Chapter 28

Question 1

Today a college graduate earns about $_____ while a high school graduate earns about $_______.

Answer 1

B. $51,000; $28,000

Question 2

Which statement is true?
A. american manufacturing wages are the highest in the world.
B. American manufacturing wage rates are the lowest of any industrial country.
C. Our manufacturing wage rates are the second highest in the world.
D. Both statements are true

Answer 2

D. None statements are true.

Question 3

Which statement is false?
A. The substitution effect means that you trade away leisure time for more money.
B. The income effect means that you trade away some money for more leisure time.
C. Both statements are true.

Answer 3

C. Both statements are true.

Question 4

In 1991, the base year, you were earning $350/week. Your wages rose to $450 in 2000, the current year, when the Consumer Price Index stood at 135. What statement can you make about what happened to your real wages over this period?

Answer 4

B. They fell.

Question 5

Teh backward-bending labor supply curve includes each of these variables except

Answer 5

C. the savings effect

Question 6

A firm’s demand for labor is

Answer 6

A. the MRP schedule

Question 7

If Jason were offered a job as an accountant at $30,000 and a job as a running back for the Oakland Raiders at $300,000, and he would have been willing to accept the latter even if it paid as little as $50,000, he would be receiving economic rent of

Answer 7

C. $250,000

Question 8

An effective minimum wage is

Answer 8

A. Above the equilibrium level

Question 9

Which statement is true about incomes in the United States?
A. Almost everyone earns about the same income.
B. Almost everyone is either very rich or very poor.
C. There is a wide disparity of income.
D. None of these statements is true.

Answer 9

C. There is a wide disparity of income.

Question 10

Some conservative economists want to help more teenagers to find jobs by

Answer 10

C. Lowering the minimum wager rate for teenagers

Question 11

Which statement is false?
A. A firm’s marginal revenue product curve for labor is its demand curve for labor.
B. Most desirable jobs are in the primary labor market
C. Virtually no one today earns economic rent.
D. None of these statements is false.

Answer 11

C. Virtually no one today earns economic rent.

Question 12

The amount a person earns over and above the amount she/he would be willing to work for is called

Answer 12

B. Economic rent

Question 13

Suppose your economics professor earns an equal annual salary of $40,000. The professor loves teaching and would not quit her job if her pay were reduced to $15,000 per year. Your professor is earning annual economic rent of

Answer 13

B. $25,000

Question 14

According to the theory of the backward-bending labor supply curve, as the wage rate rises,

Answer 14

A. first the substitution effect sets in, and then the income effect.

Question 15

The possibility of earning economic rent is great if

Answer 15

B. the demand of a factor is very high relative to supply.

Question 16

If you are earning $20,000 a year today and you were to earn $40,000 a year in 10 years.

Answer 16

D. Your money wages will have increased

Question 17

Which statement is true?
A. The higest paid professional athletes earn economic rent.
B. Economic rent is paid on land, but not in the form of wages.
C. Economic rent is earned mainly by the poor and the lower middle class
D. Economic rent is paid in proportion to the marginal revenue product of a resource.
E. None of the statements is true

Answer 17

A. The higest paid professional athletes earn economic rent.

Question 18

Who is most likely to be earning economic rent?

Answer 18

D. A major league baseball player

Question 19

Conservative economists would like to help younger workers get work experience by

Answer 19

C. lowering the minimum wager rate

Question 20

If the legal minimum wage rate were set at $15 hour,

Answer 20

A. employment would decline substatnially

Question 21

AN increse in the demand for electricians will

Answer 21

D. have no effect on economic rent earned by electricians

Question 22

Compared to real wages in 1973, today they are about

Answer 22

B. 9% lower

Question 23

Amoung these countries, which has the highest hourly wage and fringe benefits in manufacturing?

Answer 23

A. Germany

Question 24

Traditionally our society got its dirty work done by
A. forcing oppressed minorities to do it
B. Paying people higher wages to do it
C. All of the choices are correct

Answer 24

C. All of the choices are correct

Question 25

Economic rent is generally associated with

Answer 25

A. High wages