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WorksheetsMicro Final
Total questions: 93
Worksheet time: 47mins
Economic theory suggests that the standard of living of American workers would fall if the
knowledge and skills of workers improved, reducing the need for workers.
United States had more natural resources.
United States turned to more automated methods of production.
productivity of American workers declined.
Is there a danger that we will “run out of jobs” as robots and other labor-saving machines replace workers?
Yes, a society that continues to replace workers with machines will eventually run out of jobs.
No, as long as our output of goods and services falls short of our consumption desires, there will be jobs.
Yes, jobs are the key to economic prosperity and as they are eliminated, our standard of living will decline.
No, we will not run out of jobs, but adoption of automated equipment does reduce output and our standard of living.
As the price paid to a resource increases,
the supply of that resource will increase in the resource market.
the supply of that resource will decrease in the resource market.
resources will shift from other resource markets to this one.
resources will shift from this resource market to others.
If a family earned $10,000 and, as a consequence, sustained a reduction of $4,000 in government benefits, the family's implicit marginal tax rate associated with the loss of the benefits would be
10 percent.
40 percent.
60 percent.
75 percent.
Firms will only adopt more automated methods of production when
they reduce the need for workers.
they lower production costs.
they lengthen the production process.
other firms in the industry are doing it.
Most studies indicate that the degree of income inequality in the United States has
been increasing in recent decades.
been declining in recent decades.
been constant since 1970.
fluctuated widely from year to year.
Economic theory suggests that college graduates receive higher wages than those with only a high school education because
on average, college graduates are more productive.
college graduates must be paid higher wages because their educational costs were higher.
college graduates have formed stronger unions.
the supply of high school graduates is small relative to the demand for their labor.
Economic theory suggests that the standard of living of American workers would rise if
the minimum wage were doubled.
the knowledge and skills of workers improved.
older workers were forced to retire earlier, opening up jobs for younger workers.
technological setbacks lowered output per worker hour, increasing the number of jobs.
When there is a close link between productivity and income
individuals will undertake fewer projects that create income.
the demand for education will be weak.
the incentive of individuals to provide others with goods and services they value highly will be weak.
individuals will have a strong incentive to improve their skills in order to increase their productivity.
Technological progress generally has the effect of
creating permanently higher levels of unemployment.
freeing resources that can now go to other uses.
lowering the national standard of living.
lowering wage rates.
Assume that Daniel is a single parent who is in poverty. He receives food stamps and Medicaid. For every $100 that he earns, Daniel loses $35 in food stamps and $20 in Medicaid benefits. Also, Daniel's income is taxed at a rate of 15%. Then, Daniel's total tax rate is
45 percent
55 percent
65 percent
70 percent
When an occupation is licensed,
consumers can be assured that the quality of the product or service will be high.
the regulators issuing the licenses can be counted on to serve the interests of consumers.
the licensing will often be used to limit entry and the competitiveness of the market.
political factors will not influence the standards and procedures for receipt of a license.
Unions often attempt to obtain stricter certification requirements and/or longer apprenticeships. These changes will tend to raise union workers' wages because they
create unnecessary unemployment.
shift the labor supply curve leftward.
decrease the marginal product of labor.
increase the demand for the product.
Economic theory suggests that the standard of living of American workers would rise if
expanded use of robotic equipment resulted in an increase in output per worker.
the minimum wage were doubled.
automation were outlawed.
a larger proportion of the labor force was unionized.
Physical and human capital investments are
different in that the opportunity for economic profit is present for physical capital but not for human capital investments.
different in that human capital decisions do not involve future income considerations, while physical capital investments do.
similar in that nonmonetary considerations play an equally important role in both.
similar in that both involve forgoing current income (and consumption) in an effort to achieve higher future income (and consumption).
In a market economy, individuals have a strong incentive to develop their skills and provide others with resources, goods, and services that they value because these activities generally
improve the overall efficiency of the economy.
increase aggregate output.
lead to a higher personal income.
provide additional tax revenue for the government.
Assume that the demand for paper products increases. Then, we expect that the
demand for trees will also increase.
demand for trees will stay the same.
demand for trees will decrease.
effect on the demand for trees is uncertain; it depends on the elasticity of the demand for paper.
Which of the following is true concerning the distribution of income?
Various measures of income inequality can be used to objectively determine the fairness of an income distribution.
When the political process is democratic, income transfer programs will redistribute income from the rich to the poor.
The fairness of an income distribution is a normative concept; it cannot be determined objectively by economic criteria.
Income inequality is the fairest method to allocate income.
Which of the following would be most likely to cause an increase in the wage rate for a particular job?
A decrease in the amount of training needed to perform this job.
An increase in the danger of this job.
An improvement in the working conditions associated with this job.
An increase in the number of workers with the skills for this job.
The rule for the optimal use of any input states that
when MRP is less than price, profit will increase when more of that resource is utilized.
when MRP is greater than resource price, profit will increase when more of that resource is utilized.
when MRP equals resource price, profit will increase when less of that resource is utilized.
when MRP is greater than resource price, profit will increase when less of that resource is utilized.
Measuring poverty using an absolute income scale like the poverty line can be misleading because
the income figures used to calculate the poverty rate do not include the value of in-kind transfers such as food, medical, and housing benefits.
money is valued less highly by the poor than by the rich.
the poor are not likely to participate in the labor market.
income measures are adjusted for the effects of labor-market discrimination.
When the price of steel rises, Ford uses more aluminum in the production of its cars. This is an example of
substitution in consumption.
substitution in production.
a change in the marginal productivity of a resource.
derived demand.
Which of the following events could increase the demand for labor?
a decrease in output price.
a decrease in the amount of capital available for workers to use.
an increase in the marginal productivity of workers.
A decrease in technology.
The real wages of workers will tend to be high when
output per worker is high.
capital is scarce.
industries are automating at a slow rate.
profits are low.
Which of the following is true of income mobility in the United States?
With time, most of those with low incomes at a point in time move up the income ladder only to be replaced by others who are youthful, inexperienced, or the victim of current misfortune.
Recent studies indicate a strong relationship between the relative income position of grandparents and their grandchildren.
During the last four decades, the share of income earned by the top quintile has fallen, whereas that earned by the bottom group has steadily risen.
If one person’s income grows, another’s income must shrink.
Regulations that make it difficult to enter a particular job market are harmful because
they reduce competition and prevent some voluntary exchanges from occurring.
they fail to stop business exploitation of workers and consumers.
they cause profits to become more unpredictable.
they reduce tax revenue collected.
If the demand for a consumer good increases, the demand for resources required to make the good will
remain the same, but the quantity demanded will increase.
decrease if the demand for the consumer good is inelastic, otherwise the demand will increase.
stay the same, but the quantity demanded will decrease.
increase.
Window cleaners that work the top floors of high-rise office buildings are, on average, paid approximately 30 percent more an hour than those that clean windows on the bottom floor. This is an example of
employment discrimination.
non-pecuniary job benefits.
irrational wage compensation.
compensating wage differentials.
Which of the following is the most accurate definition of a worker's "marginal revenue product"?
the change in the firm's profits as the result of hiring an additional worker
the change in the firm's total revenue as the result of hiring an additional worker
the change in the firm's output as the result of hiring an additional worker
the change in the firm's cost as the result of hiring an additional worker
Which of the following is true of the tax and transfer programs of the United States?
Tax-transfer programs persistently redistribute income from the rich to the poor.
Social Security, the largest transfer program, redirects income toward the elderly, a group with below-average levels of both income and wealth.
The bulk of agriculture subsidies go to large farmers with above-average incomes.
Taxes generally take a larger share of the income of the poor than is true for those with higher incomes.
If complete equality of income were legislated, which of the following would economics predict?
People would become richer.
Society would gain utility from the extra goods produced.
Individuals would willingly work longer hours and thus produce more.
The incentive to produce and perform efficiently would be virtually eliminated.
Over the past two decades, the earnings gap between college graduates and those with only a high school education has
decreased substantially.
increased substantially.
remained the same.
fluctuated in a random pattern.
As the War on Poverty programs were instituted and transfer payments expanded in the last half of the 1960s, what happened to the poverty rate?
After rising for several decades, the official poverty rate has been declining since 1968.
After falling for several decades, the official poverty rate leveled off in the 1970s, and it has been relatively stable since that time.
The poverty rate declined slowly prior to the War on Poverty programs and it declined even more rapidly after the programs were adopted.
The poverty rate rose prior to the War on Poverty period and it has continued to rise.
Which of the following is most likely to increase entry barriers into labor markets?
adoption of new licensing requirements for a large number of occupations
an increase in the competitiveness of product markets
a reduction in the minimum wage
a reduction in unemployment compensation benefits
When the earnings of Asian-American men are adjusted for productivity related factors such as work experience, education, marital status, and location, their productivity-adjusted earnings relative to white men
are greater than 100 percent, indicating that Asian-American men discriminate against white men.
are less than the ratio of their actual earnings relative to white men, indicating that, on average, the productivity characteristics of Asian-American men are superior to those of white men.
are about 15 percent less than those of white men, indicating that there is substantial employment discrimination directed toward Asian-American men.
are about 30 percent less than those of white men, indicating that there is strong employment discrimination directed toward Asian-American men.
If the marginal physical product (MPP) of labor is 60 and the price of labor per period is $20, the MPP of machinery is 75 and the price of the machinery per period is $25, in order to achieve optimal input proportions the firm should use
more labor and less machinery.
more machinery and less labor.
more labor with the same amount of machinery.
the current combination.
If a firm is using a resource hired in a perfectly competitive market, and if the marginal resource cost is less than its marginal revenue product,
more of the resource should be used.
less of the resource should be used.
the firm should pay a lower price for the resource.
the firm should pay a higher price for the resource.
Which of the following is true of the current system of income transfers directed toward those with low incomes?
They discourage behavior that increases the risk of poverty.
They create high implicit marginal tax rates that reduce the incentive of transfer recipients to earn.
They provide low-income recipients with a strong incentive to work and increase their earnings so they will not be dependent on income transfers.
They will encourage people to form two-parents families in order to increase the size of the income transfers.
Which of the following programs is most clearly advantageous to those with lower levels of income?
Farm subsidy programs.
The Social Security retirement program.
The Earned Income Tax Credit.
Credit subsidies provided by the Import-Export bank to business firms that sell goods abroad.
The major determinant of an individual's income is
whether or not her family is wealthy.
how well she gets along with her co-workers and boss.
how productive she is combined with demand for what she produces.
how much she enjoys the work.
It would be more reasonable to use annual income data as an index of economic inequality if all of the households
filed tax returns and thus all of their income was reported accurately.
were different with regard to their age and size characteristics.
were more similar with regard to family size, age, education, and other major factors that are linked to income.
were more similar with regard to their hair color, height, and weight.
In the short run, the supply of a resource will generally be
less elastic than in the long run.
more elastic than in the long run.
equally elastic as the supply of the resource in the long run.
inversely related to the elasticity of demand for the product that the resource helps produce.
In an environment of tournament pay, it is quite likely that marginally more productive employees will receive
less than their marginal revenue product, while less productive employees receive more than theirs.
more than their marginal revenue product, while less productive employees receive less than theirs.
more than their marginal revenue product, as do less productive employees.
less than their marginal revenue product, as do less productive employees.
The demand for a resource depends largely on the
demand for the products that it produces.
price of the resource.
supply of the resource.
cost of producing the resource.
Which of the following scenarios would serve to decrease the demand for unskilled labor in our country?
increased productivity gains among the unskilled laborers.
increased demand for goods produced by unskilled labor.
increased international trade with countries where unskilled labor is more plentiful.
increased supply of migrant workers.
The official poverty rate of elderly families
has been virtually unchanged for the last four decades.
increased as the elderly became a larger proportion of the U.S. population during the past four decades.
was approximately 21 percent in 2018, which is even higher than the rate in 1965.
has declined during the last four decades.
Data indicate that the large increase in government spending on income transfers that started with the War on Poverty during the latter half of the 1960s has resulted in
a substantial reduction in the poverty rate.
a more equal distribution of income.
fewer single-parent families because a married couple receives benefits twice as large.
little change in the official poverty rate.
This year David earned $3,000 more than last year. As a result, he received $2,500 less in government transfers. Therefore, David's implicit marginal tax rate accompanying the loss of the transfers is about
16 percent
25 percent
66 percent
83 percent
Assume that DeShawn is a single parent who is in poverty. He receives food stamps and Medicaid. For every $100 that he earns, DeShawn loses $35 of his food stamp benefits and $20 in his Medicaid benefits. Also, DeShawn's income is taxed at a rate of 10 percent. Then, DeShawn's effective marginal tax rate is
45 percent.
55 percent.
65 percent.
70 percent.
Profit-maximizing firms will expand their employment of each variable resource until
the Marginal Revenue Product (MRP) of the resource is just equal to the price of the resource.
other firms realize they can't compete.
the MRP of the resource is below the cost of the resource.
the MRP of the resource is above the cost of the resource.
Suppose a change in technology increases the marginal product of labor. The result is
a downward movement along the demand for labor curve.
a rightward shift in the demand for labor curve.
a leftward shift in the demand for labor curve.
an upward movement along the demand for labor curve.
The marginal product of labor is the
value marginal product of labor multiplied by the price of the good produced.
total output of labor divided by the quantity of labor used.
additional output resulting from employing one additional unit of labor.
same as the marginal revenue product of labor in price-taker markets.
Which of the following contributed to the increase in income inequality among families in the United States during the 1980s and 1990s?
An increase in the highest marginal tax rates that forced high income earners to work more in order to maintain their income.
An increase in the proportion of both single-parent and dual-earner families.
A decrease in the size of the earnings differential between college graduates and high school graduates.
An increase in the income of single-parent families relative to two-parents families.
Which of the following most accurately describes which groups are over-represented among those with low incomes?
Youthful inexperienced workers
College students working on graduate degrees
Single-parent families and youthful inexperienced workers
Youthful inexperienced workers, college students working on graduate degrees, single-parent families
Compensation where the top performer receives much higher rewards than other competitors, even if the others perform at only slightly lower levels, is called
a compensating differential.
round-robin pay.
tournament pay.
base pay.
Income is created when
individuals supply others with goods and services they value highly relative to cost.
the government levies taxes on some and transfers the revenues to others.
the general level of prices increases.
shares of stock are sold from their current owner to another party.
Which of the following is accurate regarding income statistics?
Current annual income is also an accurate indicator of relative economic status for the same individual over a longer period such as a decade or lifetime.
When there is substantial income mobility, one's current position in the income distribution will not be a very good indicator as to what one's position will be a few years in the future.
Recent studies indicate that there is a strong positive relationship between the relative income position of a family and the relative income position of their children and grandchildren.
Even though annual income data camouflage the fact, high-income earners generally maintain their status year after year, while those with low current incomes tend to stay poor year after year.
Which of the following limits the ability of the current system of transfer programs to increase the incomes of the able-bodied poor?
The high implicit marginal tax rates that accompany the current income transfer programs reduce the incentive of the poor to earn.
The transfer programs encourage the poor to marry and form dual-earner families.
The transfer programs tend to increase the wages that employers are required by law to pay for low-skill labor.
The transfer programs reduce the likelihood of single-parent families.
Why do persons in high-earning occupations such as lawyer and doctor generally work more hours than those in other occupations?
Unlike other workers, they like to work long hours.
The high earnings means that the opportunity cost of leisure is high and as the result of this incentive structure, they choose to work more hours.
it is necessary for individuals in these occupations to work long hours in order to provide an income level sufficient to support a family.
This is a trick question; people in high-earning occupations usually work fewer hours than those in other occupations.
The Samaritan's dilemma describes the problem that exists when transfer programs, designed to help the poor, encourage choices that tend to promote or perpetuate
poverty.
healthier lifestyles.
lower birth rates.
increased life expectancy.
This year, Zahra earned $2,000 more than last year. As a result, she received $500 less in government transfers. Therefore, Zahra's implicit marginal tax rate accompanying the loss of the transfers is
15 percent.
25 percent.
40 percent.
75 percent.
Which of the following is true about income inequality?
Taxes and transfers generally increase the income share of the bottom quintile of income recipients, while reducing the share of the top group of earners.
In a market economy, the distribution of income is determined by the quantity and value of the resources supplied by the various individuals, and nearly half the value of resources owned by the rich was inherited.
During the last four decades, the share of income earned by the top quintile has fallen, whereas that earned by the bottom group has steadily risen.
In recent years, the annual hours worked of persons in the bottom quintile of the income distribution has been approximately twice that of persons in the top quintile.
Which of the following would cause the demand for plumbers to decrease?
an increase in the productivity of plumbers
a decline in the construction of housing
a law that mandated higher wages for plumbers
an increase in the number of plumbers who belong to a union
Regarding automation, which of the following is true?
Automated production processes are generally adopted regardless of whether they reduce costs.
Automated production processes eliminate jobs and, thereby, endanger our future living standards.
Cost-reducing automated production techniques will expand output directly and/or release scarce resources for the expansion of output in other areas.
Use of the most advanced technology will always minimize the cost of a productive activity.
Since 1980, income inequality (as measured by the income share of the highest 20 percent of income earners relative to the lowest 20 percent) has
been virtually unchanged.
increased.
decreased.
fluctuated in a random pattern.
Which of the following is most likely to increase the market wage rate in a job category?
The employer provides a generous pension plan.
The work is widely viewed as safe and not stressful.
The job is widely viewed as interesting and prestigious.
The job requires employees to live in unattractive locations.
In the United States the degree of individual income mobility (that is, the degree to which people move from higher to lower or lower to higher income groupings) is
rigid in both directions.
flexible in both directions.
flexible upward but rigid downward since high income perpetuates itself from generation to generation.
flexible downward but rigid upward since most low-income people never rise significantly above the poverty level.
When an employer pays the cost of educating a worker, it is likely that the employer
is demonstrating altruistic motives.
is pursuing some objective other than profit-maximization.
hopes to recapture its investment in the form of increased labor productivity.
receives reimbursement from the government for the cost of the education.
If there is employment discrimination against a group, this will cause the
supply of their services to increase, and their wages to fall.
demand for their services to decline, and their wages to fall.
supply of their services to decline, and their wages to rise.
demand for their services to decline, and their wages to rise.
Poor people, who receive income assistance from the government, often do not work because
they face very high implicit marginal tax rates.
they are usually not physically able to work.
they have no desire for additional money.
the government forces them to stay at home and take care of their children.
Which of the following is the primary source of cross-country differences in the real earnings of workers?
Differences in natural resource endowments.
Differences in output per worker.
Differences in the average number of hours worked.
Differences in the share of workers that are members of a labor union.
Which of the following is a correct statement about the labor market?
Workers determine the supply of labor, and firms determine the demand for labor.
Workers determine the demand for labor, and firms determine the supply of labor.
Workers determine the supply of labor, and government determines the demand for labor.
The forces of supply and demand, while present in the labor market, have nothing to balance in that market.
The demand for a resource is generally more
elastic in the short run because it takes time to alter the ratio of resources used in many production processes.
inelastic in the short run because it takes time to alter the ratio of resources used in many production processes.
elastic in the short run because an increase in the price of the resource may not be expected to last.
inelastic in the short run because once resource suppliers find out they can charge a higher price, they will do so in the long run.
Makena's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Makena hired was 2 tires per hour. What is the maximum hourly wage that Makena was willing to pay the last worker hired?
$5
$10
$20
There is insufficient information to answer this question.
A profit-maximizing restaurant owner will hire more busboys to keep more tables clean and quickly available to new customers, as long as the
marginal product of busboys exceeds the marginal product of other employees.
hourly wage of busboys is lower than that of cashiers and cooks.
marginal revenue product of busboys exceeds their wage rate.
wage of busboys exceeds the wage of other employees.
The marginal revenue product of a resource is best described as the
selling price of the last unit of output produced.
increment of total cost resulting from the use of an additional unit of the resource.
marginal product of the resource divided by the unit price of the good produced.
change in total revenue resulting from employing an additional unit of the resource.
As the price of a resource decreases,
demand for that resource increases.
the quantity demanded of that resource decreases.
the supply of that resource increases.
producers are more willing and able to hire that resource.
An individual who possesses a specialized skill that is difficult to execute will
receive a wage considerably higher than those who lack this skill.
receive a wage that is directly related to the number of other persons possessing this skill.
receive a high wage only when this skill is in great demand relative to its supply.
receive a wage rate that is lower than similarly productive individuals who lack this skill.
The labor supply curve reflects how
workers' decisions about the labor-leisure tradeoff respond to a change in the wage.
workers' decisions about the opportunity cost of labor respond to a change in the quantity of labor supplied.
firms' decisions about the labor-leisure tradeoff respond to the quantity of labor demanded.
firms' decisions about how the quantity of labor they hire respond to changes in their opportunities to earn profits.
The phenomenon that describes how transfer programs, which significantly reduce the adversities of poverty, also reduce the opportunity cost of choices that often lead to poverty is known as
the implicit marginal tax rate.
Gibson's paradox.
the Phillips curve
the Samaritan's dilemma.
Government programs that take money from high-income people and give it to low-income people generally
improve economic efficiency because they reduce poverty.
improve economic efficiency because they increase the incentive of low-income recipients to work more hours and earn more income.
have no effect on economic efficiency because they both reduce poverty and distort incentives.
reduce economic efficiency because they often impose high implicit marginal tax rates on those with low incomes, which reduces their incentive to earn.
Other things constant, if the demand for a final product is quite elastic, the demand for a resource used to produce the product will tend to be
highly inelastic.
of unitary elasticity.
a curve sloping upward to the right.
quite elastic as well.
New technological advancements, such as robots are
harmful because they put people out of work.
helpful because they improve worker productivity.
harmful because robots are likely to have electrical problems which could cause injuries to people.
harmful because in many cases they reduce overall output.
The share of additional earnings that must be paid explicitly in taxes or implicitly in the form of a reduction in income supplements is known as the
marginal income tax rate.
implicit marginal tax rate.
explicit benefit-reduction rate.
supplemental income tax rate.
Annual income data would be a better index of economic inequality if
all households filed tax returns revealing their real income.
households were more different with regard to age and size characteristics.
all households were more similar with regard to size, age, education, and other major factors that are linked to income.
mathematicians could grasp the complexities of the calculations.
If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil
will increase the demand for coal.
will reduce the demand for coal.
will increase the supply of coal.
will reduce the supply of coal.
As the price of land decreases along its demand curve, the relative price of land
increases because the prices of other resources have also decreased.
decreases because the prices of other resources have also decreased.
increases because the prices of other resources have increased.
decreases because the prices of other resources are held constant.
Suppose the mean earnings of two groups differ. Which of the following would be the logical conclusion?
The group with the lowest earnings must be the victim of employment discrimination.
The group with the lowest earnings must be less ambitious.
The group with the highest earnings is more highly motivated and materialistic.
Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination.
Which of the following most accurately explains how the use of robots and other labor-saving machines impact the living standards of people?
They are harmful because their use puts people out of work.
They are helpful because they improve worker productivity.
They are harmful because they are accident prone and therefore endanger the health and welfare of employees working with them.
They are helpful to employers, but they are harmful to both consumers and workers because they reduce overall output.
How do the high implicit marginal tax rates that often occur when transfer payments are inversely linked to earnings affect the incentive of poor people to work and earn?
A poor person's incentive to earn is increased.
A poor person's incentive to earn is reduced.
The incentive of the poor to earn is unaffected.
The incentive of the poor to earn reported income is increased, but the incentive to earn unreported income is reduced.
Data on income inequality in the United States indicate that
rich families stay rich and poor families stay poor.
most poor families never significantly rise above the poverty level, but rich families tend to become less wealthy over time.
there is substantial movement among income groupings in the United States.
the inequality between the rich and poor in annual consumption expenditures is greater than the parallel inequality in annual income.
Which of the following is the clearest evidence of employment discrimination against black employees?
The average wages of black workers are lower than the average wages of whites.
The average wages of black employees are lower than the average wages of whites with similar productivity characteristics.
The mean number of years of schooling of black workers is lower than that of whites.
The average hours worked by black employees exceeds the hours worked by whites.
Which of the following is true of robots and other labor-saving machines?
They are harmful because their use puts people out of work.
They are the primary reason why so many people are unemployed, and a large share of the world’s population has income levels at or below the poverty income threshold.
They will be adopted by profit seeking firms only if they reduce cost, and when this is the case, they will release humans to perform other useful tasks.
They are helpful to employers, but they are harmful to both consumers and workers because they reduce overall output.
