Labor Econ Final Exam 2025 Questions and
Answers
If the firm hires to a point where the marginal cost of labor is greater than the marginal revenue
product of labor, then... - ANS Profits could be increased by reducing employment
The own-wage elasticity of labor demand measures... - ANS percentage change in quantity of
labor demanded divided by percentage change in wages.
If Industry A can substitute capital for labor easily and Industry Z can not, then other things
equal: - ANS Industry A's own-wage elasticity deman will be more elastic than Industry Z's.
If an increase in the minimum wage leads to higher overall earnings by the workers affected,
then the own-wage elasticity of demand is... - ANS inelastic
If a small factory's demand for custodians increases, then - ANS its wage rate will remain the
same and its employment level will increase.
When wages decrease, the scale effect implies that employment will_________ and the
substitution effect implies that employment will _______. - ANS Increase; Increase
According to Hardy, the view of work of the Medieval church could be described as: -
ANS the active life of work was acceptable, but the contemplative life was better.
Pg. 1 Copyright © 2025 Jasonmcconell. ALL RIGHTS RESERVED.
, The marginal product of labor tells us - ANS the additional output produced by the last
employee hired.
Total Population: 200 million
Employed: 120 million
Unemployed: 8 million
Retired: 32 milliom
Population under age 16: 40 milliom
-Given the data, the labor force participation rate is...
-Given the date, the unemployment rate it... - ANS 1. 80%
2. 6.25%
When the price of robots rises, we observe that the employment of unskilled labor falls. This
tells us that... - ANS robots and unskilled labor are gross complements.
If two inputs are complements in production... - ANS then the inputs are gross complements
If the wage paid to steel workers goes up by 24 percent, this causes the quantity of steel
workers demanded to go down by 8 percent. Therefore, the own-wage elasticity of demand for
these workers is... - ANS -0.33
In an industry, when the price of computers goes up, the company employs more high skilles
workers. This implies... - ANS the subsitition effect dominated the scale effect
Results from economic research show that most of a payroll tax is paid by the employees in the
form of lowered wages. If true, these studies imply: - ANS the supply of labor curve is very
steep.
Pg. 2 Copyright © 2025 Jasonmcconell. ALL RIGHTS RESERVED.
Answers
If the firm hires to a point where the marginal cost of labor is greater than the marginal revenue
product of labor, then... - ANS Profits could be increased by reducing employment
The own-wage elasticity of labor demand measures... - ANS percentage change in quantity of
labor demanded divided by percentage change in wages.
If Industry A can substitute capital for labor easily and Industry Z can not, then other things
equal: - ANS Industry A's own-wage elasticity deman will be more elastic than Industry Z's.
If an increase in the minimum wage leads to higher overall earnings by the workers affected,
then the own-wage elasticity of demand is... - ANS inelastic
If a small factory's demand for custodians increases, then - ANS its wage rate will remain the
same and its employment level will increase.
When wages decrease, the scale effect implies that employment will_________ and the
substitution effect implies that employment will _______. - ANS Increase; Increase
According to Hardy, the view of work of the Medieval church could be described as: -
ANS the active life of work was acceptable, but the contemplative life was better.
Pg. 1 Copyright © 2025 Jasonmcconell. ALL RIGHTS RESERVED.
, The marginal product of labor tells us - ANS the additional output produced by the last
employee hired.
Total Population: 200 million
Employed: 120 million
Unemployed: 8 million
Retired: 32 milliom
Population under age 16: 40 milliom
-Given the data, the labor force participation rate is...
-Given the date, the unemployment rate it... - ANS 1. 80%
2. 6.25%
When the price of robots rises, we observe that the employment of unskilled labor falls. This
tells us that... - ANS robots and unskilled labor are gross complements.
If two inputs are complements in production... - ANS then the inputs are gross complements
If the wage paid to steel workers goes up by 24 percent, this causes the quantity of steel
workers demanded to go down by 8 percent. Therefore, the own-wage elasticity of demand for
these workers is... - ANS -0.33
In an industry, when the price of computers goes up, the company employs more high skilles
workers. This implies... - ANS the subsitition effect dominated the scale effect
Results from economic research show that most of a payroll tax is paid by the employees in the
form of lowered wages. If true, these studies imply: - ANS the supply of labor curve is very
steep.
Pg. 2 Copyright © 2025 Jasonmcconell. ALL RIGHTS RESERVED.
