ECN 212 Homework Set #3 – Dr. Roberts
Homework Set #3 is due in the Lab no later than Friday, April 4, 2014. Late Homework will not be accepted under any circumstance. The early submission deadline is Wednesday, April 2. Early submissions will receive 2 extra credit points. Answers must be turned in on an “exam SYSTEM II” Scantron, form # 229633, available at the ASU Bookstore. Answer sheets must be marked in pencil and contain your name and 10 digit ASU Identification Number.
1. In the figure above, a monopsony will pay the wage rate
a. W1 and hire Q1.
b. W3 and hire Q1.
c. W2 and hire Q2.
d. W1 and hire Q3.
e. W1 and hire Q2.
2. In the figure above, if this were a competitive labor market they would pay the wage rate
a. W2 and hire Q2.
b. W3 and hire Q1.
c. W1 and hire Q3.
d. W1 and hire Q2.
e. W1 and hire Q1.
3. In the figure above, if the government imposes a minimum wage of W2, what quantity of labor will a competitive labor market hire?
a. A quantity less than Q1
4. In the figure above, if the government imposes a minimum wage of W2, what quantity of labor will a monopsonist hire?
b. A quantity less than Q1
Number of Workers Output per Hour ________________________________________
5. According to the table above, if the product price is $3 and the wage rate is $6 per hour, how many workers should this firm hire?
6. According to the table above, the marginal revenue product of the
a. fourth worker is $68.
b. third worker is $3.
c. fifth worker is $3.
d. second worker is $12.
e. first worker is $3.
7. After hiring 151 units of the variable input, labor, a firm determines the MRP to be $.30 and the MFC to be $.33. The firm should
a. increase the output of its product.
b. produce less than 151 units of output.
c. increase the use of labor.
d. continue to produce 151 units of output.
e. decrease the use of labor.
8. In the graph above, if comparable worth doctrine sets the wage rate in market A and market B at $15, then
a. both markets would be in equilibrium.
b. there would be a surplus of workers in both markets.
c. there would be a shortage of workers in market A and a surplus of workers in market B.
d. there would be a shortage of workers in market B and a surplus of workers in market A.
e. there would be a shortage of workers in both markets.
9. According to the table above, what wage rate will a monopsony pay to hire the optimal number of workers?
10. According to the table above, if this were a perfectly competitive input market rather than a monopsony, what wage rate would be paid for the optimal number of workers?
11. Refer to the figure above. If a minimum wage law of $5.15 is imposed, which of the following is correct?
a. Qs people will be employed.
b. A shortage will result equal to .
c. A shortage will result equal to units.
d. There will be a net gain for this labor market because those who keep their jobs gain more than those who lost their jobs.
e. None of the above is correct.
12. Refer to the figure above. If a minimum wage of $3.00 is imposed,
a. some workers will lose their jobs.
b. a surplus will result.
c. more than Qe workers will be hired.
d. Qe workers will be hired.
e. None of the above is true.
13 Comparable worth is derived from the view that pay should be based on
a. the degree of occupational segregation in a labor market.
b. the supply and demand for different types of labor.
c. only the demand side of the labor market.
d. only the supply side of the market.
e. the characteristics of the job.
14. If in the negative income tax proposal the guaranteed income floor is $9,000 and the tax rate is 25%, what is the value of the breakeven income?
15. Refer to the figure above. Assume that total income in Country A and Country B is equal. The poorest 20 percent of country A’s population receives
a. half as much income as the poorest 20 percent of country B’s population.
b. less income than the poorest 20 percent of country B’s population.
c. the same as country B’s richest 20 percent.
d. the same income as the poorest 20 percent of country B’s population.
e. more income than the poorest 20 percent of country B’s population.
16. The most unequal distribution of income is found in
a. formerly communist countries.
b. less developed countries.
c. OPEC countries.
d. the United States.
e. developed countries.
17. Suppose, as a policymaker, that you could order a single change to reduce the incidence of poverty. Which of the following changes is most likely to be effective?
a. Engineering a sustained period of economic growth.
b. Reducing, if not eliminating, the minimum wage.
c. Make income taxes more progressive.
d. Tightening governmental regulations to ease the burden on business.
e. Winning the war on crime and illegal drug use.
18. The Lorenz curve shows __________ within a society.
a. the per capita annual income of individuals
b. the quality of life of the poor
c. the absolute level of income
d. how equitable the distribution of income is
e. the income distribution
19. The Lorenz curve cannot be used to show
a. a summary of distributions of income
b. how a give income is distributed among the population
c. the fairest distribution of income
d. an equal distribution of income
e. the Lorenz curve can be used to show all of the above.
Use the following information to answer the next three questions. Assume that labor demand is given by QD = 140-20p and labor supply is given by QS = 10P-10 where P = wage and Q = quantity of labor.
20. What is the equilibrium wage and number of workers hired in this market?
a. $6, 50
b. $7, 40
c. $5, 40
d. $10, 140
e. $20, 10
21. If a minimum wage of $6 is imposed on the market, how much unemployment will exist?
22. What is the net effect of the $6 minimum wage on this labor market?
a. There is no effect as the minimum wage is set below the equilibrium wage.
b. $30 loss
c. $80 loss
d. $100 loss
e. $20 gain
23. Which of the following statements is true?
a) Raising the minimum wage is an effective way to lift families out of poverty.
b) Households in the bottom income quintile are very likely to remain there throughout their lives.
c) U.S. census poverty data does not include in-kind transfers and therefore overstates poverty rates.
d) Wage discrimination is the largest component of poverty in America.
e) None of the above is true.
24. Which of the following statements proves the existence of wage discrimination?
a. Male prison guards earn more on average than female prison guards.
b. Professors of economics earn more on average than professors of women’s studies.
c. Men earn more on average than women.
d. All of the above prove the existence of wage discrimination.
e. None of the above proves the existence of wage discrimination.
25. What condition would create less worry about the Social Security system?
a. If the amount paid into the social security system by an individual was equal to the amount of the social security trust fund.
b. If the amount paid into the social security system by an individual was equal to the amount collected from all individuals.
c. If the amount paid into the social security system by an individual was equal to the amount of private savings that individual had.
d. If the amount paid into the social security system by an individual was equal to the amount received by that individual in retirement benefits.
e. If the amount paid into the social security system by an individual was the minimum an individual could receive in retirement benefits.