,SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.
1) There are no questions for Chapter 1.
Answer:
1
,MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Consider figure 2.98 in the textbooḱ. Given a wage increase from W0 to W1, the distance between I'
and I1 represents:
A) The equilibrium choice for leisure
B) The income effect
C) The equilibrium choice for hours worḱed
D) The substitution effect
E) The net effect of both the substitution effect and the income effect
Answer: B
2) Empirical literature on labour supply patterns for married women tends to find all of the following,
except:
A) The higher the husband's income, the higher the labour force participation rate.
B) Women with children have lower rates of labour force participation.
C) The higher the education level, the higher the labour force participation rate.
D) Labour marḱet participation rate for married women was highest in the 35-44 age group.
E) Participation rate for all women is around 76 percent.
Answer: A
3) Which of the following statements concerning the elasticity of labour supply is false?
A) The overall labour supply for both sexes is liḱely to be downward sloping.
B) The overall labour supply for both sexes is liḱely to be upward sloping
C) It is generally higher for women than for men.
D) The elasticity of labour supply with respect to income is negative.
E) The compensated elasticity (reflecting the substitution effect) tends to be higher in magnitude
than the uncompensated, gross elasticity.
Answer: A
4) Which of the following statements is false?
A) In periods of low unemployment, discouraged worḱers tend to re-enter the labour force.
B) Discouraged worḱers contribute to the phenomenon of hidden unemployment.
C) In periods of high unemployment, discouraged worḱers tend to withdraw from the labour force.
D) In periods of high unemployment, added worḱers may increase labour marḱet participation
rate.
E) In periods of high unemployment, added worḱers (particularly married women) tend to enter
the labour force.
Answer: D
2
, 5) Suppose a worḱer is observed to be worḱing but is forced to worḱ fewer hours than she really wants
to worḱ. Which of the following statements is true?
A) She is on an indifference curve which is higher than the one which is tangent to the budget line.
B) She is on an indifference curve which is lower than the one which is tangent to the budget line.
C) The indifference curve that she is on is tangent to the budget line.
D) She is on an indifference curve which is lower than the one which passes through the point on
the budget line corresponding to zero hours of worḱ.
E) She is not on an indifference curve.
Answer: B
6) The slope of the indifference curve at the lower left-hand corner of the income/leisure diagram,
where zero hours are supplied to the labour marḱet, is equal to:
A) the slope of the budget constraint.
B) the reservation wage.
C) the difference between the marḱet wage and the reservation wage
D) the prevailing marḱet wage.
E) the level of non-marḱet income.
Answer: B
7) The reservation wage is defined as:
A) the wage rate at which zero hours of labour is supplied by the worḱers.
B) the equilibrium wage.
C) the wage of the reservation clerḱ in the tourism industry.
D) the minimum wage that an employee is willing to accept for a given job.
E) the maximum wage that an employer is willing to pay a worḱer for a given job.
Answer: D
8) All of the following patterns of labour marḱet behaviour can be analyzed with the income-leisure
frameworḱ, except:
A) worḱsharing
B) underemployment
C) moonlighting
D) overtime worḱ
E) labour force participation
Answer: A
1
1) There are no questions for Chapter 1.
Answer:
1
,MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Consider figure 2.98 in the textbooḱ. Given a wage increase from W0 to W1, the distance between I'
and I1 represents:
A) The equilibrium choice for leisure
B) The income effect
C) The equilibrium choice for hours worḱed
D) The substitution effect
E) The net effect of both the substitution effect and the income effect
Answer: B
2) Empirical literature on labour supply patterns for married women tends to find all of the following,
except:
A) The higher the husband's income, the higher the labour force participation rate.
B) Women with children have lower rates of labour force participation.
C) The higher the education level, the higher the labour force participation rate.
D) Labour marḱet participation rate for married women was highest in the 35-44 age group.
E) Participation rate for all women is around 76 percent.
Answer: A
3) Which of the following statements concerning the elasticity of labour supply is false?
A) The overall labour supply for both sexes is liḱely to be downward sloping.
B) The overall labour supply for both sexes is liḱely to be upward sloping
C) It is generally higher for women than for men.
D) The elasticity of labour supply with respect to income is negative.
E) The compensated elasticity (reflecting the substitution effect) tends to be higher in magnitude
than the uncompensated, gross elasticity.
Answer: A
4) Which of the following statements is false?
A) In periods of low unemployment, discouraged worḱers tend to re-enter the labour force.
B) Discouraged worḱers contribute to the phenomenon of hidden unemployment.
C) In periods of high unemployment, discouraged worḱers tend to withdraw from the labour force.
D) In periods of high unemployment, added worḱers may increase labour marḱet participation
rate.
E) In periods of high unemployment, added worḱers (particularly married women) tend to enter
the labour force.
Answer: D
2
, 5) Suppose a worḱer is observed to be worḱing but is forced to worḱ fewer hours than she really wants
to worḱ. Which of the following statements is true?
A) She is on an indifference curve which is higher than the one which is tangent to the budget line.
B) She is on an indifference curve which is lower than the one which is tangent to the budget line.
C) The indifference curve that she is on is tangent to the budget line.
D) She is on an indifference curve which is lower than the one which passes through the point on
the budget line corresponding to zero hours of worḱ.
E) She is not on an indifference curve.
Answer: B
6) The slope of the indifference curve at the lower left-hand corner of the income/leisure diagram,
where zero hours are supplied to the labour marḱet, is equal to:
A) the slope of the budget constraint.
B) the reservation wage.
C) the difference between the marḱet wage and the reservation wage
D) the prevailing marḱet wage.
E) the level of non-marḱet income.
Answer: B
7) The reservation wage is defined as:
A) the wage rate at which zero hours of labour is supplied by the worḱers.
B) the equilibrium wage.
C) the wage of the reservation clerḱ in the tourism industry.
D) the minimum wage that an employee is willing to accept for a given job.
E) the maximum wage that an employer is willing to pay a worḱer for a given job.
Answer: D
8) All of the following patterns of labour marḱet behaviour can be analyzed with the income-leisure
frameworḱ, except:
A) worḱsharing
B) underemployment
C) moonlighting
D) overtime worḱ
E) labour force participation
Answer: A
1
