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Unit 6 Quiz
1. Question : An increase in the supply of capital, which is a complement to labor, will lead to

Student Answer:    a decrease in the quantity demanded of labor.

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an increase in the demand for labor.

a decrease in the demand for labor.

an increase in the quantity demanded of labor.

2. Question : The town of Saddle Peak has a fixed supply of mountain view lots. In this case, the price per square foot of mountain view lots is

Student Answer:    determined only by supply.

determined only by demand.

set by government officials of Saddle Peak.

negotiated by environmental groups and property developers.

3. Question : Table 16-1

Refer to Table 16-1. Suppose the output price is \$3. If the firm represented in the table is maximizing its profit by hiring six workers, what is the wage rate?

\$40

\$65

There is insufficient information to answer the question.

4. Question : A decrease in the wage rate causes

Student Answer:     an increase in the quantity of labor demanded.

a rightward shift of the firm’s labor demand curve.

a leftward shift of the firm’s labor demand curve.

a decrease in labor’s productivity.

5. Question : The labor supply for an industry would decrease if

Student Answer:    the wage rate falls.

the percentage of the population of ages 16 to 65 decreases.
the government welcomes foreign workers into the country.
a greater percentage of women want to work outside the home.

6. Question : Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from the age 65 years to the age 62?

Student Answer:    The equilibrium wage and the equilibrium quantity of pilots rise.
The equilibrium wage and the equilibrium quantity of pilots fall.
The equilibrium wage falls and the equilibrium quantity of pilots rises.
The equilibrium wage rises and the equilibrium quantity of pilots falls.

7. Question : Worker discrimination occurs when

workers refuse to work with persons of a different race.

customers refuse to buy products produced by a racially diverse workforce.
employers pay different employees different wages based on race.

8. Question : Figure 16-2

Refer to Figure 16-2. Which of the following statements is true?

Student Answer:    Panel B correctly describes a situation in which the income effect dominate the substitution effect at low wages (segment i) and again at very high wages (segment iii).
Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at low wages (segment i) and a situation in which the substitution effect dominate the income effect at very high wages (segment iii).
Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at low wages (segment i).
Panel B incorrectly describes a situation in which the income effect dominate the substitution effect at very high wages (segment iii)

9. Question : Let MP=marginal product, P=output price, and W=wage, then the equation that represents the condition where a competitive firm would hire another worker is

Student Answer:    P x MP = W.

P x MP < W.

P x MP > W.

P x W > MP.

10. Question : Suppose a competitive firm is paying a wage of \$12 an hour. Assume that labor is the only input. If, hiring another worker would increase output by four units per hour, then to maximize profits the firm should

Student Answer:    not change the number of workers it currently hires.

hire the extra worker.

layoff some workers.

There is not enough information is given to answer the question.

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