Econ 252 Purdue exam 2 Questions with Correct Answers (Grade A+)
Question 1: Potential Workers
Answer: Civilian non institutional populationeveryone except children under 16, active military,
institutionalized persons
Question 2: Employed
Answer: Have a paid full time or part time job
Question 3: Unemployed
Answer: No job, but are available for work and have looked for a job in the past 4 weeks
Question 4: Labor Force
Answer: Unemployed +employed
Question 5: Not in labor force
Answer: Persons without paid job and not actively searching for one
Question 6: Labor Force Participation Rate (LFPR)
Answer: 100%*(LF/PW)
Question 7: Employment Population Ratio (EPR)
Answer: 100%*(employed/PW)
Question 8: Employment Rate (ER)
Answer: 100%*(Employed/LF)
Question 9: Unemployment Rate (UR)
Answer: 100%*(unemployment/LF)
Question 10: counterfactual
Answer: calculating unemployment rate with the same labor force as a year before
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, Question 11: labor market
Answer: where the equilibrium real wage and quantity of labor are determined
Question 12: demand for labor
Answer: determined by firms that want to maximize profits
Question 13: supply of labor
Answer: determined by workers who want to maximize utility
Question 14: Labor Demand
Answer: firms seek to maximize profits
Question 15: Price Taking firms
Answer: perfectly competitive firm cannot influence prices of outputs or inputs
Question 16: Marginal Benefit
Answer: value of the output produced by the last unit of labor
Question 17: Marginal product of labor
Answer: increase in revenue resulting from hiring an additional worker
Question 18: marginal cost
Answer: the cost to the firm of an additional unit of labor (market wage, w)
Question 19: VMPl =
Answer: w = P*MPl = change in total revenue/change in Labor
Question 20: Labor Demand Curve
Answer: depicts the relationship between the quantity of labor demanded and the wage, it is the VMPl
Question 21: Labor demand curve shifts when there is a change in:
Answer: 1. output price of the good or service
2. demand for the good or service
3. Tech progress and high productivity
4. Input prices of capital and land
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Question 1: Potential Workers
Answer: Civilian non institutional populationeveryone except children under 16, active military,
institutionalized persons
Question 2: Employed
Answer: Have a paid full time or part time job
Question 3: Unemployed
Answer: No job, but are available for work and have looked for a job in the past 4 weeks
Question 4: Labor Force
Answer: Unemployed +employed
Question 5: Not in labor force
Answer: Persons without paid job and not actively searching for one
Question 6: Labor Force Participation Rate (LFPR)
Answer: 100%*(LF/PW)
Question 7: Employment Population Ratio (EPR)
Answer: 100%*(employed/PW)
Question 8: Employment Rate (ER)
Answer: 100%*(Employed/LF)
Question 9: Unemployment Rate (UR)
Answer: 100%*(unemployment/LF)
Question 10: counterfactual
Answer: calculating unemployment rate with the same labor force as a year before
Page 1
, Question 11: labor market
Answer: where the equilibrium real wage and quantity of labor are determined
Question 12: demand for labor
Answer: determined by firms that want to maximize profits
Question 13: supply of labor
Answer: determined by workers who want to maximize utility
Question 14: Labor Demand
Answer: firms seek to maximize profits
Question 15: Price Taking firms
Answer: perfectly competitive firm cannot influence prices of outputs or inputs
Question 16: Marginal Benefit
Answer: value of the output produced by the last unit of labor
Question 17: Marginal product of labor
Answer: increase in revenue resulting from hiring an additional worker
Question 18: marginal cost
Answer: the cost to the firm of an additional unit of labor (market wage, w)
Question 19: VMPl =
Answer: w = P*MPl = change in total revenue/change in Labor
Question 20: Labor Demand Curve
Answer: depicts the relationship between the quantity of labor demanded and the wage, it is the VMPl
Question 21: Labor demand curve shifts when there is a change in:
Answer: 1. output price of the good or service
2. demand for the good or service
3. Tech progress and high productivity
4. Input prices of capital and land
Page 2
