Question 1

The marginal resource cost of labor is the amount that an extra unit of labor adds to the firm's average costs

Accepted Answer

The marginal resource cost of labor is the additional cost incurred by a firm when they hire an extra unit of labor, not the amount added to the firm's average costs.

Question 2

Labor unions create barriers to entry in certain work settings.

Accepted Answer

Labor unions have collective bargaining power that can result in agreements with employers to only hire union members or require certain qualifications that non-union workers do not have, creating barriers to entry for non-union workers in those work settings.

Question 3

Police officers earn higher wages in part because of the dangers associated with their profession.

Accepted Answer

Police officers face the risk of physical harm and injury while on duty and are compensated for this risk with higher wages.

Question 4

Many economists conclude that in-kind income programs have served to reduce levels of inequality significantly from the levels suggested by aggregate income statistics

Accepted Answer

In-kind income programs, such as food stamps and housing assistance, provide goods and services that are not reflected in traditional income statistics. These programs have been shown to reduce poverty and inequality by providing necessary resources to individuals and families who would otherwise have limited access to them.

Question 5

The law of diminishing marginal product is a reason why the demand curve for labor is downward sloping

Accepted Answer

The law of diminishing marginal product explains why the supply curve of labor might eventually slope upwards, as it relates to the decreasing additional output from each additional unit of labor. The demand curve for labor is downward slooping primarily due to the diminishing marginal utility of labor to employers, not the diminishing marginal product.

Question 6

Other things equal, an increase in labor productivity will shift the labor demand curve to the left.

Accepted Answer

An increase in labor productivity actually shifts the labor demand curve to the right, as firms demand more labor to produce more output.

Question 7

If the demand for opera singers increases faster than the supply increases, wages will rise.

Accepted Answer

When the demand for a particular profession increases faster than the supply, the wages for that profession tend to rise due to the scarcity of qualified individuals available to fill the jobs. Therefore, if the demand for opera singers increases faster than the supply, their wages are likely to increase.

Question 8

The intersection of a firm's demand curve for labor and an individual worker's supply curve of labor determines the equilibrium wage rate.

Accepted Answer

The intersection of a firm's demand curve for labor and the market supply curve of labor determines the equilibrium wage rate, not an individual worker's supply curve. Individual workers typically do not have a supply curve that intersects with a firm's demand curve to determine wages; instead, wages are determined at the market level.

Question 9

Increases in income from sources other than employment can cause the labor supply curve to shift to the left.

Accepted Answer

If individuals receive additional income from other sources (such as investments or inheritances), they may choose to work less because they have more financial security. This leads to a decrease in labor supply and a leftward shift of the labor supply curve.

Question 10

Labor unions can ensure full employment for union workers along with a wage that is higher than the competitive wage.

Accepted Answer

While labor unions may negotiate for higher wages and better working conditions for their members, they cannot guarantee full employment for their workers. Employment is ultimately determined by market forces and the demand for labor in a particular industry or occupation.

Question 11

The concept of derived demand indicates that the demand for a final good or service is determined by the price of the inputs used to produce that final good or service.

Accepted Answer

Derived demand refers to the demand for a good or factor of production resulting from the demand for another good or service, rather than being directly related to the price of the inputs.

Question 12

A progressive tax system imposes higher marginal tax rates on lower incomes.

Accepted Answer

A progressive tax system imposes higher marginal tax rates on higher incomes, not lower incomes.

Question 13

Skilled workers earn more than unskilled workers because they invested more in acquiring their skills.

Accepted Answer

The answer of Skilled workers earn more than unskilled workers...

Question 14

A decrease in the productivity of labor will shift the demand curve for labor to the right, other things equal.

Accepted Answer

A decrease in the productivity of labor means that each worker is producing less output, which decreases the profitability of hiring additional workers. Therefore, the demand for labor will shift to the left, not the right.

Question 15

Middle-aged people have lower incomes than older people because older people are more experienced.

Accepted Answer

This statement is false. While older people may have more experience, their higher incomes may also be attributed to factors such as higher job titles, longer tenure at a company, and the ability to negotiate for higher salaries. Middle-aged people may actually have lower incomes due to factors such as skill gaps or career changes.

Question 16

Other things equal, if the quantity of labor supplied is less than the quantity of labor demanded, wages will tend to fall.

Accepted Answer

If the quantity of labor supplied is less than the quantity of labor demanded, it usually means that there is a shortage of labor. In a situation of labor shortage, wages tend to rise as employers compete for scarce labor. Therefore, the statement is false.

Question 17

Income inequality is greater within nations than among nations

Accepted Answer

Income inequality exists both within and among nations, but the disparities in income and wealth are often more pronounced among different countries due to varying levels of economic development, resources, and policies.

Question 18

Any wage increase won by unionized workers is shared with nonunion unskilled workers.

Accepted Answer

Unionized workers negotiate wages and benefits through collective bargaining, which directly benefits only the members of the union. Nonunion workers may indirectly benefit if employers raise wages to compete with unionized workplaces, but there is no direct sharing of wage increases.

Question 19

The salaries of college professors are partly determined by the demand for college education.

Accepted Answer

The demand for college education affects the number of students enrolling in colleges and universities, which in turn affects the level of funding and budget for the institution. This can impact the salaries of college professors as their salaries are often budgeted and determined by the institution. If there is a high demand for college education, there may be more funding available for salaries, including for professors.

Question 20

An increase in the price of a firm's output will shift the firm's demand curve for labor to the right, other things equal

Accepted Answer

An increase in the price of a firm's output does not shift the firm's demand curve for labor; instead, it increases the demand for labor at every wage rate, moving along the curve. The demand curve itself shifts due to changes in productivity, technology, or the price of substitute or complementary inputs, not due to changes in the price of output.

Quiz 10: Labor Markets, Income Distribution, and Poverty