Assignment 1 study guide – Flashcards
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An increase in the wage rate: a)causes parallel rightward shift in the budget constraint b) rotate the budge constraint to the right c) causes a movement up a give indifference curve. d) causes a movement up a given budget constraint
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b) rotate the budge constraint to the right
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Equilibrium hours of work for an individual occurs: a) at the point on the budget constraint where the wage equals the marginal rate of substitution b) where the marginal rate of substitution is maximized. c) on the highest indifference curve. d) at the point on an indifference curve where the additional utility of working one more hour is zero .
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a) at the point on the budget constraint where the wage equals the marginal rate of substitution
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Assuming leisure is a normal good, a decrease in non-labor income will cause: a) a reduction in work hours b) an increase in work hours c) no change in work hours d) the change in work hours depends on the relative size of the income and substitution effects.
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b) an increase in work hours
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If the income effect is larger than the substitution effect: a) a person will work zero hours b) the labor supply curve will be positively sloped. c) whether a person works more or less in response to a wage increase cannot be predicted d) the labor supply curve will be negatively sloped.
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d) the labor supply curve will be negatively sloped.
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A person will choose not to participate in the labor force when
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c) the market wage is less than the reservation wage.
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IF the supply college graduates is greater than the demand, the human capital model predicts:
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d) all of the above
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Two people make the same dollar expenditure on human capital investment. This implies:
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d) none of the above
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The upward sloping portion of the average worker's age-earnings profile can be explained as arising from:
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d) all of the above
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Human capital theory predicts that women who plan on interrupting their work career will:
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c) be given less specific OJT by firms that women who do not
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Which of the following factors causes the officially defined unemployment rate to overstate the economic costs resulting from unemployment?
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c) certain income transfer programs require that recipients register for work.
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A person who misses work due to illness is classified as
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b) employed.
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The long-term nature of the employment relationship
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b) reduces the sensitivity of wage rates to changes in demand and supply
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The long-term nature of the employment relationship:
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b) reduces the sensitivity of wage rates to change in demand and supply
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Graphically, the reservation wage is shown by:
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c) the slope of an indifference curve where hours of work are zero
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Which of the following is an example of the failure of the market to achieve economic efficiency?>
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B) dean would benefit from moving to a job in vegas but he cannot borrow the money to finance the move
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A regression of w= a+bX, where w is wages and X is hours worked per week yielded a t-statistic of .75 for b. This implies:
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c) hours worked are probably not related to wages
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Multiple regression analysis uses:
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b) several independent variables
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A regression estimates that q= 35- .1X, where q is the quit rate and X is the number of employees at the firm. Both t-statistics are greater than 2. This indicates that doubling the number of employeees from 500 to 100 will reduce the quit rate by:
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b) 5 percentage points
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If leisure is a normal good then an increase in non-labor income will cause desired hours of work to:
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a) decrease
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Through the substitution effect, a decrease in the wage rate will cause ______ in the quantity of leisure desired.
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a) an increase
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If Alice' wage increase from 6.00 to 6.50 per hour, then
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d) she may want to work either more or fewer hours than before her raise.
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If Gene receives a raise and then decides he would like to increase his hours of work, we know that:
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b) his substitution effect is greater than his income effect.
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On the portion of a worker's labor supply curve that is backward bending:
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b) the income effect outweighs the substitution effect.
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If a worker's desired hours of labor do not change after a wage decrease, then:
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c) the income and substitution effects are of equal magnitude
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Present- oriented people discount future earnings _______ forward-looking people.
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b) at a higher rate than
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Nina would be more likely to obtain a college education if:
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a) her discount rate was lower.
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Workers with relatively high levels of natural ability are quite likely to attend college. This can cause _____ bias when estimating educational returns because______.
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a) an upward; ability increase earnings
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The psychic costs of college are usually lowest for:
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a) students with relatively high ability
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An increase in an individual's reservation wage:
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d) will increase both the individual's duration of unemployment and expected wage.
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The existence of generous unemployment insurance will probably:
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c) improve job matches
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