Question : 17.3   Equilibrium in the Labor Market 1) The equilibrium wage and : 1387983

 

17.3   Equilibrium in the Labor Market

 

1) The equilibrium wage and quantity of labor in the market for skilled workers is determined by

A) the strength of labor unions.

B) the monopsony power of firms.

C) the demand and supply of labor.

D) the market value created by the output of these skilled workers.

 

 

2) What happens to the equilibrium wage and quantity of labor if output price rises?

A) The equilibrium wage and the equilibrium quantity of labor rise.

B) The equilibrium wage and the equilibrium quantity of labor fall.

C) The equilibrium wage falls and the equilibrium quantity of labor rises.

D) The equilibrium wage rises and the equilibrium quantity of labor falls.

 

 

3) Consider the market for opticians. What is likely to happen to the equilibrium wage and quantity of opticians if more and more people turn to laser eye surgery instead of wearing glasses or contact lens?

A) The equilibrium wage and the equilibrium quantity of opticians rise.

B) The equilibrium wage and the equilibrium quantity of opticians fall.

C) The equilibrium wage rises and the equilibrium quantity of opticians falls.

D) The equilibrium quantity falls and the equilibrium wage of opticians rises.

 

4) Suppose the government grants child care subsidies to mothers entering the labor force. What is likely to happen to the equilibrium wage and quantity of labor?

A) The equilibrium wage and the equilibrium quantity of labor rise.

B) The equilibrium wage and the equilibrium quantity of labor fall.

C) The equilibrium wage falls and the equilibrium quantity of labor rises.

D) The equilibrium wage rises and the equilibrium quantity of labor falls.

 

 

5) Consider the market for pilots. What is likely to happen to the equilibrium wage and quantity of pilots if the government enforces a lower mandatory retirement age, say from age 65 to age 62?

A) The equilibrium wage and the equilibrium quantity of pilots rise.

B) The equilibrium wage and the equilibrium quantity of pilots fall.

C) The equilibrium wage falls and the equilibrium quantity of pilots rises.

D) The equilibrium wage rises and the equilibrium quantity of pilots falls.

 

 

6) Suppose the following two events occur in the domestic market for radiologists:

a.Some hospitals are outsourcing some radiology services such as reading x-rays.

b.Some medical schools have closed down their radiology departments as fewer students enroll in this field.

 

What is likely to happen to the equilibrium wage and quantity of radiologists following these two events?

A) The equilibrium wage and the equilibrium quantity of radiologists rise.

B) The equilibrium wage and the equilibrium quantity of radiologists fall.

C) The equilibrium quantity falls and the effect on the equilibrium wage of radiologists is indeterminate.

D) The equilibrium wage falls and the effect on equilibrium quantity of radiologists is indeterminate.

 

7) Suppose the following two events occur in the market for elementary school teachers:

a.Overcrowded schools and education budget cuts have discouraged young college students from pursuing careers in teaching.

b.With an increasing birth rate, the number of children entering the elementary school system is expected to increase significantly over the next ten years.

 

What is likely to happen to the equilibrium wage and quantity of teachers as a result of these two events?

A) The equilibrium quantity and the equilibrium wage of elementary school teachers fall.

B) The equilibrium wage rises and the effect on the equilibrium quantity of elementary school teachers is indeterminate.

C) The equilibrium quantity falls and the effect on the equilibrium wage of elementary school teachers is indeterminate.

D) The equilibrium quantity falls and the equilibrium wage of elementary school teachers rises.

 

 

8) Consider this quote from an article in the Wall Street Journal: “The stock of educated workers isn’t increasing fast enough to keep up with rising demand. ……. Employers are paying the typical four-year college graduate [without graduate school] 75% more than they pay high-school grads. Twenty-five years ago, they were paying 40% more. Employers insist on ever better-educated, skilled workers. ”

Source: David Wessel, “Lack of Well-Educated Workers Has Lots of Roots, No Quick Fix”, Wall Street Journal, April 19, 2007, Page A2.

 

Which of the following best explains the rapid increase in the wage differential between college graduates and high school graduates?

A) The demand for college educated workers shifted to the right while the supply of college educated workers shifted to the left.

B) The supply of high-school educated workers shifted to the right faster than the demand for college educated workers shifted to the right.

C) The demand for college educated workers shifted to the right faster than the supply of college educated workers shifted to the right.

D) The demand for high-school educated workers shifted to the left faster than the supply of college educated workers shifted to the right.

 

9) According to the signaling hypothesis,

A) signaling about job openings occurs in help wanted classified ads.

B) a college diploma signals to employers that a person has certain desirable characteristics.

C) a slowdown in output signals to companies the need to hire more labor.

D) a high unemployment rate is a signal to the government to take some policy action.

 

 

10) Consider the following statements about the signaling hypothesis of education:

a.The signaling hypothesis of education is based on the idea that college graduates are more productive than non-college graduates.

b.The signaling hypothesis of education suggests that firms rely on human capital requirements to ensure worker quality.

c.Employers rely on certain signals, such as a college diploma, to gauge a potential employee’s abilities because it could lower the cost of acquiring information about the person that is not easily observed.

 

Which of the statements above is true about the signaling hypothesis of education?

A) a, b, and c

B) a and b only

C) b and c only

D) a and c only