Microeconomics Multiple choice questions

Question 1 of 20

5.0
Points

Which of the following
is the most important reason for growing inequality in the income
distribution in the United States?

A. inheritances

B. an increase in demand for
highly educated workers

C. discrimination

D. a steady increase in tuition
and fees for a college education

Question 2 of 20

5.0 Points

The poverty rate in the
United States is highest for:

A. married couples.

B. childless households.

C. single people.

D. female headed households.

Question 3 of 20

5.0
Points

When wages increase,
the income effect ________ the supply of labor and the substitution effect
________ the supply of labor.

A. increases; decreases

B. decreases; increases

C. decreases; decreases

D. increases; increases

Question 4 of 20

5.0
Points

If Jerry’s demand for
leisure increases as the wage increases:

A. the substitution effect
dominates the income effect.

B. the income effect dominates the substitution effect.

C. the income effect is
completely offset by the substitution effect.

D. There is insufficient
information.

Question 5 of 20

5.0
Points

According to the
income effect of labor supply, if leisure is a normal good, then an increase
in the wage rate will ________ the quantity of labor ________.

A. increase; demanded

B. decrease; supplied

C. decrease; demanded

D. increase; supplied

Question 6 of 20

5.0
Points

When a firm hires a
worker for one hour, the marginal cost to that firm equals the:

A. average total cost of
production at the quantity produced.

B. diminishing marginal
productivity of that worker.

C. hourly wage of that worker.

D. price of each item that the
worker produces in that hour.

Question 7 of 20

5.0
Points

A decrease in the
supply of musicians ________ the number of musicians employed, and ________
the wages paid to musicians.

A. increases; increases

B. increases; decreases

C. decreases; increases

D. decreases; decreases

Question 8 of 20

5.0 Points

If the price of output
increases the labor ________ curve shifts to the ________.

A. supply; left

B. demand; left

C. demand; right

D. supply; right

Question 9 of 20

5.0
Points

When the wage falls:

A. all workers will work more hours.

B. all workers will work fewer
hours.

C. some workers will work more
hours and some workers will work fewer hours, but we don’t know whether
average hours will increase or decrease.

D. some workers will work more
hours and some workers will work fewer hours, but on average, hours worked
will fall.

Question 10 of 20

5.0
Points

According to the
substitution effect of labor supply, when the wage rate goes up:

A. it becomes more costly to consume leisure, so people will work
more.

B. the opportunity cost of
enjoying leisure goes down.

C. firms will hire more workers
since people are more willing to work.

D. it becomes less costly to
consume leisure, so people will work more.

Question 11 of 20

5.0
Points

If the equilibrium wage is above
the actual wage:

A. the wage rate will rise.

B. the demand for labor will
increase.

C. the wage rate will fall.

D. the demand for labor will
decrease.

Question 12 of 20

5.0
Points

The marginal revenue
product of labor is the:

A. change in revenue resulting
from adding an additional unit of labor.

B. cost of additional labor
necessary to produce an additional unit of output.

C. change in labor necessary to
produce an additional unit of output.

D. change in output resulting from adding an additional unit of
labor.

Question 13 of 20

5.0
Points

An equilibrium in the
labor market is a situation in which:

A. there is no unemployment.

B. marginal revenue product equals the wage.

C. there is no pressure for
wages to change.

D. wages exceed minimum wage.

Question 14 of 20

5.0
Points

If the price of output decreases,
the equilibrium wage of workers who produce that output will ________ and
________ workers will be hired.

A. decrease; fewer

B. increase; fewer

C. decrease; more

D. increase; more

Question 15 of 20

5.0
Points

The price of an hour
of leisure time is:

A. the minimum wage rate.

B. zero.

C. the income that could have been earned in that hour.

D. determined by the value of
the activity the person engages in during that hour of leisure.

Question 16 of 20

5.0 Points

Other things being
equal, as diminishing marginal returns begin to occur, the marginal revenue
product of labor:

A. increases as more workers are
used.

B. remains unchanged as more
workers are used.

C. decreases as more workers are used.

D. none of the above

Question 17 of 20

5.0
Points

Government taxes and
transfers:

A. reduce the wealth of all Americans.

B. reduce the wealth of the
poorest Americans and increase the wealth of the richest Americans.

C. increase the wealth of the
poorest Americans and reduce the wealth of the richest Americans.

D. increase the wealth of all
Americans.

Question 18 of 20

5.0
Points

The individual supply
curve for labor is the relationship between the wage and the quantity of
labor that:

A. all workers are willing to
provide.

B. any given worker is willing to provide.

C. any given firm is willing to
employ.

D. all firms are willing to
employ.

Question 19 of 20

5.0 Points

Labor costs account for
approximately ________ of total production costs.

A. one-fourth

B. three-fourths

C. one-third

D. half

Question 20 of 20

5.0
Points

A government report
that makes working in a particular industry more attractive to workers will
most likely ________ the number of workers hired in that industry, and
________ the wage paid to those workers.

A. increase; decrease

B. decrease; increase

C. decrease; decrease

D. increase; increase