King: Economics Chapter 14 Instructions Answer the following questions and then press 'Submit' to get your score. Question 1 Which of the following statements about the market demand curve for labour in a competitive labour market is false? a) The market demand curve represents the individual demand curves of all firms which hire this type of labour added together. b) The market demand curve may shift if there is a change in the behaviour of some firms which hire this type of labour. c) The market demand curve may shift if there is change in the wage rate for this type of labour. d) The market demand curve may shift if there is a change in the number of firms which hire this type of labour. Question 2 Which of these two assumptions must be made if a firm's demand curve for a given type of labour is to be the same as its MRP curve for that labour?X No matter what the wage rate is, and no matter how many workers the firm hires, it will always use the same quantity of other inputs.Y No matter what the wage rate is, other firms will always hire the same number of workers. a) Both X and Y. b) X only. c) Y only. d) Neither X nor Y. Question 3 Which of the following statements about a firm's demand for labour is false? a) Its demand for labour is a derived demand. b) Its demand for labour depends on the marginal revenue product of the labour concerned. c) If the prices of other inputs that are used along with the labour increase, the firm would be sure to demand less labour. d) If labour became more productive, the firm would be sure to demand less labour. Question 4 Two workers, X and Y, are roofers working on the same wage for the same firm. X earns more economic rent than Y. Which of the following statements is false? a) X has lower transfer earnings than Y. b) Because Y is earning some economic rent, the firm which hires Y could reduce the wage and Y would continue to work for that firm. c) If the wage for roofers generally fell enough to persuade Y to take up another occupation, X might continue to be a roofer. d) If we add up X's economic rent and transfer earnings, we would get the same figure we would get if we add up Y's economic rent and transfer earnings. Question 5 Which type of workers is most likely to enjoy substantial economic rent? a) Those with high wages which compensate them for unpleasant aspects of their jobs. b) Those with high wages which result from them possessing the innate ability to develop some skill to a very high level c) Those with low wages which can be paid because their jobs have other very pleasant aspects. d) Those with low wages which result from no need to have a period of training. Question 6 Suppose one type of labour is hired by only one employer. Which of the following statements is false? a) The employer is called a monopsonist. b) The employer faces an upward sloping supply curve for labour, which is also the average cost of labour, ACL. c) The employer hires more labour so long as the MP of that labour exceeds the marginal cost of that labour, MCL. d) The wage paid equals the MP of the labour hired. Question 7 Which of the following statements about minimum wages is false? a) In a competitive labour market, a minimum wage creates a kinked supply curve. b) In a competitive labour market where a minimum wage has already increased the wage, a rise in the minimum wage always reduces the quantity of labour that is demanded. c) In a monopsonistic labour market, a minimum wage creates a two-part MCL curve. d) In a monopsonistic labour market where a minimum wage has alreadt increased the wage, a rise in the minimum wage always reduces the quantity of labour that is demanded. Question 8 Which of the following statements about trade unions is false? a) They have many roles in addition to negotiating wages. b) If they negotiate a higher wage in a competitive labour market, they will result in employers wanting to hire less labour. c) If they negotiate a higher wage with a monopsonistic employer, they will always make the employer want less labour. d) They may attempt to alter the demand curve for labour. Question 9 Which of the following statements about efficiency wages is false? a) Efficiency wages are paid only to discourage shirking. b) Efficiency wages discourage shirking because they create an excess supply of labour, so a shirking worker who was dismissed might face a lengthy period of unemployment. c) The no shirking constraint curve shows the number of non-shirkers who could be hired at each wage. d) The efficiency wage is above the market wage. Question 10 Which of the following statements about discrimination in labour markets is false? a) It is always illegal for employers in the UK to discriminate on race or gender. b) Employers are most likely to discriminate against applicants from particular groups if the wage is held above the market wage, for example because of a minimum wage law. c) It is irrational for a profit-maximizing firm to pay different wages to different genders for the same work, unless they or their clients believe one gender performs better than the other. d) Females earn less on average than males, partly because within each occupation, males hold a disproportionate share of the better paid jobs, and partly because women tend more often to work in low paid occupations.