11 May WHAT IS THE INPUT-SUBSTITUTION EFFECT?
What is the output effect?
72)
What is the input-substitution effect?
10.2 The
Supply of Labor
1)
The relationship between the wage and the quantity of labor that a given worker
is willing to provide is called
A)
individual labor demand.
B)
market labor demand.
C)
individual labor supply.
D)
market labor supply.
2)
The price of an hour of leisure time is
A)
the income that could have been earned in that hour.
B)
zero.
C)
the minimum wage rate.
D)
determined by the value of the activity the person engages in during that hour
of leisure.
3)
The price of an hour of leisure time for a successful lawyer is ________ the
price of an hour of leisure for an unemployed high school drop-out.
A)
greater than
B)
the same as
C)
less than
D)
impossible to compare to
4)
According to the income effect of labor supply, if leisure is a normal good,
then an increase in the wage rate will ________ the quantity of labor ________.
A)
increase; supplied
B)
decrease; supplied
C)
increase; demanded
D)
decrease; demanded
5)
When wages increase the income effect of labor supply ________ the quantity of
labor supplied because ________.
A)
reduces; the price of leisure has increased
B)
reduces; workers acquire more of all normal goods when income increases
C)
increases; the value of working has increased
D)
increases; the price of leisure has increased
6)
According to the substitution effect of labor supply, when the wage rate goes
up
A)
it becomes more costly to consume leisure, so people will work more.
B)
it becomes less costly to consume leisure, so people will work more.
C)
the opportunity cost of enjoying leisure goes down.
D)
firms will hire more workers since people are more willing to work.
7)
When wages increase, the income effect ________ the supply of labor and the
substitution effect ________ the supply of labor.
A)
decreases; increases
B)
increases; decreases
C)
increases; increases
D)
decreases; decreases
8)
If Jerry’s demand for leisure increases as the wage increases,
A)
the income effect dominates the substitution effect.
B)
the substitution effect dominates the income effect.
C)
the income effect is completely offset by the substitution effect.
D)
There is insufficient information.
71)
What is the output effect? 72)
What is the input-substitution effect? 10.2 The
Supply of Labor1)
The relationship between the wage and the quantity of labor that a given worker
is willing to provide is calledA)
individual labor demand.B)
market labor demand.C)
individual labor supply.D)
market labor supply. 2)
The price of an hour of leisure time isA)
the income that could have been earned in that hour.B)
zero.C)
the minimum wage rate.D)
determined by the value of the activity the person engages in during that hour
of leisure. 3)
The price of an hour of leisure time for a successful lawyer is ________ the
price of an hour of leisure for an unemployed high school drop-out.A)
greater thanB)
the same asC)
less thanD)
impossible to compare to 4)
According to the income effect of labor supply, if leisure is a normal good,
then an increase in the wage rate will ________ the quantity of labor ________.A)
increase; suppliedB)
decrease; suppliedC)
increase; demandedD)
decrease; demanded 5)
When wages increase the income effect of labor supply ________ the quantity of
labor supplied because ________.A)
reduces; the price of leisure has increasedB)
reduces; workers acquire more of all normal goods when income increasesC)
increases; the value of working has increasedD)
increases; the price of leisure has increased 6)
According to the substitution effect of labor supply, when the wage rate goes
upA)
it becomes more costly to consume leisure, so people will work more.B)
it becomes less costly to consume leisure, so people will work more.C)
the opportunity cost of enjoying leisure goes down.D)
firms will hire more workers since people are more willing to work. 7)
When wages increase, the income effect ________ the supply of labor and the
substitution effect ________ the supply of labor.A)
decreases; increasesB)
increases; decreasesC)
increases; increasesD)
decreases; decreases 8)
If Jerry’s demand for leisure increases as the wage increases, A)
the income effect dominates the substitution effect.B)
the substitution effect dominates the income effect.C)
the income effect is completely offset by the substitution effect.D)
There is insufficient information.
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