Workforce Economics Exam
Questions
Course Introduction
Workforce Economics explores the principles and dynamics underlying labor markets, employment trends, wage determination, and workforce participation. The course examines the economic factors influencing labor supply and demand, the role of government policies, labor unions, and globalization on employment structures. Students will study models of labor market behavior, human capital theory, wage inequality, and the effects of technological change on the workforce. Emphasis is placed on applying economic theory to contemporary workforce challenges and analyzing real-world data to inform policy and organizational decisions.
Recommended Textbook
Contemporary Labor Economics 10th Edition by Campbell McConnell
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Page 2
Chapter 1: Labor Economics: Introduction and Overview
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Sample Questions
Q1) The "old" view of labor economics stresses _____ while the "new" view focuses upon
A)analysis ; markets
B)description; analysis
C)description; institutions
D)institutions; description
Answer: B
Q2) Nobel Laureate Gary Becker is known for economic theories in all of the following areas except:
A)economics of households
B)investment in human capital
C)the "old" labor economics
D)economics of discrimination
Answer: C
Q3) The three basic characteristics of the economic perspective are:
A)Relative scarcity,purposeful behavior,and adaptability
B)Supply,demand,and equilibrium
C)Description,institutions,and facts
D)Prices,quantities,and incomes
Answer: A
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Chapter 2: The Theory of Individual Labor Supply
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Q1) If this person were now willing to supply only H<sub>1</sub> hours of work at W<sub>3</sub>,we could conclude that:
A)labor supply increased (the curve shifted to the right)
B)labor supply decreased (the curve shifted to the left)
C)the person's preferences must have changed
D)the substitution and income effects are now equal
Answer: B
Q2) For income and leisure time,a higher level of utility is achieved by moving to the _____ on an indifference _____.
A)northeast; curve
B)southwest; curve
C)northeast; map
D)southwest; map
Answer: C
Q3) The higher the individual's wage rate:
A)the steeper the budget constraint
B)the lower the marginal rate of substitution of leisure for income
C)the greater the desired number of hours of work
D)the greater the desired number of hours of leisure
Answer: A
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Chapter 3: Population, Participation Rates, and Hours of Work
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Sample Questions
Q1) The added-worker effect suggests that:
A)higher wages will attract more persons into the labor market during market expansions
B)when one family member loses a job,other family members may enter the labor force
C)the measured unemployment rate probably understates the true economic hardship associated with unemployment
D)the labor force participation rate will fall as the unemployment rate rises
Answer: B
Q2) Fuchs' research suggests the most important reasons for the increased labor force participation rate of women are:
A)rising real wages and expansion of service sector jobs
B)rising real wages and the feminist movement
C)the feminist movement and passage of antidiscrimination legislation
D)passage of antidiscrimination legislation and technological innovations in household production methods
Answer: A
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Chapter 4: Labor Quality: Investing in Human Capital
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Q1) If education is undertaken as consumption as well as investment:
A)researchers will understate the private rate of return on human capital investment
B)researchers will overstate the social rate of return on human capital investment
C)the investment costs of education will be understated
D)the benefits of education will be overstated
Q2) Available evidence indicates that:
A)age-earnings profiles vary with education,but not with age
B)age-earnings profiles vary with age,but not with education
C)age-earnings profiles of workers with more education tend to be flatter,but higher,than those with less education
D)differences in earnings between workers who have more education and those who have less education generally widen with age
Q3) From 1980 to the present,the college wage premium:
A)rose for women but fell for men
B)rose for men but fell for women
C)fell for both women and men
D)rose for both women and men
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Chapter 5: The Demand for Labor
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Sample Questions
Q1) Suppose that the decline in prices of personal computers has reduced the demand for labor at a particular firm.We may conclude that at this firm:
A)computers and labor are pure complements
B)computers and labor are gross complements but not pure complements
C)computers and labor are gross substitutes
D)computers and labor are perfect substitutes
Q2) The marginal revenue product schedule:
A)measures the increase in total revenue that results from the production of one more unit
B)measures the decline in product price that a firm must accept in order to sell the extra output of one more worker
C)is the same whether the firm is selling in a purely competitive or imperfectly competitive market
D)is the firm's labor demand schedule,provided the firm is operating in the zone of production
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Chapter 6: Wage Determination and the Allocation of Labor
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Q1) For the supply and demand curves in the diagram,the level of employment will be highest at:
A)wage rate W<sub>1</sub>
B)wage rate W<sub>2</sub>
C)a wage rate higher than W<sub>1</sub>
D)a wage rate lower than W<sub>2</sub>
Q2) Which of the following best explains why the market labor supply curve is upward sloping,even though individual supply curves are normally backward bending?
A)The statement is not true: market labor supply curves are also backward bending
B)Market labor supply curves are "price-adjusted," whereas individual supply curves are not
C)Lower wages in a given market increase the demand for labor,so more labor must be supplied to maintain labor market equilibrium
D)Higher wages in a given market attract more workers away from other activities,more than compensating for any reduction in hours by individuals already in the market
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Chapter 7: Alternative Pay Schemes and Labor Efficiency
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Q1) Which one of the following is not typically offered as an explanation for efficiency wages?
A)An employer will not pay a wage that exceeds the market rate
B)A higher wage may reduce turnover
C)A higher wage may allow lower income workers to afford better nutrition that increases their stamina
D)The higher wage may be perceived by workers as raising the opportunity cost of shirking
Q2) Royalties would most likely be received by a(n):
A)art dealer
B)factory worker
C)used car dealer
D)author
Q3) 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
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Chapter 8: The Wage Structure
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Sample Questions
Q1) In equilibrium:
A)worker A will work for firm X; worker B will work for firm Y
B)worker A will work for firm Y; worker B will work for firm X
C)both workers will work for firm X
D)both workers will work for firm Y
Q2) The hedonic theory of wages predicts that:
A)workers and firms will be matched randomly,but in equilibrium firms will be maximizing profits and workers will be maximizing utility
B)other things equal,workers who value job safety least will tend to work for firms that have the lowest cost of providing safe jobs
C)other things equal,workers who value job safety least will tend to work for firms that have the highest cost of providing safe jobs
D)other things equal,workers who value job safety most will tend to work for firms that have the highest cost of providing safe jobs
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Chapter 9: Mobility,Migration,and Efficiency
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Q1) Early empirical evidence reported by Barry Chiswick indicated that foreign-born persons migrating to the U.S.,all else constant:
A)tended to earn more than natives from the time they arrived at the destination
B)initially tended to earn less than natives,caught up after 10-15 years,and eventually surpassed natives
C)typically did not catch up to the earnings of native-born workers,even after several years
D)had little or no variance in their earnings
Q2) Which of the following would be considered a real (as opposed to pecuniary)externality associated with migration?
A)Capital owners in the origin will lose income as wages rise in response to reduced labor supply
B)More public services will be required in the destination and there will be excess capacity of public goods in the origin
C)Profits of capital owners at the origin will rise as migrants leave
D)Wages of destination workers will fall as migrants enter and add to labor supply
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11
Chapter 10: Labor Unions and Collective Bargaining
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Q1) Compared to the 1950s,current union membership as a percent of the labor force in the U.S.is:
A)the same in the private sector and higher in the public sector
B)lower in the private sector and higher in the public sector
C)the same in the private sector and lower in the public sector
D)lower in the private sector and lower in the public sector
Q2) According to models of asymmetric information,strikes are more likely when:
A)firm profitability is highly variable and uncertain
B)there is less democracy in the union
C)union leaders have less information regarding firm profitability than the rank and file members
D)none of the above
Q3) Which one of the following is generally not associated with relatively high levels of unionization?
A)Services
B)Public administration
C)African Americans
D)Blue-collar workers
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12
Chapter 11: The Economic Impact of Unions
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Sample Questions
Q1) The pure union wage advantage in this market is:
A)20%
B)25%
C)$2
D)More information is needed
Q2) The allocative efficiency loss associated with unions arises because:
A)job losers in the union sector take away jobs from more productive workers in the nonunion sector
B)the value of lost output in the union sector is greater than the value of any additional output in the nonunion sector
C)the union wage rises above the value of marginal product while the nonunion wage falls below it
D)job losers in the union sector are unqualified to work in the nonunion sector,so society loses their potential output
Q3) The union wage advantage tends to:
A)decrease during recessions
B)be smaller among lower-educated workers
C)be smaller among African Americans
D)be larger among craft unions
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Page 13
Chapter 12: Government and the Labor Market:
Employment, Expenditures, and Taxation
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Q1) Which of the following is an example of a nonexhaustive (transfer)government expenditure?
A)Government payroll expenditures
B)Government purchase of a weather satellite
C)Farm price supports
D)Public school construction
Q2) Most studies conclude that aggregate labor supply is very:
A)elastic,so that income taxes are borne mainly by workers
B)inelastic,so that income taxes are borne mainly by workers
C)elastic,so that income taxes are borne mainly by employers
D)inelastic,so that income taxes are borne mainly by employers
Q3) Because a lottery draft selects individuals with opportunity costs randomly drawn from the general population while an all-volunteer military enlists only those with opportunity costs less than the military wage:
A)the true economic costs of a draft exceeds that of a voluntary system
B)the true economic costs of a draft are less than that of a voluntary system
C)the taxpayer costs of a draft exceed that of a voluntary system
D)the true economic costs of a draft equal the taxpayer costs of a voluntary system
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Chapter 13: Government and the Labor Market: Legislation and Regulation
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Sample Questions
Q1) Consider the diagram.Suppose the government establishes a minimum wage of $7.00 in this market.Which of the following is a true statement?
A)Demand is elastic over the relevant range,so that total wage income rises
B)Demand is elastic over the relevant range,so that total wage income falls
C)Demand is inelastic over the relevant range,so that total wage income rises
D)Demand is inelastic over the relevant range,so that total wage income falls
Q2) Which of the following established unfair labor practices by unions?
A)Norris-LaGuardia Act
B)Taft-Hartley Act
C)Wagner Act
D)Landrum-Griffin Act
Q3) A court order to prevent actions such as picketing,striking,and boycotting is called a(n):
A)yellow-dog contract
B)blacklist
C)lockout
D)injunction
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Page 15
Chapter 14: Labor Market Discrimination
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Sample Questions
Q1) Discrimination in the form of access barriers to productivity-increasing opportunities is termed:
A)wage discrimination
B)employment discrimination
C)occupational discrimination
D)human capital discrimination
Q2) Which one of the following is an example of premarket discrimination:
A)wage discrimination
B)employment discrimination
C)occupational discrimination
D)human capital discrimination
Q3) The horizontal portion of the demand curve will be extended by an increase in the:
A)number of firms that discriminate
B)number of firms that do not discriminate
C)productivity of white workers
D)supply of African American workers
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Chapter 15: Job Search: External and Internal
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Sample Questions
Q1) A fully anticipated reduction in the rate of inflation is expected to:
A)reduce the unemployment rate in the short run,but not in the long run
B)reduce the unemployment rate in the both the short run and the long run
C)increase the unemployment rate in the short run,but not in the long run
D)have little impact on the unemployment rate in either the short run or the long run
Q2) The recent drop in the proportion of worker holding long-term jobs can be partially explained by:
A)the shift from defined contribution to defined benefit pension systems
B)the shift from services to manufacturing
C)the decline in technological progress and productivity
D)the increase in women's labor force attachment
Q3) A recent tax reform made all unemployment compensation benefits subject to the federal income tax.Since unemployment compensation was tax free prior to the reform,this policy change likely:
A)reduced average job search duration and increased the unemployment rate
B)increased average job search duration and increased the unemployment rate
C)increased acceptance wages and decreased the unemployment rate
D)reduced acceptance wages and decreased the unemployment rate
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17
Chapter 16: The Distribution of Personal Earnings
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Sample Questions
Q1) The Gini coefficient measures:
A)the area under the Lorenz curve
B)the area above the Lorenz curve
C)twice the area between the Lorenz curve and the line of equality
D)half the area between the Lorenz curve and the line of equality
Q2) The mean of this distribution is:
A)10,000 workers
B)between $20,000 and $30,000
C)between $30,000 and $50,000
D)between $60,000 and $90,000
Q3) The median of this distribution is in the:
A)second 20%
B)third 20%
C)fourth 20%
D)highest 20%
Q4) The U.S.earnings distribution is:
A)skewed toward lower earnings
B)skewed toward higher earnings
C)symmetrical
D)uniform
18
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Chapter 17: Labor Productivity: Wages,Prices,and Employment
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Q1) Which of the following best describes the relationship between productivity changes and investment during a recession?
A)Unit labor costs rise,plant and equipment are utilized more,investment rises
B)Unit labor costs fall,plant and equipment are utilized more,investment rises
C)Unit labor costs fall,plant and equipment are utilized less,investment rises
D)Unit labor costs rise,plant and equipment are utilized less,investment falls
Q2) Which of the following will leave unit labor costs unchanged?
A)Nominal wages and productivity both increase by 3%
B)Nominal wages do not increase,regardless of the productivity increase
C)Real wages do not increase,regardless of the productivity increase
D)Real wages,productivity,and prices all increase by 3%
Q3) Which of the following would not cause an increase in the BLS Index of Labor Productivity?
A)An increase in labor quality
B)An improvement in production technology
C)An increase in output per worker in the public sector
D)An increase in the quantity of physical capital
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Page 19
Chapter 18: Employment and Unemployment
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Sample Questions
Q1) Which of the following is not a source of wait unemployment?
A)Temporary layoffs
B)Union job queues
C)Efficiency wages
D)Changes in the structure of the economy
Q2) Suppose that a policy response to cyclical unemployment is mistimed or overshoots its target,resulting in output above the full-employment level.Output will:
A)eventually return to the full-employment level because at some point,workers will no longer continue to supply as much labor at each nominal wage
B)eventually return to the full-employment level because nominal wage rates are rigid
C)eventually return to the full-employment level because workers will not adjust their acceptance wages
D)stay above the full-employment level until corrective policy action is taken
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