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Exam 11: Labor Demand and Supply

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Question 91

Multiple Choice

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Higher wages lead to

A) a leftward shift in the labor demand curve.
B) a leftward shift in the labor supply curve.
C) fewer people supplying their labor to a labor market.
D) more people supplying their labor to a labor market.

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Question 92

Multiple Choice

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Over long periods, the price elasticity of demand for labor becomes

A) unit elastic.
B) inelastic.
C) less elastic.
D) more elastic.

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Question 93

Multiple Choice

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The marginal revenue product is equal to:

The labor demand curve in a labor market

An individual's time is divided into the two main categories of

Most economist agree that individual labor supply between $40 and $80 and hour is

(Table: Production of Bagels at The Bagel Factory) Use Table: Production of Bagels at The Bagel Factory. The marginal product of labor for the sixth worker is _____ bagels. ${ \text { Table: Production of Bagels at The Bagel Factory } } \\\begin{array} { | l | l | } \hline \text { Workers per Day } & \text { Dozens of Bagels per Day } \\\hline 0 & 0 \\\hline 1 & 5 \\\hline 2 & 15 \\\hline 3 & 30 \\\hline 4 & 42 \\\hline 5 & 51 \\\hline 6 & 57 \\\hline 7 & 60 \\\hline 8 & 50 \\\hline 9 & 57 \\\hline\end{array}$

Which of the following would shift the labor supply curve?

Nora, the manager of three hospital rehabilitation clinics, has the clinics adopt software that allows better tracking of supplies. This software adoption also allows therapists to spend less time gathering supplies for therapy sessions. On average, each therapist can meet with one more patient per day. The marginal revenue product of the therapists will _____, and the demand for therapists at the clinics will _____.

The marginal revenue product of labor is equal to:

The wage in a labor market is determined by the

When the substitution effect dominates, a person's labor supply curve

Damon's wage falls. The substitution effect would cause him to _____ his work hours, and the income effect would cause him to _____ his work hours.

The _____ principle explains why the loss of jobs due to automation in certain industries may create jobs in other industries.

(Table: Employment and Output in the Buckwheat Market) Use Table: Employment and Output in the Buckwheat Market. In the table, if the price of a bushel of buckwheat is $5, and the price of labor (the wage) is $40, then the profit-maximizing quantity of labor is: ? $\begin{array}{l}\text { Table: Employment and Output in the Buckwheat Market }\\\begin{array} { | l | l | l | } \hline \begin{array} { l } \text { Quantity of Labor } \\\text { (workers) }\end{array} & \begin{array} { l } \text { Quantity of } \\\text { Buckwheat }\end{array} & \begin{array} { l } \text { Marginal Product of } \\\text { Labor }\end{array} \\\hline 0 & 0 & 0 \\\hline 1 & 19 & 19 \\\hline 2 & 36 & 17 \\\hline 3 & 51 & 15 \\\hline 4 & 64 & 13 \\\hline 5 & 75 & 11 \\\hline 6 & 84 & 9 \\\hline 7 & 91 & 7 \\\hline 8 & 96 & 5 \\\hline\end{array}\end{array}$

(Figure: Competitive Equilibrium in the Labor Market) Use Figure: Competitive Equilibrium in the Labor Market. In the figure, an increase in demand of the good produced will, all else equal, lead to a(n) _____ in the equilibrium quantity of labor and a(n) _____ in the equilibrium price of labor.

Summarize the three-step recipe for forecasting changes in wages and employment opportunities in a labor market.

Consideration of the benefits of choosing an occupation should NOT include

When nonwage worker benefits are increased at a company, the company's demand for labor will _____ because employees are _____ to the company.

(Table: Production and Employment for Jackson's Custom Photo Framing Shop III) Use Table: Production and employment for Jackson's Custom Photo Framing Shop. Jackson runs a custom picture-framing shop. The table shows his daily production function. He can hire a worker at a daily competitive wage of $70, and he sells a custom frame at a competitive price of $10. ​ ​ ${ \begin{array} { l } \text { Table: Production and Employment for } \\\text { Jackson's Custom Photo Framing Shop III }\end{array} } \\\begin{array} { | l | l | } \hline \begin{array} { l } \text { Quantity of Labor } \\\text { (workers) }\end{array} & \begin{array} { l } \text { Quantity of Picture } \\\text { Frames }\end{array} \\\hline 0 & 0 \\\hline 1 & 2 \\\hline 2 & 10 \\\hline 3 & 17 \\\hline 4 & 23 \\\hline 5 & 28 \\\hline 6 & 32 \\\hline 7 & 35 \\\hline\end{array}$ I. How many workers should Jackson hire to maximize his profit? II. Suppose Jackson can employ more sophisticated tools, which make his workers twice as productive.