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# Labor Economics Study Set 3

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## Quiz 3 : Labor Demand

The elasticity of substitution is the
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Multiple Choice

E

Labor demand is more elastic the greater the elasticity of substitution between labor and capital because
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C

The production function relates
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C

What is the most accurate description of the value of a worker to the firm?
Multiple Choice
Labor demand is more elastic
Multiple Choice
The marginal rate of technical substitution at any particular labor-capital bundle is
Multiple Choice
Ally owns a shoe store. The market wage is $10 per hour, and the cost of capital is$2 per week for every $1000, of capital borrowed. Consider the isocost line associated with spending$8000, per week, and let the y-axis be the amount of capital borrowed in increments of $1000. Which of the following is not true? Multiple Choice Answer: At a wage of$25 per hour, the firm employs 50,000 of hours of labor per week. If the wage would increase to \$27 per hour, the firm would employ 45,000 hours of labor per week. What is the elasticity of labor demand?
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What is an example of the substitution effect?
Multiple Choice
Why is the short run labor demand curve less elastic relative to the long run labor demand curve?
Multiple Choice
At what point should a firm stop hiring workers?
Multiple Choice
Which of the following statements is false?
Multiple Choice
When estimating a labor demand function, one needs to
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Labor demand is more elastic the greater the elasticity of demand for the firm's output because
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What is not true when thinking of the firm's objective as a cost-minimization problem rather than as a profit-maximization problem?
Multiple Choice
What is an example of the scale effect?
Multiple Choice