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Labor Economics, multiple choice questions

1. In the leisure-income model, the wage constraint shows a. the points that maximize a workers utility b. all points that are equally preferred c. the wage rates that affect work decisions d. the available combinations of leisure and income 2. The slope of a wage constraint reflects the: a. rate at which a person is willing to substitute leisure for income c. income effect b. price of leisure d. substitution effect 3. When a worker maximizes her utility, then her a. income ; wage times hours of leisure c. marginal rate of substitution ; wage will be equal to her b. marginal rate of substitution ; wage times APu d. wage ; VMPL Questions 4 - 5 refer to the following diagram representing Natashas budget constraint and preferences Leisure 4. Consider the three combinations of leisure and income represented by points A, B, and C. Which of the following is a correct statement? a. Natasha prefers A to B b. Natasha prefers B to C c. Natasha prefers A to C d. Natasha prefers C to B5. At point B, Natashas marginal rate of substitution a. exceeds the wage and Natasha would like to work more hours b. exceeds the wage and Natasha would like to work fewer hours c. is less than the wage and Natasha would like to work more hours d. is less than the wage and Natasha would like to work fewer hours 6. On a standard income-leisure diagram, Tony has flatter indifference curves than Bruce, but both are negatively sloped. It is probably true that: a. Both like leisure and income, but Bruce values leisure relatively more than Tony does. b. Bruce likes leisure but dislike c. Bruce likes income but dislikes leisure while Tony likes both d. Tony values leisure more highly compared to income than Bruce does s income while Tony likes both 7. As an individuals wage rate gets higher, the: a. budget constraint gets flatter c. desired hours of work increases b. marginal rate of substitution gets larger d. marginal product of their labor must fall 8. An individual whose MRS exceeds the wage at her current combination of leisure and income could increase utility by: a. working fewer hours d. none of the above; her utility is maximized b. increasing her income c. working more hours e. changing her major to pychology 9. Phils wage increases and Phil responds by working more hours. Which of the following could explain this? a. Phils substitution effect is larger than his income effect b. Phil views leisure as an inferior good c. Phils income effect is larger than his substitution effect d. Both b and c f. Phil died, but was brought back to life with an alien serum in a plot twist no one saw because they gave up after episode 5. e. Both a and b10. Where do labor supply curves come from? a. Our professor just makes them up b. Individuals making tradeoffs between leisure and income c. The value of the marginal product of labor d. The inverse ofa workers highest attainable indifference curve e. When a mommy labor supply curve and a daddy labor supply curve love each other very much... 11. Given the following data, what is the labor force participation rate? Population Civilian, non-institutionalized population, age 16 and over Employed persons Unemployed persons 200 million 150 million 100 million 50 million a. 66.7% b. 75% с. 80% d. 84% e. 100% 12. In problem 11, how many NILFs were there? a. none e. I dont know; I was expecting some kind of joke about your mom b. 50 million c. 100 million d. 200 million 13. If discouraged workers all decided to start looking for work, what would happen to the labor force participation rate? (Assume none of them are actually going to find jobs.) a. It would increase b. It would decrease c. No change. d. Wed need more information 14. Marias employer is considering her for a training program that will cost $3 per hour. Her current VMPL is $15 per hour and will rise to $30 upon completion of the program. The training would make her more productive for her employer, but also for any other employer. Of the following, Marias training and post-training wage, respectively, will most likely be a. $15; $30 b. $12; $15 c. $15; $16d. $12; $30 e. $12, $27 15. T/F The total cost of a college education is the sum of all the money you spend while in college.

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