Question 1

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the summer than in the winter, we can assume that his labor supply curve for the range of earnings in this example
A)is horizontal.
B)is vertical.
C)is upward sloping.
D)has a backward-bending portion.

Accepted Answer

The answer of Scenario 18-3
Sam has two jobs, one for...

Question 2

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?
A)The opportunity cost of Fiona's leisure time has decreased.
B)Fiona may choose to work more hours due to the decrease in her wage.
C)Fiona may choose to work fewer hours due to the decrease in her wage.
D)All of the above are correct.

Accepted Answer

The answer of Fiona's hourly wage decreases from $10 to...

Question 3

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?
A)work and wages
B)work and leisure
C)wages and productivity
D)technology and wages

Accepted Answer

The labor supply curve shows the relationship between the quantity of labor supplied and the wage rate. It represents the trade-off that individuals face between working and having leisure time. As the wage rate increases, the opportunity cost of leisure time increases, leading individuals to supply more labor. Conversely, when the wage rate decreases, the opportunity cost of leisure time decreases, leading individuals to supply less labor. A and C are not entirely accurate, as the labor supply curve does not directly represent the trade-off between work and wages or productivity. D is also incorrect, as technology does not directly affect the labor supply curve.

Question 4

An upward-sloping labor supply curve means that
A)workers prefer to buy more leisure time when their incomes increase.
B)workers prefer to supply less labor when wages are high.
C)an increase in the opportunity cost of leisure leads workers to increase the quantity of labor they supply.
D)All of the above are correct.

Accepted Answer

An upward-sloping labor supply curve means that as wages increase, workers are willing to supply more labor because the opportunity cost of leisure has increased. Therefore, choice C is the correct answer as it accurately explains the relationship between wage rate and labor supply. Choices A and B are incorrect because they imply that workers would prefer to supply less labor as their incomes increase, which contradicts the idea of an upward-sloping labor supply curve.

Question 5

Roxanne's hourly wage increases from $9 to $13. Which of the following describes a consequence of the increase in Roxanne's wage?
A)The opportunity cost of Roxanne's leisure time has increased.
B)Roxanne may choose to work fewer hours due to the increase in her wage.
C)If Roxanne's labor supply curve is upward sloping, she will choose to work fewer hours.
D)Both a and b are correct.

Accepted Answer

A) The opportunity cost of Roxanne's leisure time has increased: This is true because with an increase in wage, Roxanne's time is now more valuable and therefore the opportunity cost of using her time for leisure activities has increased.
B) Roxanne may choose to work fewer hours due to the increase in her wage: This is also true because with a higher wage, Roxanne may feel that she can achieve her earnings goals with fewer hours worked, allowing her more leisure time.
C) If Roxanne's labor supply curve is upward sloping, she will choose to work fewer hours: This statement alone is not a definite consequence of an increase in Roxanne's wage as the shape of Roxanne's labor supply curve can be affected by a variety of factors.

Question 6

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. During the summer months, what is Sam's opportunity cost of taking an hour off work to go hiking?
A)$13
B)between $11 and $12
C)$11
D)less than $11

Accepted Answer

Sam's opportunity cost during the summer months is the amount of money he could have earned by working. Since Sam earns $11 per hour during the summer, his opportunity cost of taking an hour off work to go hiking is $11. Therefore, the correct answer is C.

Question 7

Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is
A)vertical.
B)horizontal.
C)upward sloping.
D)backward sloping.

Accepted Answer

Miguel's labor supply curve is upward sloping because as his wage rate increases, he is willing and able to supply more hours of work. This is evidenced by the fact that when his wage increases from $7.50 to $9 per hour, he decides to work more hours per week (from 10 to 12). If his labor supply curve were vertical, this increase in wage would not lead to an increase in hours worked. Similarly, if it were horizontal, he would be willing to work the same number of hours regardless of the wage rate offered. If it were backward sloping, he would actually decrease the number of hours worked as his wage rate increased.

Question 8

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. During the winter months, what is Sam's opportunity cost of taking an hour off work to go skiing?
A)$13
B)between $11 and $12
C)$11
D)less than $11

Accepted Answer

The answer of Scenario 18-3
Sam has two jobs, one for...

Question 9

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?
A)The opportunity cost of Fiona's leisure time has increased.
B)Fiona may choose to work more hours due to the decrease in her wage.
C)Fiona may choose to work fewer hours due to the decrease in her wage.
D)Both b and c are correct.

Accepted Answer

The answer of Fiona's hourly wage decreases from $10 to...

Question 10

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. Assume that Sam has an upward-sloping labor supply curve. If the opportunity cost of Sam's leisure time increases, he will respond by working
A)more hours.
B)fewer hours.
C)an equal number of hours.
D)a number of hours that cannot be determined from the information. The labor demand curve is needed to make this determination.

Accepted Answer

Since Sam's labor supply curve is upward-sloping, an increase in the opportunity cost of leisure time will make working more attractive to him. Therefore, he will respond by working more hours.

Question 11

If your wage increases from $10 per hour to $15 per hour, then your
A)opportunity cost of an hour of leisure decreases by $5 per hour.
B)opportunity cost of an hour of leisure increases by $5 per hour.
C)out-of-pocket cost of an hour of leisure decreases by $5 per hour.
D)out-of-pocket cost of an hour of leisure increases by $5 per hour.

Accepted Answer

Opportunity cost measures the value of the next highest valued opportunity foregone. In this case, if your wage increases from $10 per hour to $15 per hour, the opportunity cost of an hour of leisure increases because now the value of your time has increased. If you choose to take an hour off work, you are giving up the opportunity to earn $15 instead of $10, so the cost of that leisure time has increased.

Question 12

For a worker, the opportunity cost of an hour of leisure
A)rises by $8 when his wage rises by $8 per hour.
B)falls by $8 when his wage rises by $8 per hour.
C)is the same for a celebrity talk-show host as it is for a teacher.
D)is determined by factors that are unrelated to his hourly wage.

Accepted Answer

The answer of For a worker, the opportunity cost of...

Question 13

Which of the following is not correct? Using data from 2014,
A)immigrants (both legal and illegal) make up about 40 percent of the U.S. population.
B)immigration lowers the earnings of native-born workers in the United States by about 1 to 3 percent.
C)illegal immigrants make up about 5 percent of the U.S. workforce.
D)today the largest percentage of immigrants come from Latin America and Asia, whereas in the 1950s and 1960s the largest percentage came from Europe.

Accepted Answer

According to data from 2014, immigrants (both legal and illegal) make up approximately 13.6 percent of the U.S. population, not 40 percent.

Question 14

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 10 hours per week, but now she decides to work 15 hours per week. For this price range, her labor supply curve is
A)vertical.
B)horizontal.
C)upward sloping.
D)backward sloping.

Accepted Answer

The labor supply curve shows the amount of labor that an individual is willing and able to supply at different wage rates. In this case, the individual's wage rate has increased from $9 to $11 per hour, which would typically result in an increase in the quantity of labor supplied.

However, the individual has also increased her hours worked per week from 10 to 15. This suggests that there may be some labor supply elasticity, as the individual is willing to supply more labor at the higher wage rate.

An upward sloping labor supply curve reflects this elasticity, as it shows that at higher wage rates, individuals are willing to supply more labor. Therefore, the answer is C.

Question 15

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is
A)vertical.
B)horizontal.
C)upward sloping.
D)backward sloping.

Accepted Answer

The labor supply curve is backward sloping in this scenario because as the wage rate increases from $9 to $11, the quantity of labor supplied decreases from 25 hours to 20 hours. This indicates a negative relationship between wage rate and hours worked, characteristic of a backward sloping labor supply curve.

Question 16

Which of the following is correct? Using data from 2014,
A)immigrants (both legal and illegal) make up about 40 percent of the U.S. population.
B)low-skilled immigration lowers the earnings of all workers in the United States by about 15 percent.
C)illegal immigrants make up about 20 percent of the U.S. workforce.
D)over 80 percent of immigrants are from Latin America and Asia.

Accepted Answer

The answer of Which of the following is correct? Using...

Question 17

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. If Sam takes fewer hours of leisure in the winter than in the summer, we can assume that his labor supply curve for the range of earnings in this example
A)is horizontal.
B)is vertical.
C)is upward sloping.
D)has a backward-sloping portion.

Accepted Answer

Since Sam works longer hours during the summer when he earns $11 per hour compared to the winter when he earns $13 per hour, we can assume that his labor supply curve is upward sloping. This means that he is willing to supply more hours of work as the wage rate increases, but he also values his leisure time and is less willing to work as many hours when the wage rate is lower.

Question 18

Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?
A)The opportunity cost of Fiona's leisure time has decreased.
B)Fiona may choose to work fewer hours due to the increase in her wage.
C)If Fiona's labor supply curve is upward sloping, she will choose to work fewer hours.
D)Both a and b are correct.

Accepted Answer

The answer of Fiona's hourly wage increases from $8 to...

Question 19

Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does the increase in the demand for labor affect the value of the marginal product of labor (VMPL)?
A)The VMPL increases by less than $4.
B)The VMPL increases by $4.
C)The VMPL increases by more than $4.
D)The VMPL decreases by $4.

Accepted Answer

In a competitive market, the equilibrium wage is equal to the value of the marginal product of labor (VMPL). An increase in the demand for labor results in an increase in the equilibrium wage. Since the increase in the wage is equal to $4, it means that the VMPL has also increased by $4 to match the new equilibrium wage. Therefore, the answer is B.

Question 20

Which of the following statements is correct?
A)Neither economic theory nor evidence from the U.S. economy suggests that there is a close link between productivity and real wages.
B)Economic theory suggests that there is a close link between productivity and real wages, but evidence from the U.S. economy fails to confirm that link.
C)Evidence from the U.S. economy suggests a close link between productivity and real wages, but economic theory provides no basis for such a link.
D)Both economic theory and evidence from the U.S. economy suggest that there is a close link between productivity and real wages.

Accepted Answer

Economic theory posits that there should be a positive relationship between productivity and real wages, as increased productivity should lead to increased profits which can then be distributed to workers in the form of higher wages. Empirical evidence from the U.S. economy generally supports this relationship as well, with periods of high productivity growth typically leading to increases in real wages over time. Therefore, both theoretical and empirical considerations point to a close link between productivity and real wages in the U.S. economy.

Quiz 18: The Markets for the Factors of Production

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

The labor supply curve is fundamentally a representation of the trade-off people face between which of the following?

An upward-sloping labor supply curve means that

Roxanne's hourly wage increases from $9 to $13. Which of the following describes a consequence of the increase in Roxanne's wage?

Miguel receives a pay raise at his part-time job from $7.50 to $9 per hour. He used to work 10 hours per week, but now he decides to work 12 hours per week. For this price range, his labor supply curve is

Fiona's hourly wage decreases from $10 to $8. Which of the following describes a consequence of the decrease in Fiona's wage?

If your wage increases from $10 per hour to $15 per hour, then your

For a worker, the opportunity cost of an hour of leisure

Which of the following is not correct? Using data from 2014,

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 10 hours per week, but now she decides to work 15 hours per week. For this price range, her labor supply curve is

Your college roommate receives a pay raise at her part-time job from $9 to $11 per hour. She used to work 25 hours per week, but now she decides to work 20 hours per week in order to spend more time studying economics. For this price range, her labor supply curve is

Which of the following is correct? Using data from 2014,

Fiona's hourly wage increases from $8 to $10. Which of the following describes a consequence of the increase in Fiona's wage?

Suppose an increase in the demand for labor results in an increase of $4 per hour in the equilibrium wage. How does the increase in the demand for labor affect the value of the marginal product of labor (VMPL) ?

Which of the following statements is correct?