Suppose all workers are identical but working for Ajax is more pleasant than working for Acme. In all other non-wage respects the two firms offer the same job characteristics. In equilibrium:a) the wage at Ajax will be higher

than at Acme b) the wage at Ajax will be lower than

at Acme c) workers will have lower net utility

at Acme d) employment will be lower at Ajax if

demand is the same in both markets

a) b) c) d)

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a) Flow, Inc. is a more prestigious firm than Stock Co

b) earnings are subject to greater variability at Stock, Co.

c) Stock Co. offers better pension and insurance benefits than Flow, Inc.

d) the demand for labor at Stock Co. exceeds the demand for labor at Flow, Inc.

The wage rate paid workers at Flow, Inc. will most likely exceed that at otherwise identical Stock Co. if:

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Which of the following would tend to increase labor supply to a particular job?

a) b) c) d)

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a) The employer cuts back the scope and coverage of the medical plan

b) Vesting in the firm’s pension plan is pushed back from 1 year to 5 years

c) The crime rate rises in the city where the job is located

d) The perceived status of the job improves

Suppose this labor market is competitive, so that the wage rate is W2. If W* is imposed as the minimum wage, then employment in this market:

Labor

$

MRP

S

MWC

W*

W2

W1

Q1 Q3 Q40 Q2

0% 0%0%0%

a) will riseb) will fallc) remain the samed) may or may not change;

more info is required

Suppose this labor market is monopsonistic, so that the wage rate is W1. If W* is imposed as the minimum wage, then employment in this market:

Labor

$

MRP

S

MWC

W*

W2

W1

Q1 Q3 Q40 Q2

0% 0%0%0%

a) will riseb) will fallc) remain the samed) may or may not change;

more info is required

Consider a proposed law to deregulate the hair-care industry. Barbers would be allowed to do work previously confined to stylists, and the latter would no longer be required to pass strict licensure exams. Which outcome would you expect to result from this deregulation?

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a) A decrease in economic rent to current stylists

b) A decrease in economic rent to current barbers

c) An increase in economic rent to beauty school operators

d) An increase in economic rent to workers in occupations in which displaced stylists find jobs

Currently, the minimum wage law does not apply to about 12% of non-supervisory workers. Assuming that all consequently displaced workers find jobs in the uncovered sector, an increase in the minimum wage will:

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a) make all workers better offb) cause a migration of workers from

the uncovered to the covered sectorc) create additional output in the

uncovered sector of a lower value than the output lost in the covered sector

d) cause an increase in economic rent to original workers in the uncovered sector

The profit-maximizing level of job safety is a probability level of:

a) b) c) d) e)

0% 0% 0%0%0%

Prob(Safety) MBs MCs

.65 25 8

.70 22 10

.75 19 12

.80 18 13

.85 15 14

.90 10 16

.95 7 20

a) 0.65b) 0.75c) 0.80d) 0.85e) 0.95

If workers underestimate the actual amount of risk associated with the job because of imperfect information, the values in the:

a) b) c) d)

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a) MBs column will understate the true marginal benefit and the profit-maximizing level of job safety will be less than the optimal level

b) MBs column will overstate the true marginal benefit and profit-maximizing level of job safety will exceed the optimal level

c) MCs column will overstate the true marginal cost and the profit-maximizing level of job safety will exceed the optimal level

d) MCs column will understate the true marginal cost and the profit-maximizing level of job safety will exceed the optimal level

If OSHA were to become increasingly effective in reducing workplace hazards, then

a) b) c) d)

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a) firms’ profits would be increased b) wage differentials between safe and

hazardous jobs would diminish c) wage differentials between safe and

hazardous jobs would increase d) employment in safe jobs would

increase and employment in hazardous jobs would decrease

The major cost of continued job search is:

a) b) c) d)

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a) the cost of placing job-wanted advertisements in the newspaper

b) expenses paid to a job-placement agency

c) foregone wages of job offers not accepted

d) transportation expenses of going to job interviews

If $8.50 is the acceptance wage, what is the probability of Sally finding her next wage offer acceptable?

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a) 0.25b) 0.30c) 0.50d) 0.70

0.000.050.100.150.200.250.300.35

$7 $8 $9 $10 $11

Frequency

Wage

If the rate of inflation increases but Sally mistakenly believes it has not, then:

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a) both the acceptance wage and the entire distribution will shift to the left, thereby leaving expected search duration unchanged

b) the entire distribution will shift to the right, but the acceptance wage will not, thereby reducing expected search duration

c) the acceptance wage will shift to the right, thereby reducing excepted search duration

d) both the acceptance wage and the entire distribution will shift to the right, thereby leaving expected search duration unchanged

A fully anticipated reduction in the rate of inflation is expected to:

a) b) c) d)

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a) reduce the unemployment rate in the short run, but not in the long run

b) reduce the unemployment rate in the both the short run and the long run

c) increase the unemployment rate in the short run, but not in the long run

d) have little impact on the unemployment rate in either the short run or the long run

a) reduce job search duration by shifting the wage offer distribution to the left

b) reduce job search duration by decreasing the acceptance wage and intensifying job search

c) reduce job search duration by shifting the wage offer distribution to the right

d) have no effect on job search duration, as the acceptance wage will decrease to offset the effect of the shifting wage offer distribution

In addition to their regular unemployment benefits, a recent Washington state program offered an average of $562 to any job loser who became reemployed within 13 weeks of filing for unemployment compensation. Economic theory suggests that such a “bounty” scheme should:

a) b) c) d)

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Which of the following contributes to a higher unemployment rate of African American youths compared to white youths?

a) b) c) d)

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a) Both wage offer distributions and acceptance wages are lower for African American youths

b) The African American wage offer distribution is to the right of the white distribution

c) White youths have a higher acceptance wage than African American youths

d) African American youths have a higher acceptance wage than white youths

Which of the following is not a characteristic of an internal labor market?

a) b) c) d)

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a) A port of entry, at which workers gain access to the bottom of the job ladder

b) A hierarchy of jobs constituting the job ladder

c) A set of rules and procedures governing the wage structure

d) Equal access by internal and external workers to jobs at all skill levels

Internal labor markets are more likely to occur when

a) b) c) d)

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a) principal-agent problems are absent

b) workers at a particular firm require specific training

c) workers at a particular firm require general training

d) firms expect a high rate of turnover and low hiring costs

Suppose a management team assigns 100 points to the job of clerk/typist and 75 points to a job on the loading dock. If the wage paid to a clerk/typist is $8.00 per hour, then the hourly wage paid to a worker on the loading dock would be:

a) b) c) d)

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a) $6b) $8c) $10d) $12

Suppose that all other nonwage aspects of the jobs in these two markets are identical. We would expect labor supply in B to increase if:

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a) the probability of job loss rises in B b) earnings are more variable in A c) job safety improves in A d) there are better prospects for

advancement in A