AP Micro- Unit 5 Review

Suppose that the market for low-wage labor is perfectly competitive and initially in equilibrium. If the government establishes an effective minimum wage, which of the following will occur?

• Employment of low-wage workers will decrease and unemployment will increase.

• The quantity of low-wage workers supplied will be less than the quantity demanded.

• The total wage payment received by all 
low-wage workers will increase.

• Economic efficiency will increase, since 
firms were paying workers less than the 
value of their marginal revenue product.

• Low-wage workers will be motivated to form a union.

A monopsony pays _____ & hires ____ than a perfectly competitive firm

• much more & tons of workers

• more & more

• less & less

• the same & fewer

Assume that firms sell their output in a perfectly competitive product market and hire labor in a perfectly competitive labor market. If all other factors remain constant, an increase in the demand for the firms’ product will result in which of the following changes in the labor market?

• The demand curve for labor will shift to the right.

• The supply curve for labor will shift to the left.

• The supply curve for labor will shift to the right.

• The demand curve for labor will shift to the left.

If a large number of unskilled workers enter the labor market, which of the following is most likely to occur in the labor market for unskilled workers?

• The supply curve will shift to the right and the wage rate will decrease.

• The supply curve will shift to the left and the wage rate will increase.

• The demand curve will shift to the left and the wage rate will decrease.

• The demand curve will shift to the right and the wage rate will increase.

A profit-maximizing firm will continue to hire workers until the marginal revenue product of labor is equal to the:

• demand for labor

• marginal product of labor

• price of the good that labor is producing

• marginal resource cost

Which of the following would cause the wage for computer programmers to increase?

• A decrease in the amount of physical capital per computer programmer

• A decrease in the value that computer programmers place on leisure

• A minimum wage set below the equilibrium wage in the market for computer programmers

• An improvement in the education of computer programmers

If the wage rate decreases, which of the following is the most likely outcome?

• people increase the quantity of labor supplied; firms decrease the quantity of labor demanded

• people decrease the quantity of labor supplied; firms increase the quantity of labor demanded

• people decrease their leisure and increase their supply of labor

• people decide to equalize their leisure and labor usage

The graph shows a(n):

• oligopsony
• monopoly
• monopsony
• perfectly competitive factor market and firm

Derived demand refers to:

• The demand for resources used to make a good or service.
• The supply of resources used to make a good or service.
• The demand for a product produced with specific resources.
• The supply of a product produced with specific resources.

Someone buys a car in exchange for a large amount of money. They have completed an exchange in which part of the circuclar flow model?

• Product Market

• Factor Market

• Firms

• Individuals