Principles of Microeconomics
ECON-0202
Doug Copeland
EXAM #3 (Covers Chapters 11 and 15)
(150 points possible)
Name: ___________________________________________
Date: _____________
Choose the one best answer for each of the following 30 questions. Please place your answers (and
your name) in a separate Microsoft WORD file, in list form like this:
Your Name
1. a
2. b
3. c
Etc…
And submit your answers at the course website under Lesson Content (and also email me your
answers as a WORD file to my email address: dcopeland@kckcc.edu as well) by 11:59 pm Sunday
evening, November 22, 2020.
Good luck on this test! ☺
1. Which factor would shift the market labor supply curve to the right?
A) a more stringent immigration policy
B) a reduction in nonwage income
C) an increase in the market wage rate
D) an increase in wages in alternative jobs using the same skills
2. Jeff owns a small business installing home security systems priced at $1,000 each. By
himself, he can install four systems per month. If he hires an assistant, a total of ten
systems can be installed. If he hires two assistants, a total of fifteen systems can be
installed. Assuming that the price stays the same, what is the marginal revenue product
of the first assistant; and the marginal revenue product of the second assistant?
A) $6,000; $5,000
B) $6,000; $11,000
C) $10,000; $11,000
D) $10,000; $15,000
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3. Which of these is most likely to decrease the demand for labor in the nursing industry?
A) an increase in demand for health care services
B) an increase in the productivity of nurses as they perform services previously done
by doctors
C) an increase in Web-based medical services that allow patients to self-diagnose
minor illnesses
D) a decrease in the number of colleges offering four-year nursing degrees
4. Suppose that the government eases restrictions on the immigration of scientists and
engineers. What would happen in the labor market for these professions, all else equal?
A) equilibrium wages would rise and labor quantity would fall
B) equilibrium wages would fall and labor quantity would rise
C) both equilibrium wages and labor quantity would fall
D) both equilibrium wages and labor quantity would rise
5. What would happen to wages and labor if worker safely regulations were abolished,
making work conditions more dangerous?
A) both wages and labor quantity would rise
B) both wages and labor quantity would fall
C) wages would fall and labor quantity would rise
D) wages would rise and labor quantity would fall
6. According to Gary Becker's theory on economic discrimination, employers who
successfully discriminate in their hiring practices will:
A) earn less profits because they must pay more for labor.
B) earn more profits because the pool of potential workers would expand .
C) earn more profits because discrimination results in lower labor costs.
D) have no effect on a firm's ability to earn profits.
7. Which of these is a characteristic that may be subjected to economic discrimination?
I. Age
II. Disability
III. Human Capital
A) I and III
B) I, II, and III
C) III only
D) I and II
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8. Which law addressed the inequities of gender pay?
A) Equal Pay Act of 1963 and Employment Non-Discrimination Act
B) Civil Rights Act of 1964 and Executive Order 11246
C) Equal Pay Act of 1963 and Lily Ledbetter Fair Pay Act
D) Executive Order 11246 and Employment Non-Discrimination Act
9. Which situation is least likely to be an example of labor discrimination?
A) employers screening out candidates based on candidates' names
B) women earning less money in a career that offers flexible work hours
C) a restaurant that hires only young female servers
D) senior citizens finding difficulty in pursuing new careers
10. Jack works for a large lumber company. Although he chose not to join the union for
personal reasons, he is still required to pay union dues. Jack's company is represented by
which form of union?
A) closed shop
B) open shop
C) union shop
D) agency shop
11. Union membership in the United States rose significantly during the _____.
A) 1940s
B) 1960s
C) 1970s
D) 1980s
12. Unions tend to _____ wage differentials between a union and non-union sector by
_____ entry into union-sector jobs.
A) decrease; promoting
B) decrease; restricting
C) increase; promoting
D) increase; restricting
13. Which of the following acts or policies was most favorable to the growth of unions?
A) Taft-Hartley Act
B) yellow-dog contracts
C) Wagner Act
D) right-to-work laws
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14. In which industry or sector are unions most prominent?
A) service sector
B) high-tech industry
C) manufacturing sector
D) agriculture industry
15. Which career is least likely to expand in demand over the next decade?
A) Internet security technicians
B) health care professionals
C) elementary school teachers
D) steel manufacturing
16. Which employer would best represent a monopsony?
A) McDonalds
B) Starbucks
C) AT&T Wireless
D) the U.S. military
17. Which of these describes a labor market in which most of a small town's workers are
employed by one large company?
A) monopoly
B) oligopoly
C) monopsony
D) monopolistic competition
18. When a labor market is imperfect due to market power by a firm, the result in that
market typically is:
A) fewer workers hired at a wage below their marginal value.
B) fewer workers hired at a wage above their marginal value.
C) more workers hired than in a competitive market, at a wage below their marginal
value.
D) more workers hired than in a competitive market, at a wage above their marginal
value.
19. Which measurement rises most quickly as more labor is hired?
A) the value of the marginal product of labor
B) the marginal revenue product of labor
C) the supply of labor
D) the marginal factor cost of labor
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20. When an individual labor supply curve bends backward, this means that the:
A) substitution effect is the only effect that occurs.
B) income effect is the only effect that occurs.
C) substitution effect is stronger than the income effect.
D) income effect is stronger than the substitution effect.
21. Which statement is most likely to be a true one?
A) A person with a high income will have high wealth.
B) A person will typically maximize their income right before he or she retires at
around age 65.
C) Wages are the most common form of income in the U.S. economy.
D) The richest quintile of Americans control about three times as much wealth as the
lowest quintile.
22. Suppose that the five residents of a small village have the following incomes: $10,000;
$20,000; $30,000; $40,000; $50,000. The proportion of total income earned by the
lowest two quintiles is _____ and the proportion earned by the highest two quintiles is
_____.
A) 30%; 90%
B) 20%; 100%
C) 30%; 40%
D) 20%; 60%
23. Which Gini coefficient corresponds to a Lorenz curve that is bowed furthest away from
the 45-degree line?
A) 0.00
B) 0.35
C) 0.50
D) 0.71
24. Income redistribution efforts such as progressive taxation and transfer payments will
typically _____ income inequality, which means that the Gini coefficient will _____.
A) increase; rise
B) increase; fall
C) decrease; rise
D) decrease; fall
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25. Which of these is not a common cause of income inequality?
A) the choice of city where one lives
B) differences in human capital
C) economic labor discrimination
D) number of earners in a household
26. The poverty thresholds in the United States are largely based on an adjusted measure of
prices of which category or categories of goods?
A) housing and transportation
B) housing
C) food and health care
D) food
27. Poverty is least likely to be eliminated when using which form of measurement?
A) an absolute poverty threshold
B) the World Bank's $2 per day measure
C) a relative poverty threshold
D) a fixed annual dollar amount measure
28. If the poverty threshold for a family of four is $24,000 and the Shoenfelds earned
$21,000, their income deficit is _____ and their ratio of income to poverty is _____.
A) $3,000; 1.14
B) $3,000; 0.875
C) $45,000; 1.14
D) $45,000; 0.875
29. If the poverty threshold for a household of 3 persons is $20,000 and the Shermans earn
$22,000, they would be classified as:
A) severely poor.
B) poor.
C) near poor.
D) not poor.
30. Which policy would a Rawlsian economist not support?
A) a reduction in capital gains taxes benefiting high-income earners
B) an increase in the top income tax bracket
C) an increase in government spending programs aimed at the poor
D) a more progressive tax structure
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