Question 1

What happens to the labor supply curves in both countries when Mexican workers leave Mexico and move to the United States?

Accepted Answer

When Mexican workers move from Mexico to the United States, the labor supply decreases in Mexico because there are fewer workers available. Conversely, the labor supply increases in the United States as these workers add to the pool of labor available in the country.

Question 2

Figure 18-5 -Refer to Figure 18-5. When the relevant labor supply curve is S₁, and the labor market is in equilibrium, the

Accepted Answer

The answer of Figure 18-5 
-Refer to Figure 18-5. When...

Question 3

If the wages of a dentist increase, which of the following statements is not true?

Accepted Answer

When the wages of a dentist increase, the opportunity cost of leisure increases because the time spent not working becomes more costly in terms of foregone earnings. This makes statement D incorrect, as it suggests the opposite.

Question 4

Scenario 18-4
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to immigrate to southern Canada.
-Refer to Scenario 18-4. In the labor market in southern Canada, the equilibrium wage

Accepted Answer

When workers immigrate to southern Canada, the supply of labor increases. This leads to a decrease in the equilibrium wage due to the higher supply, but the quantity of labor employed rises because employers can hire more workers at the lower wage.

Question 5

Among the people who are characterized below, who has the highest opportunity cost of leisure?

Accepted Answer

The opportunity cost of leisure is the income one foregoes by choosing leisure over work. The CEO, earning $225 per hour, has the highest opportunity cost for their leisure time since they are foregoing the highest amount of income to engage in leisure activities.

Question 6

Figure 18-5 -Refer to Figure 18-5. If the relevant labor supply curve is S₂ and the current wage is W₁,

Accepted Answer

Given the current wage is below the equilibrium wage where the supply of labor exceeds the demand for labor, there is a surplus of labor.

Question 7

When a labor market experiences a surplus of labor, there is downward pressure on

Accepted Answer

A surplus of labor means that the supply of labor exceeds the demand for labor. This situation puts downward pressure on wages because employers have more potential workers to choose from, and workers may be willing to accept lower wages to secure employment.

Question 8

Suppose that the market for labor is initially in equilibrium. An increase in immigration will cause the equilibrium wage

Accepted Answer

An increase in immigration increases the supply of labor. According to basic economic principles, an increase in supply, with demand remaining constant, leads to a decrease in price (wage, in this case) and an increase in the quantity consumed (quantity of labor employed, in this case).

Question 9

Figure 18-5 -Refer to Figure 18-5. Assume W₁ = $15 and W₂ = $11, and the market is always in equilibrium. A shift of the labor supply curve from S₂to S₁ would

Accepted Answer

The shift of the labor supply curve from S₂ to S₁, given the equilibrium wages before and after the shift ($11 to $15), indicates an increase in the value of the marginal product of labor by $4. This is because the wage rate in a competitive labor market reflects the value of the marginal product of labor, and an increase in the wage rate from $11 to $15 suggests that the value of the marginal product of labor has increased by $4.

Question 10

When labor supply increases,

Accepted Answer

When the labor supply increases, the additional supply of workers tends to decrease the wage rate, assuming the demand for labor is downward sloping. This is because, with more workers available, employers can choose from a larger pool of candidates, reducing the need to offer higher wages to attract or retain employees.

Question 11

Suppose that the wage paid to workers who de-tassel corn rises. What happens in the market for workers who weed soybean fields, given that workers who de-tassel corn can easily work weeding soybean fields?

Accepted Answer

When the wage for de-tasseling corn increases, workers may shift from weeding soybean fields to de-tasseling corn due to the higher pay, reducing the supply of workers available for soybean weeding.

Question 12

Suppose that workers immigrate to Minnesota from Canada. Which of the following correctly describes what would happen in the market for labor in Minnesota?

Accepted Answer

An increase in the supply of labor (due to immigration) would lead to a decrease in the equilibrium wage because of the higher availability of workers. The quantity of labor would increase because more workers are available for employment. The added output from an extra worker is smaller due to the law of diminishing returns.

Question 13

Consider the market for medical doctors. Suppose the opportunity cost of going to medical school decreases for many individuals. Suppose, it generally takes about 10 years to become a practicing doctor. Holding all else constant, in 10 years the equilibrium wage for doctors will

Accepted Answer

When the opportunity cost of going to medical school decreases, more individuals are likely to pursue a career as a doctor. This increase in supply of doctors, assuming demand remains constant, will lead to a decrease in the equilibrium wage for doctors in 10 years.

Question 14

Scenario 18-3
Gabrielle has two jobs, one for the winter and one for the summer. In the winter, she works as a lift attendant at a ski resort where she earns $16 per hour. During the summer, she drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. If Gabrielle takes more hours of leisure in the winter than in the summer, we can assume that her labor supply curve for the range of earnings in this example

Accepted Answer

If Gabrielle takes more hours of leisure in the winter when she earns more ($16 per hour) than in the summer when she earns less ($11 per hour), it suggests that as her wage increases, she initially supplies more labor but then chooses to work less and take more leisure time. This behavior is characteristic of a backward-bending labor supply curve, where the curve bends backward at higher wage levels as individuals opt for more leisure over additional income.

Question 15

Figure 18-4 
-Refer to Figure 18-4. This graph illustrates the market for bakers who make homemade breads and breakfast pastries. If the bakery profession becomes more attractive to young women and men because of a new reality television show, what happens in the market for bakers?

Accepted Answer

The attractiveness of the bakery profession due to a reality TV show would likely increase the number of people wanting to become bakers, which increases the supply of bakers in the market, not the demand for bakery goods.

Question 16

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

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 17

Which of the following would shift a market labor supply curve to the left?

Accepted Answer

A decrease in immigration would reduce the number of available workers in the labor market, thus shifting the labor supply curve to the left.

Question 18

Figure 18-5 -Refer to Figure 18-5. Which of the following would shift the labor supply curve from S₂to S₁?

Accepted Answer

A shift in the labor supply curve from SS1 to SS1 could be caused by a change in workers' attitudes toward the work-leisure tradeoff in favor of leisure. This would mean that workers are now more inclined to value their leisure time over work, leading to a decrease in the supply of labor at any given wage rate.

Question 19

What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?

Accepted Answer

When the wage paid to apple pickers increases, some workers who were picking pears may switch to picking apples to take advantage of the higher wages, leading to a decrease in the labor supply in the pear-picking market.

Question 20

Scenario 18-4
Suppose that workers from northern Minnesota, North Dakota, and Montana decide to immigrate to southern Canada.
-Refer to Scenario 18-4. In the labor market in the northern United States, the equilibrium wage

Accepted Answer

The answer of Scenario 18-4
Suppose that workers from northern Minnesota,...

Quiz 18: The Markets for the Factors of Production

What happens to the labor supply curves in both countries when Mexican workers leave Mexico and move to the United States?

Figure 18-5 -Refer to Figure 18-5. When the relevant labor supply curve is S1, and the labor market is in equilibrium, the