Ch 10

Question 1

What do people do when they work in labor markets?

Answer 1

They make themselves better off

Question 2

What is the law of diminishing returns?

Answer 2

as more labor is used the extra output that an individual can produce declines

Question 3

What happens to the value when more people are hired?

Answer 3

It declines

Question 4

What is the value of extra output to the employer?

Answer 4

it is the extra revenue that comes in from selling that extra output

Question 5

What is the Value Marginal Product? (VMP)

Answer 5

the marginal product of a worker multiplied by the price of the output

Question 6

When will the employer hire more employees?

Answer 6

When the value of the employee is at least as great as the cost of having the employee in terms of revenue

Question 7

The VMP is what to labor?

Answer 7

the demand for labor

Question 8

Which way does the VMP slope?

Answer 8

downward

Question 9

Which way does the labor supply curve?

Answer 9

upward

Question 10

How does social welfare programs effect the supply of labor?

Answer 10

the supply of labor decreases because less people are willing to work if they benefit for doing nothing

Question 11

What happens when less people are working?

Answer 11

output decreases therefore our economy/country is not better off and the people whoa are working these higher paying jobs are beneficiaries for the people on welfare

Question 12

When taxes or higher regulations are placed on employees what happens to the demand for labor?

Answer 12

the demand falls

Question 13

What happens when the demand falls due to high regulations or taxes placed on employees?

Answer 13

employment lowers and wages lower as well

Question 14

Why does the law of unintended consequences apply to higher regulations on employees?

Answer 14

Because most of the time when legislation tries to improve working conditions by increasing regulations they make businesses decrease their employment and decrease the employers pay

Question 15

What is human capital?

Answer 15

the investment in ones self to further their education or themselves in any way; this raises the demand for their labor

Question 16

What is the screening theory?

Answer 16

it says that education and training may be valuable too the individual, not because the training increases productivity, but because it points out which employees will be good.

Question 17

What is not of interest in the screening theory?

Answer 17

the subject matter, for screening theory, it is the physical and mental effort that is valuable

Question 18

What is make work fallacy?

Answer 18

it is the idea that jobs have value

Question 19

What is the establishment survey?

Answer 19

The bureau of labor statistics ask large businesses about how many employees are on their payroll, to measure the # of jobs the economy is creating

Question 20

What does the establishment survey not include?

Answer 20

self employed persons or contractors (they are only operating expenses, they are not on the pay roll)

Question 21

What does the BLS household survey ask?

Answer 21

it asks individuals about their employment status over the phone; which complies the unemployment rate and other statistics

Question 22

What is included in the Civilian Non-Institutional Population?

Answer 22

members in the population 16 years and older not in the military or institutionalized (about 248.5 million)

Question 23

What is included in the employed?

Answer 23

everyone who worked at least 1 hour of pay or profit in the previous week. Everyone who was not paid for working in a family business, but worked at least 15 hours at that business in the previous week. Or anyone who didn’t work in the previous week due to illness, vacation etc. (about 146.6 million)

Question 24

What is included in the unemployed?

Answer 24

everyone not employed, but made efforts to find a job in the previous 4 weeks (about 9.3 million)

Question 25

What is included in the civilian labor force

Answer 25

employed + unemployed (about 155.8 million)

Question 26

What is the U.S. population?

Answer 26

315 million

Question 27

What is the unemployment rate?

Answer 27

the unemployed divided by the civilian labor force (5.9%)

Question 28

What is considered a high unemployment rate?

Answer 28

5.5%

Question 29

What has been the highest unemployment rate since The Great Depression?

Answer 29

around 10-11%

Question 30

What is the labor force participation rate?

Answer 30

it is the civilian labor force divided by the civilian non-institutional population

Question 31

What is the labor force participation rate measure?

Answer 31

how many people are interested in holding a job