Topic Questions (MCQ – HARD): Labour market forces, MRP theory – 3auk

When faced with an increase in his hourly wage rate, a worker decides to work fewer hours per week.

What could account for this behavior?

The income effect of the wage rate increase outweighs the substitution effect.

The higher opportunity cost of leisure encourages the worker to prioritize leisure over work.

The worker has a preference for leisure time over working longer hours.

The elasticity of the worker's labor supply is low, resulting in a reduced response to wage changes.

The diagram illustrates the supply curve of labor for an individual worker.

The hourly wage is represented by OW, and the worker is required to work a standard 40-hour week.
Which area corresponds to the difference between the total weekly payment received by the worker and the minimum amount he would be willing to receive?

a

c

a+c

c-a

The implementation of a minimum hourly wage applicable to all workers aged 21 and above is anticipated to raise the average wages of this group.

What is the probable impact on workers under the age of 21?

Unemployment for under 21s decreases; average wages for under 21s fall

Unemployment for under 21s increases; average wages for under 21s fall

Unemployment for under 21s decreases; average wages for under 21s rise

Unemployment for under 21s increases; average wages for under 21s rise

The graph illustrates the marginal product of labor curve (MPL) for a firm.

Labour is the only variable input, and the firm compensates its workers at the market wage rate.
At the employment level OQ, which statement is accurate?

The firm is maximizing its production output.

The firm is minimizing its total costs of labour.

The firm is minimizing its expenditure on wages.

The firm is minimizing its marginal production costs.

A firm operating under conditions of perfect competition sells its product for $1. The table provides information on the average physical product associated with varying numbers of workers.

Which wage raise would lead the firm to reduce its workforce from three workers to two?

$10 to $20

$20 to $24

$24 to $28

$28 to $32

In the diagram, S represents the supply of labor curve for a monopsonistic firm, MCL represents the marginal cost of labor curve, and MRPL represents the marginal revenue product of labor curve.

When the firm's workers unionize and negotiate a wage rate of OW with the firm's owners, what will be the impact on the firm's total wage expenditure and the quantity of employed workers?

A

B

C

D

The diagram illustrates the initial state of a labor market.

Suppose the government enacts a law that reduces the standard working week from 40 hours to 35 hours.
What will be the impact on the supply and demand curves depicted in the diagram?