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Contents

Review of Labor Markets

Review Test

Table of Contents

Further Reading

Which group makes up labor supply?

Which of the following do firms set equal to the wage level in order to maximize their revenue?

If the MRP of labor at a firm is $5 an hour, and the wage is $4 an hour, what should the firm do?

If the MRP of labor at a certain firm is $10 and the wage is $10 an hour, what should the firm do?

If the MRP of labor at a particular firm is $7 an hour, and the wage is $8 an hour, what should the firm do?

What does the law of diminishing returns mean, when applied to the MRP of labor?

A firm's labor demand curve will be the same as which of the following?

When the wage drops, what will firms most likely do?

Goods X and Y are complementary goods. The price of Good X decreases. What probably happens to the wages of workers in the Y industry?

Goods X and Y are substitute goods. What probably happens to the wages of workers in the Y industry when the price of X increases?

Which of the following will NOT cause an increase in wages for workers in the automobile industry?

Why is it unlikely that a drop in the price of jet fuel would drastically affect the wages of workers in the airplane industry?

Which of the following most resembles a minimum wage?

Which will most likely be caused by a minimum wage?

Which group is a minimum wage most likely to hurt?

Which of the following can act as a deterrent to work long hours?

Which of the following may cause a drop in the unemployment rate?

Why does a minimum wage raise the unemployment rate?

When deciding how much to work, workers must choose between:

Leisure is

Some economists believe that the labor supply curve can be

If the substitution effect is stronger than the income effect, the labor supply curve will be

If the substitution effect is initially stronger than the income effect, and then the income effect is stronger than the substitution effect at high wage levels, then the labor supply curve will be:

Which of the following will NOT influence a worker's choice between consumption and leisure?

Which curves help determine a worker's leisure/consumption decisions?

A consumption/leisure decision is most like:

What is labor, from a worker's point of view?

Workers use their indifference curves and budget constraints to:

An increase in wages will cause a worker's budget constraint to:

Labor is inversely related to:

When wages increase, the substitution effect will:

When wages drop, the income effect will:

When wages rise, the income effect will:

When wages drop, the substitution effect will:

Wages are the price of:

Which is usually stronger at low wage levels, the substitution effect or the income effect?

Horizontal addition can be used to find:

Cameras and film are complementary goods. What happens to labor demand in the camera industry when the price of film increases?

Jackets and ties are complementary goods. What happens to the MRP of labor in the tie industry when the price of jackets goes down?

Vitamins and sweatshirts are normal goods. What happens to the wages of workers in the vitamins industry when the price of sweatshirts goes up?

If the MRP of labor is greater than the wage, that means that:

If there is no minimum wage, who sets the market wage?

To which of the following does the law of diminishing returns apply?

Which of the following workers generates the most MRP of labor?

If a firm is hiring workers correctly, then the last worker will have an MRP of labor of:

Firms use what intersection to determine their labor demand?

If the market wage is above the minimum wage, which of the following will NOT be true?

A drop in the price of paper causes the MRP of labor of paper workers to:

Which of the following combinations would most likely lead to a drop in hiring at a bookstore?

Why can't a worker's budget constraint shift in or out?

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