lower than they would be without the union.
9-42 The opportunity cost to a worker of taking a particular
job is usually
A. the economic rent (producer surplus) of that job..
B. the consumer surplus of that job.
C. the minimum wage legally set by the government.
D. the demand for labor.
E. the wage in the best alternative job.
9-43 In a fundamental sense, a labor union can correctly be called
A. a monopsonist B. a price taker
C. a monopolist D. perfect competition
E. organized crime
9-44 The term "economic rent" is used to identify a
situation in which
A. a worker earns more than she is worth to the employer
B. a worker earns more than the amount of money necessary
to keep her at her present job.
C. a worker is acting like a monopolist.
D. an employer is acting like a monopsonist.
E. a worker is acting like a monopsonist.
9-45. Suppose we live in a region in which short people are
generally discriminated against (so that they are not usually
hired by employers, even though they are qualified). An employer
who does not discriminate against short people may be able to
hire short workers at a bargain wage. Therefore
A. it is against a company's economic interests to discriminate.
B. it is in the economic interests of employers not to discriminate.
C. the selfish profit motive of companies will discourage them
from discriminating.
D. companies that are most concerned with profit and "the
bottom line" are least likely to discriminate.
E. all of the above.
9-46 Suppose that some workers at a factory are earning economic
rents. What does this imply?
A. The employer must be paying all workers more than they are
worth.
B. The employer must be exploiting the workers.
C. The employer must be paying all workers less than they are
worth..
D. That a monopolistic labor union must be raising the wages.
E. None of the above needs to be true for some workers
to earn rents.
9-47 Zip Code is a professional football player for the Arizona
Cardinals. He enjoys his job and likes being on the team based
in his home town. He also earns economic rents. This means
A. he earns more money than his opportunity cost.
B. he earns more than he would have to earn to keep him
on the team.
C. he must be a price taker in the sale of his services.
D. he gets income from property that he rents out.
E. he gets paid more than he is worth to the team's owners.
9-48. Donna Deskmonger is a secretary. She does not enjoy her
job at all, and only works for the money. She does earn economic
rent, so
A. she is getting paid more than she is worth to her employer.
B. she earns more than her opportunity cost.
C. she should quit and find a job elsewhere.
D. she must belong to a union.
E. she must be a landlord.
9-49 Human capital consists of
A. robots and other machines that replace human workers.
B. all the money spent by businesses on hiring human workers.
C. skills and education acquired by workers.
D. the tools and machines that human workers use while on the
job.
E. money borrowed by businesses that is used to pay the salaries
of human workers.
9-50 Which of the following is an investment in human capital?
A. Employers buy robots to replace human workers.
B. The government increases unemployment benefits for those without
jobs.
C. An accounting firm purchases a new computer software program
to keep accounts.
D. The minimum wage is increased.
E. A secretary at a law firm completes the program to become
a paralegal.
All content on this page is ©2000 by Ray Bromley
Chapter 9 Questions