人力資源理論與應用
Theory and Application of Human Resources
ECON4203
Quiz #1-Answer
Spring 2010
Date : 5/13 (Thu.)
姓名______________ 學號_______________
I.
Multiple Choice (40 points)
1) When forming theories, economists must be careful to
A. include all known facts and details.
B. omit crucial factors.
C. mirror the real world as realistically but as simply as possible.
D. consider historical behavior and policies.
E. take into account international trade policy.
Ans: C
2) What is the difference between normative and positive economics?
A. Normative economics concerns the how and why of economic activity while positive
economics concerns what should be.
B. Positive economics concerns what is while normative economics concerns what should be.
C. Both concern the how and why of economic activity while only positive economics also
concerns what should be.
D. Neither deals with the how and why of economic activity, but normative economics concerns
what should be.
E. Positive economics is used in Microeconomics while normative economics is used in
Macroeconomics.
Ans: B
3)
Assuming that consumption and leisure are normal goods, then hours worked will fall
when the wage increases if:
A. The income effect dominates the substitution effect.
B. The substitution effect dominates the income effect.
C. If the income and substitution effect move in the same direction (i.e., if they are of the same
sign).
D. If the income and substitution effect move in the opposite direction (i.e., if they are of the
opposite sign).
E. The wage increase is accompanied by an increase in prices.
Ans: A
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4)
When the wage was $10 per hour, a group of workers supplied 30 hours of work per week
on average. The wage then increased to $12 per hour, and the same group of workers
supplied 33 hours of work per week on average. What is the elasticity of labor supply for
this group of workers?
A. 0
B. 0.5
C. 1.0
D. 1.5
E. 2.0
Ans: B
5) The imposition of a minimum wage on a competitive labor market will likely
A. create additional employment opportunities because some low-skilled workers will now see
their wage increase.
B. lower the wages of workers earning more than the minimum wage.
C. create unemployment as some people enter the labor market while some firms reduce the
quantity of labor they are willing to employ due to the increased wage.
D. increase unemployment of high-skilled workers as firms substitute high-skilled labor for
low-skilled labor.
E. increase tax revenue for the government, even if there is a large unemployment effect.
Ans: C
6)
A.
B.
C.
D.
E.
If the minimum wage applies to one sector (the covered sector) but not another sector
(the uncovered sector), an increase in the minimum wage in the covered sector is likely to
result in which of the following?
Greater employment in the covered sector.
Less employment in the uncovered sector.
A lower wage in the covered sector.
A lower wage in the uncovered sector.
Workers willingly leaving the covered sector for the uncovered sector in search of higher
wages.
Ans: D
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7) A profit-maximizing monopsonist
A. pays the same wage to all types of labor.
B. hires an equal number of male and female workers and pays them the same wage.
C. hires more minority workers than non-minority workers, but pays the minority workers less
than the non-minorities.
D. hires fewer workers and pays its workers less than it would if it were operating in a
competitive labor market.
E. substitutes low-skilled labor for high-skilled labor in the long run.
Ans: D
8)
If labor is supplied perfectly inelastically, then the imposition of a payroll tax will do all of
the following except:
A. reduce the wage rate by exactly the amount of the tax.
B. leave employment levels unchanged.
C. leave firm profits unchanged.
D. reduce total output.
E. generate tax revenue paid to the government.
Ans: D
9) What does not enter into the present value calculation of a college degree?
A. The cost of college tuition.
B. The cost of books.
C. Wages of college graduates.
D. Lifetime wages of non-college graduates.
E. The value of one’s scholarships.
Ans: D
10)
A.
B.
C.
What is implied when the wage-schooling profile is drawn as a concave function?
The marginal return to schooling falls as years of schooling increases.
The marginal return to schooling increases as years of schooling increases.
Average wages fall as years of schooling increases.
D. The cost of schooling increases, but at a decreasing rate, as years of schooling increases.
E. The cost of schooling decreases, but at an increasing rate, as years of schooling increases.
Ans: A
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II. Problem (60 points)
1)
In the theoretical framework of labor/leisure choice,
(a) What is the economic interpretation of a corner solution concerning labor supply decision?
(Answer in 1 or 2 sentences with graphs.)
Ans: A worker will either work all available time or will not work at all, it depends on the relative
slopes of the indifference curve and the budget line. One of special cases--the corner solution, the
worker will NOT work at all, implies that H*=0 as well as L*=T, the worker prefer leisure to
market wage, if they could, he or she want to leisure more than they have (L*>T).
Goods
C
Hours of Leisure
Figure A
(HW1. Problem 1)
(b) What is the economic interpretation of the slope of the indifference curve at the corner
solution (endowment point)? (Answer in 2 or 3 sentences with graphs.)
Ans: The slope of an indifference curve is defined as the marginal rate of substitution which a
worker is ready to give up one hour of leisure (hours of labor income) in exchange for one hour of
labor income (hour of leisure) while maintaining the same level of satisfaction. To determine the
labor supply decision depending on the relationship between market wage and reservation
wage(equivalent to MRS=W/P), when market wage is less than reservation wage, it implies that the
worker will not work at all(H*=0), and corner solution exists (shown in Figure A).
Goods
C
Hours of Leisure
Figure A
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(c) Would an individual work more hours annually if she gets a raise, other things being equal?
Under what condition (concerning two effects) will she work less? (Discuss the two effects
following the wage change with graphical expression.)
Ans: A wage increase generates both income and substitution effects. When income effect
occurs, an individual would decrease hours of work (H) as well as increase hours of leisure
(L) because more income is received for any given number of hours of work. When
substitution effect occurs, an individual would increase hours of work (H) as well as
decreases hours of leisure (L) because an increase in wage rate raises the opportunity cost
of leisure. When SE>IE(Figure A), work more; when SE>IE(Figure B), work less.
Consumption ($)
Consumption ($)
U1
G
G
U1
R
D
R
D
Q
U0
F
D
F
Q
U0
D
P
P
V
E
V
E
0
0
70 75
110
85
65 70
80
110
Hours of Leisure
Hours of Leisure
Figure A
Figure B
(Ref to PPT-Labor supply, pg 25-26)
(d) Does that (i.e. working less hours in response to a wage increase) imply that leisure is an
inferior good? Why or why not?
Ans: An individual work less as in response to a wage increase does not imply that leisure
is an inferior good. Inferior good is defined that its consumption behavior is negatively
related to income, normal good is defined that its consumption behavior is positively
related to income. When wage rises, work less as well as leisure more, it implies that
leisure, its consumption behavior is positively related to income, also implies that income
effect is stronger than substitution effect, induce to more leisure, therefore, leisure can be
consider as a normal good.
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2)
Analytical Questions
(a) Verbally and graphically how does a non-discriminating monopsonist determine the
optimal employment level and wage offer?
Ans: A non-discriminating monopsonist pays the same wage to all workers. The
marginal cost of hiring exceeds the wage, and the marginal cost curve lies above the
supply curve. Profit maximization occurs at point A; the monopsonist hires EM workers
and pays them all a wage of WM.
Dollars
MCE
VMPM
S
A
w*
wM
VMPE
E M E*
Employment
(Ref to PPT-Labor Market Equilibrium, Pg 35)
(b) Imposition of a minimum wage on a non-discriminating monopsonized labor market may
increase employment. True/false. Why? Explain verbally and graphically.
Ans: True.
The minimum wage may increase both wages and employment when imposed on a
non-discriminating monopsonist. A minimum wage set at w increases employment to E.
On the other hand, the shape of marginal cost curve will change (red line).
Dollars
MCE
S
A
w*
w
wM
VMPE
EM E
Employment
(Ref to PPT-Labor Market Equilibrium, Pg 37)
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