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What is one explanation for why this labor supply curve is upward sloping?

1. the opportunity cost of leisure decreases as wages decrease.

2. people prefer to spend time doing leisure activities rather than working.

3. labor production functions exhibit diminishing marginal returns.

4. unemployment benefits are steadily declining.

 

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Sonal Bahl
Sonal BahlLv10
26 Jan 2021

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Related questions

A change in demand for a given factor of production will not occurif:
Answer
A. the productivity of that factor increases.
B. there is a decrease in the price of a substitute factor.
C. the price of that factor falls.
D. the productivity of that factor decreases.

Question 2

In terms of contribution to total income, the single most importantfactor of production is:
Answer
A. labor.
B. entrepreneurship.
C. natural resources.
D. capital.

Question 3

The trade off between work and leisure underlying the supply oflabor involves the substitution effect and the:
Answer
A. complementary effect.
B. elasticity effect.
C. production effect.
D. income effect.

Question 4

(Exhibit: Marginal Revenue Product and Demand) If the product priceis $4 per unit and the price of the factor of production is $80 perunit, the profit-maximizing quantity of the factor is _______unit(s).
Answer
A. 1
B. 5
C. 7
D. 3

Question 5

In perfect competition:
Answer
A. MFCL is greater than the price of labor.
B. the supply curve of labor to the firm is a horizontalline.
C. MRPL equals the price of the good.
D. MFCL is less than the price of labor.

Question 6

An increase in the participation rate of women in the U.S. laborforce:
Answer
A. has shifted the supply curve of labor to the right.
B. has increased the demand for labor.
C. resulted in a faster increase in wages.
D. has shifted the supply of labor to the left.

Question 7

A firm's demand curve for labor is:
Answer
A. the downward-sloping portion of its marginal revenue productcurve.
B. the upward-sloping portion of its marginal revenue productcurve.
C. horizontal for the firm in perfect competition.
D. the downward-sloping portion of its marginal productcurve.

Question 8

Since the 1970s, wage rates in the United States have _______ more_______ than they did in the previous two decades.
Answer
A. decreased; slowly
B. decreased; rapidly
C. increased; rapidly
D. increased; slowly

Question 9

Which of the following statements is true?
Answer
A. If the MFCL = MRPL the firm should hire more labor.
B. If MFCL < MRPL the firm should hire more labor.
C. If MFCL > 0, the firm should shut down.
D. If the MFCL > MRPL the firm should hire more labor.

Question 10

A leftward shift in the labor supply curve would result if:
Answer
A. people have less nonlabor income.
B. transit costs to and from work decline.
C. the population increases.
D. people value leisure more highly.

Question 11

A firm is in equilibrium when the marginal factor cost is:
Answer
A. equal to the marginal revenue product.
B. less than the price of the factor.
C. equal to the average product.
D. greater than the average product.

Question 12

A leftward shift in the labor supply curve would result if:
Answer
A. transit costs to and from work increase.
B. people value leisure less highly.
C. the population increases.
D. people have less nonlabor income.

Question 13

(Exhibit: Wage Determination in Perfect Competition) Which of thefollowing statements is true?
Answer
A. The firm will hire L1 units of labor, as shown in Panel(a).
B. The individual firm is a wage setter.
C. The firm's MFC of labor is equal to the price of the firm'soutput.
D. Total employment is equal to L1, as shown in Panel (a).

Question 14

(Exhibit: Marginal Revenue Product and Demand) If the product priceis $2 per unit and the price of the factor of production is $20 perunit, the profit-maximizing quantity of the factor is _______units.
Answer
A. 6
B. 4
C. 8
D. 2

Question 15

(Exhibit: Marginal Revenue Product and Demand) Assume that theproduct price is $2 per unit, the price of the factor of productionis $40 per unit, and 8 units are being hired. Profit can bemaximized by hiring _______ unit(s).
Answer
A. 2 more
B. 1 more
C. 3 fewer
D. 1 fewer

Question 16

(Exhibit: Demand and Supply of Bricklayers in a PerfectlyCompetitive Labor Market) If the price for "bricks laid in thewall" by a bricklayer is $.10 a brick, the marginal product of thesecond bricklayer is _______ bricks.
Answer
A. 1,200
B. 1,400
C. 1,300
D. 1,500

Question 17

In a perfectly competitive labor market, each firm can hire:
Answer
A. larger quantities of labor at going market wages perworker.
B. all the labor it wants, but only by outbidding itscompetitors.
C. larger quantities of labor at rising wages per worker.
D. only a fixed amount of labor at the going wage.

Question 18

(Exhibit: Demand and Supply of Bricklayers in a PerfectlyCompetitive Labor Market) If the equilibrium wage in the market forbricklayers is $100 a day, but a minimum wage for bricklayers of$130 a day is set by the government:
Answer
A. 3 workers who otherwise would have been employed are nowunemployed.
B. the firm will shut down.
C. 6 workers will now be hired by the firm.
D. all bricklayers are better off.

Question 19

A factor demand curve will shift because of:
Answer
A. the proportion of the factor's cost relative to totalcost.
B. changes in technology.
C. the slope of the MP curve.
D. the elasticity of demand for the final product.

Question 20

Which of the following statements is true?
Answer
A. MFC = change in total cost/ change in the quantity of afactor.
B. MFC = the change in the quantity of a factor times the change inthe price of the factor.
C. MRPL = MC of the output.
D. MRPL = MPL x (P), where P is the price of labor.

1. the marginal cost curve is

A. Downward sloping to reflect the bowed out PPF.

B. Downward sloping as marginal benefits increase.

C. Upward sloping because marginal cost falls as more of a good or service is produced.

D. Upward sloping to reflect the increasing opportunity cost of producing one more unit.

E. U-shaped to reflect the bowed out PPF.

2. Allocative efficiency occurs

A. Anywhere inside or on the production possibilities frontier.

B. When the total cost of production is minimized

C. At all points on the production possibilities frontier.

D. At only one point on the production possibilities frontier.

E. At the points where the production possibilities frontier crosses the horizontal or vertical axis.

3. Auditors working for a large accounting firm are often away from the office. When they are in the office, they are allowed to use any desk that is available. Which method is used to allocate desks?

A. lottery

B. first-come, first-served

C. Command

D. Contest

E. Sharing equally


4. The marginal cost of a good or service

A. Can be calculated from the marginal benefit of that good or service.

B. decreases as more of the good or service is produced.

C. Can be derived from the production possibilities frontier.

D. Graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.

E. None of the above answers is correct.

5. The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

A. Marginal benefit.

B. Total benefit.

C. Marginal cost

D. Total cost.

E. Price.

1. “Total compensation” includes:

a. Wages and salaries and all fringe benefits

b. Wages and salaries and public (legally mandated) fringe benefits only

c. Wages and salaries and private (nonmandatory) fringe benefits only

d. Wages and salaries and all fringe benefits net of all personal taxes

2. Fringe benefits currently account for approximately what percentage of total compensation?

a. 5% – 10%

c. 25% – 30%

b. 15% – 20%

d. 35% – 40%

3. As a percentage of benefits, the largest share goes to:

a. retirement and savings

c. paid leave

b. insurance

d. legally required benefits

4. The proportion of total compensation paid out as fringe benefits tends to be larger in:

a. high-paid industries compared to low-paid industries

b. service industries compared to manufacturing industries

c. white-collar occupations compared to blue-collar occupations

d. retail trade compared to transportation and public utilities

5. The share of fringe benefits in total employee compensation:

a. grew steadily in the 1960s and 1970s but has fallen since 1980

b. was unchanged in the 1960s and 1970s and has fallen since 1980

c. shrank in the 1960s and 1970s and has remained constant since then

d. grew steadily from 1960 through the mid-1990s

6. Which one of the following is not a valid explanation for why workers may prefer an extra dollar’s worth of fringe benefits to an extra dollar’s worth of cash?

a. workers may prefer to bind themselves against their own tendencies toward immediate gratification

b. certain fringe benefits effectively trade current taxes for future taxes

c. people generally prefer in-kind benefits to cash

d. certain fringe benefits are untaxed

7. Because there is a _______ marginal rate of substitution of fringe benefits for wages, a worker’s wage-fringe indifference curves are typically _______:

a. diminishing; convex to the origin

b. constant; straight lines

c. diminishing; concave to the origin

d. negative; straight lines

8. The slope of a wage-fringe indifference curve reflects:

a. the overall utility level of a person

b. a worker’s willingness to give up an extra dollar of wages in exchange for an extra dollar of fringe benefits

c. the firm’s cost of paying an extra dollar of compensation as wages rather than fringe benefits

d. an increasing marginal rate of substitution of fringe benefits for cash 2

9. An individual wage-fringe isoprofit line shows:

a. combinations of wages and fringe benefits that result in constant dollar values of total compensation

b. combinations of wages and fringe benefits that result in the same profit to the firm

c. the greatest possible profit attainable from a given level of fringe benefits

d. the greatest possible profit attainable from a given level of wages

10. The slope of a wage-fringe isoprofit curve reflects:

a. the overall profitability of the firm

b. a worker’s willingness to give up an extra dollar of wages in exchange for an extra dollar of fringe benefits

c. the relative “price” of fringe benefits compared to wages

d. an increasing marginal rate of substitution of fringe benefits for cash

11. The firm’s wage-fringe isoprofit curve typically has a slope less than 1 (absolute value) because:

a. fringe benefits confer tax advantages on workers

b. on average, it costs firms more to purchase fringe benefits than workers

c. the composition of fringe benefits may increase worker productivity

d. increasing the proportion of compensation received as fringe benefits reduces a firm’s profit level

12. If a firm can offer fringe benefits worth more than one dollar for a one dollar reduction in wages:

a. the wage-fringe isoprofit line will be upward-sloping

b. the wage-fringe isoprofit line will have a slope less than one in absolute value

c. the marginal rate of substitution between wages and fringe benefits will be greater than one at the wage-fringe optimum

d. as a proportion of total compensation, fringe benefits will likely exceed one half

13. The employer’s share of the Social Security and Medicare components of the payroll tax has increased, from 6.13% in 1980 to its current rate of 7.65%. Because employers pay no payroll tax on many fringe benefits, this change in tax rates has effectively:

a. reduced the “price” of fringe benefits, increasing the slope of the wage-fringe isoprofit line

b. increased the “price” of fringe benefits, increasing the slope of the wage-fringe isoprofit line

c. reduced the “price” of fringe benefits, reducing the slope of the wage-fringe isoprofit line

d. increased the “price” of fringe benefits, reducing the slope of the wage-fringe isoprofit line

14. The trend of fringe benefits as a percentage of total compensation can be partially explained by the fact that:

a. tax reform has rendered many types of fringe benefits fully taxable

b. “in-kind” benefits restrict workers’ consumption choices

c. the firm may be able to purchase fringe benefits more cheaply than workers

d. many types of fringe benefits are income inelastic

15. Fringe benefits will tend to be a greater proportion of total compensation, the:

a. more income elastic are fringe benefits

b. more they increase worker turnover

c. lower the employer’s share of the Social Security tax

d. less there are economies of scale in purchasing fringe benefits 3

16. Which of the following is not a cause of fringe benefit growth?

a. Tax advantages to the employer

b. Efficiency considerations

c. Economies of scale

d. Fringe benefits are income inelastic

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