Economics MCQs

Question1. Suppose that eight workers can manufacture 70 radios per day and that nine workers can manufacture 90 radios per day. If radios can be sold for $10 each, the value of marginal product of the ninth worker isa. 20 radios.b. 90 radios.c. $200.d. $900. 2. Consider the following daily production data for Caroline’s Cookies, Inc. Caroline’s sells cookies for $2.50 each and pays the workers a wage of $325 per day. What is the fourth worker’s marginal product of labor?a. 120 cookiesb. 140 cookiesc. 160 cookiesd. 180 cookies 3. If the demand curve for beef shifts to the right, then the value of the marginal product of labor for butchers willa. rise.b. fall.c. remain unchanged.d. rise or fall; either is possible. 4. This figure below shows the labor market for automobile workers. The curve labeled S is the labor supply curve, and the curves labeled D1 and D2 are the labor demand curves. On the horizontal axis, L represents the quantity of labor in the market. Which of the following events would most likely explain a shift of the labor-demand curve from D2 back to D1?a. The price of automobiles decreased.b. A large number of immigrants entered the automobile-worker market.c. A technological advance increased the marginal product of automobile workers.d. The demand for automobiles increased. 5. The distinction between purchase price and rental price applies to which factor(s) of production?a. land onlyb. capital onlyc. land and capital onlyd. land, capital, and labor 6. The Black Death in fourteenth-century Europe resulted ina. a lower marginal product of labor of surviving workers.b. a higher marginal product of labor of surviving workers.c. economic hardship for surviving peasants.d. economic prosperity for surviving landowners. 7. Working in a slaughterhouse is much riskier and more unpleasant than working in a bookstore. As a result, we’d expect a difference in wages between the two jobs. The difference is known asa. an efficiency wage.b. a compensating differential.c. a wage adjustment.d. a minimum wage. 8. Which of the following is an example of a compensating differential?a. Two workers with different levels of on-the-job training earn different salaries.b. Two workers whose jobs entail different working conditions earn different salaries.c. Two workers whose jobs require different levels of technical expertise earn different salaries.d. Two workers with different levels of natural ability earn different salaries. 9. Which of the following would not be considered human capital?a. the golf clubs a professional golfer uses to play golfb. the golf balls a professional golfer uses to play golfc. the device a golfer uses to accurately measure distances on a golf coursed. none of the above would be considered human capital 10. The time spent by students in collegea. leads to lower lifetime earnings because opportunity costs are high.b. is an investment in human capital.c. decreases human capital by lowering work experience.d. increases as the wages paid to low-skilled workers rise. 11. According to proponents of the signaling theory of education,a. schooling has no real productivity benefit.b. no one person finds it easier to earn a college degree than does any other person.c. the human-capital view of education is entirely correct.d. employers send signals to young people to persuade them to expend whatever effort is necessary to earn college degrees. 12. How does the theory of efficiency wages explain above-equilibrium wages?a. Employers are forced to pay higher wages in efficient markets.b. Employers give their workers a higher wage in the hope that it will lead to increased productivity.c. Workers get higher wages when they prove they are increasing their productivity.d. Workers demand higher wages to compensate for poor fringe benefits. 13. Evidence of discrimination in labor marketsa. applies only to race and gender.b. is conclusively identified in large differences in average wages rates between men and women.c. is difficult to verify by reference to differences in average wage rates.d. is more easily identified on the basis of race than gender. 14. If the U.S. government determines that the cost of feeding an urban family of four is $5,200 per year, then the official poverty line for a family of that type isa. $10,400.b. $15,600.c. $20,800.d. $26,000. 15. Which of the following groups has the lowest poverty rate?a. blacksb. Asiansc. children (under age 18)d. female households, no spouse present 16. Suppose that Jake and Abby each win $1,000 in a state lottery. Jake spends his winnings on a new television. Abby saves her winnings for a “rainy day.” Which of the following is correct?a. Both Jake’s and Abby’s behavior suggest that they base their purchasing decisions on transitory income.b. Jake’s behavior suggests that he bases his purchasing decisions on transitory income rather than permanent income. Abby’s behavior suggest that she bases her purchasing decisions on permanent income rather than transitory income.c. Jake’s behavior suggests that he bases his purchasing decisions on permanent income rather than transitory income. Abby’s behavior suggests that she bases her purchasing decisions on transitory income rather than permanent income.d. Both Jake’s and Abby’s behavior suggest that they base their purchasing decisions on permanent income. 17. According to the doctrine of liberalism, principles of justice are the result ofa. fair agreement and bargain.b. command-and-control policies.c. domination of the powerful by the weak.d. workers owning the factors of production. 18. If the government imposes a minimum wage above Wo, it is likely to a. increase employment to a level above Qo.b. reduce employment to a level below Qo.c. provide more income to the working poor than they collectively received before the minimum wage was set.d. have no effect on employment. 19. Economists who support minimum-wage legislation are likely to believe that thea. demand for unskilled labor is relatively inelastic.b. demand for unskilled labor is relatively elastic.c. supply of unskilled labor is relatively elastic.d. supply of unskilled labor is relatively inelastic. 20. A disadvantage associated with an Earned Income Tax Credit (EITC) program to reduce poverty is that ita. encourages illegitimate births because single women with children receive higher payments.b. rewards laziness because it provides payments to those with low incomes regardless of their work effort.c. does not help the poor who are unemployed.d. creates unemployment by increasing the wage paid to unskilled workers above the equilibrium wage. 21. In a competitive market for labor, the equilibrium wage always equals the value of the marginal product.a. Trueb. False 22. In order to calculate the value of the marginal product of labor, a manager must know the marginal product of labor and the wage rate of the worker.a. Trueb. False 23. Labor-saving technological advances increase the marginal productivity of labor.a. Trueb. False 24. If men’s preferences for work change such that more men want to be stay-at-home fathers, the wages paid to men who remain in the workplace would rise, all else equal.a. Trueb. False 25. In general, less productive workers are paid less than more productive workers.a. Trueb. False 26. The signaling theory of education maintains that workers who complete specific levels of education signal their high productivity to potential to employers.a. Trueb. False 27. It is illegal in the United States for firms to pay different employees different wages for doing the same job.a. Trueb. False 28. When comparing average wages for male and female workers in the United States, wages paid to females have been about 40 percent less than those paid to male workers.a. Trueb. False 29. Fewer than three percent of families are poor for eight or more years.a. Trueb. False 30. Libertarians believe that the government should enforce individual rights to ensure that all people have the same opportunities to use their talents to achieve success.a. Trueb. False