Download ECON 3100 Midterm Questions with Complete Solutions and more Exams Business Economics in PDF only on Docsity!
ECON 3100
MIDTERM QUESTIONS WITH COMPLETE SOLUTIONS
"The unemployment rate tells us - Correct Answer the percentage of the labor force that is not
working." "A worker who has quit one job to have time to search for a similar position is counted as what type of
unemployment? - Correct Answer frictional"
"During a recession we expect the unemployment rate to - Correct Answer Rise"
"A market is said to be in equilibrium when ... - Correct Answer the quantity demanded equals the
quantity supplied." "Suppose we observe that as the price of lettuce increases from $1 to $2 per head, consumers buy only
half the number of heads of lettuce. This situation is best described as ... - Correct Answer a decrease
in the quantity demanded." "Suppose we observe an increase in the demand for houseplants. What would we expect to happen to
the price and quantity sold of houseplants? - Correct Answer Price will increase and quantity will
increase."
"Which graph illustrates a case in which the equilibrium price and quantity both clearly fall? - Correct
Answer b - New demand is sloping towards the Y axis on the Supply and Demand Curve"
"The term ceteris paribus means... - Correct Answer "holding all else constant.""
"The difference between demand and quantity demanded - Correct Answer is the difference between
the relationship between a range of prices and the quantities demanded at those prices and one quantity on the demand schedule"
"Assume a market is in equilibrium, - Correct Answer if the supply curve remains the same and the
demand curve shifts upward and to the right, the new equilibrium price will be higher and the new equilibrium quantity will be greater"
"According to Salman Khan of Khan Academy, simplifying assumptions in economic reasoning - Correct
Answer helps you clarify your thinking, can be dangerous because these simplifying assumptions might
be wrong or not relevant, Allow you to prove things based on your assumptions (ALL OF THESE ANSWERS ARE CORRECT)"
"If the labor demand curve is inelastic, what will happen to aggregate earnings if wages rise? - Correct
Answer Aggregate worker earnings will increase."
"When the cross wage elasticity of demand for two types of workers results in an elasticity value > 0,
what do we know about these types of workers? - Correct Answer They're substitutes in the
production process" "This question is a survey question with no points assigned. It is intended to offer a quick tally of our
group. My economics course experience before Econ 3100 includes - Correct Answer THERE IS NO
CORRECT ANSWER TO THIS QUESTION"
"Which of the following is NOT an assumption necessary for competitive markets to function smoothly?
- Correct Answer Workers earn important benefits from working that are not encompassed by the wage."
"The market-clearing wage is that for which - Correct Answer The quantity of labor supplied equals the
quantity of labor demanded"
"The government - Correct Answer Provides a stable set of institutions to promote effective
competition" "Which of the following are two economic actors included in the traditional circular flow diagram of an
economy? - Correct Answer Firms and households"
"What is the equilibrium level of labor supply and demand in market with LS = -10 + 10W and LD = 130 -
4W? - Correct Answer 90"
"When LD = 200 - 10W and LS = -100 + 30W, what are the market clearing values of wage and Labor? -
Correct Answer W* = $7.50, L* = 125"
"Once W* is calculated, how do we find L? - Correct Answer By substituting W into the labor supply
equation"
"With LD = 200 - 10W and LS = -100 + 30W, what are the values of LS and LD when wage = $7.50? -
Correct Answer LS=LD=125"
"What condition is necessary for the law of one wage to hold? - Correct Answer Costless labor
mobility"
The demand curve shows... - Correct Answer the quantities that buyers are willing to purchase at
different prices."
"Firms in competitive input markets (labor, capital, etc) typically only control which of the following? -
Correct Answer Quantity of labor employed"
"The marginal revenue product of labor can be thought of as which of the following? - Correct Answer
The added revenue of a firm due to an additional unit of labor" "When a firm observes the following inequality, how should it respond in the short run to achieve the
balance condition with respect to its use of labor and capital? w/MPL>c/MPK - Correct Answer
Decrease the use of labor" "If a firm in a competitive market for labor has a labor demand equation of LD= 80 - 4w, what is the
firm's profit-maximizing MRPL equation? - Correct Answer MRPL=20-1/4L"
"Which for the following would shift the labor demand curve in the long run? - Correct Answer All of
these answers" "Suppose a firm is producing with input prices w=$10 and c=$100 and marginal products MPL=30 and MPK=290. Is the firm maximizing profit? If not, what should the firm do in the long run to improve its
position? - Correct Answer No, the firm is not maximizing profit. It should decrease the quantity of
capital employed." "The price of capital goes up. The scale effect will __________ the quantity of labor demanded and the
substitution effect will __________ the quantity of labor demanded. - Correct Answer decrease;
increase"
"Why do we expect labor demand elasticity to have a negative value? - Correct Answer The demand
curve is negatively sloped" "A type of worker that experiences a 10% loss of labor units as a result of a wage increase of 3% is
thought to have which of the following? - Correct Answer Elastic labor demand"
"If a wage increase from $7.25 to $8.00 per hour results in a decline of hours from 40 to 38 in a week,
this worker's elasticity value is which of the following? - Correct Answer -0.48, inelastic"
"Suppose moderately skilled workers have a labor demand relation of LD = 40 -3w. If the wage changes
from $10 to $11 what is the elasticity value? - Correct Answer -3, elastic"
"Own wage elasticity refers to which of the following? - Correct Answer Changes in labor units for a
given type of worker in response to changes in wage for that same worker"
"Cross wage elasticity refers to which of the following? - Correct Answer Changes in labor units for a
given type of worker in response to changes in wage for another type of worker"
"Which of the following might be a good description of complements in the labor process? - Correct
Answer When the labor of one worker is at least somewhat dependent on that of another worker"
"Which of the following is one reason that the PATCO strike is considered a turning point in US labor
relations? - Correct Answer As a result of Reagan's response, some private employers were
emboldened to fire and replace their striking workforces."
"Labor market frictions are - Correct Answer costs associated with firms searching for and hiring
employees, or costs associated with workers changing employers."
"A quasi-fixed cost of labor is a cost that - Correct Answer is proportional to the number of workers
hired."
"Which of the following is definitely NOT a quasi-fixed cost of labor? - Correct Answer overtime pay"
"According to the BLS survey of Contingent and Alternative Employment Arrangements, contingent workers and independent contractors together accounted for what percentage of the labor force in
2017? - Correct Answer 10.1%"
"More than half of contingent workers measured by the Bureau of Labor Statistics survey report that
they - Correct Answer would prefer noncontingent employment."
"Which of the following characteristics is NOT an element of gig economy work? - Correct Answer
Year-round, full-time work provides income security for labor." "Which of the following characteristics might gig economy workers identify as a benefit of gig economy
labor? - Correct Answer Flexible working hours"
"Which of the following characteristics is NOT an element of the standard employment relationship of
the post-WWII era? - Correct Answer Work is compensated on a piece-rate basis."
"Which of the following conditions was a factor supporting the standard employment relation in post-
WWII labor markets? - Correct Answer Economic growth and low unemployment"
"The type of production common in early capitalism that shares many attributes with the flexible and
subcontracted work strategies of the gig economy is called the - Correct Answer putting-out system."
"Relative to the 1960s, the labor force participation of women today is - Correct Answer higher"
