Practice Questions
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What does labor demand refer to in the context of labor market equilibrium?
Labor demand means how many workers companies want to hire at a certain pay. Other options are incorrect because This option confuses the number of wo...
In a labor market where wage rates are determined by supply and demand, which of the following labor market interventions would likely lead to an increase in equilibrium wage rates?
Setting a minimum wage above the current level means workers must be paid more. Other options are incorrect because Some might think giving money to e...
What is the likely effect of a government intervention that increases the minimum wage on the labor market equilibrium, assuming a shift in labor demand occurs simultaneously?
When the minimum wage goes up, some businesses may hire fewer workers. Other options are incorrect because This option suggests that more jobs would b...
In a labor market with a high number of job vacancies and a government-imposed minimum wage above the equilibrium wage, what is the likely outcome on employment levels?
When the minimum wage is set too high, employers may not hire as many workers. Other options are incorrect because Some might think higher wages mean ...
In a labor market equilibrium, which of the following scenarios would most likely lead to a decrease in the equilibrium wage, assuming all other factors remain constant?
When there is less demand for workers, companies don't need to pay as much. Other options are incorrect because Some might think that more unemploymen...
What happens to labor market equilibrium when there is an increase in labor supply?
When more people want to work, there are more workers available. Other options are incorrect because Some might think more workers means higher wages;...
What does labor demand refer to in the context of labor market equilibrium?
Labor demand means how many workers companies want to hire at a certain pay. Other options are incorrect because Some might think labor demand is abou...
In a labor market equilibrium, the equilibrium wage is defined as the wage at which the quantity of labor supplied equals the quantity of labor demanded. What happens if the wage is set above this equilibrium wage?
When wages are too high, more people want to work, but employers hire fewer. Other options are incorrect because Some might think a high wage means mo...
If the demand for labor increases while the supply remains constant, what is the expected effect on the labor market equilibrium wage and employment levels?
When more employers want to hire workers, they offer higher wages to attract them. Other options are incorrect because This option suggests that wages...
In a perfectly competitive labor market, what determines the optimal number of workers a firm should hire?
A firm should hire workers until the extra money made from their work is equal to what it costs to hire them. Other options are incorrect because Some...
A firm is considering increasing its workforce in response to a rise in demand for its products. It estimates that hiring additional workers will enhance production efficiency. Which category best describes this situation in terms of labor market equilibrium?
When a firm needs more workers due to higher demand for its products, it shows that more jobs are available. Other options are incorrect because This ...
Which of the following statements accurately describe the implications of labor market equilibrium? Select all that apply.
Other options are incorrect because This idea suggests that only demand sets wages; This statement implies that resources are always used perfectly....
What happens when the labor supply exceeds labor demand in a market?
When more people want jobs than there are jobs available, wages go down. Other options are incorrect because Some might think wages go up to get more ...
In a perfectly competitive labor market, the equilibrium wage is determined where the supply of labor equals the demand for labor. This equilibrium occurs at the point where the marginal revenue product of labor equals the __________.
The marginal factor cost is the cost of hiring one more worker. Other options are incorrect because This option confuses the cost of hiring with the o...
In a labor market, if the equilibrium wage is analogous to the point where supply meets demand for a product, then the optimal number of workers hired is to labor as the optimal quantity of goods produced is to what?
The optimal quantity of goods produced is determined by the marginal cost. Other options are incorrect because Market price is what buyers pay, not th...
A local tech company is looking to hire software developers. The company notices that the demand for developers has increased due to a surge in online services. However, they are also aware that potential candidates are hesitant to apply because they believe the offered wages do not reflect their skills. How would this situation likely affect the labor market equilibrium for software developers in the region?
When many people want a job but few apply, companies must offer higher pay to attract candidates. Other options are incorrect because Some might think...
Arrange the following steps in the correct order of how labor market equilibrium is established: A) Firms hire workers until the marginal cost of hiring equals the marginal revenue product of labor, B) The wage rate adjusts due to shifts in labor supply or demand, C) The total supply of labor meets the total demand for labor, D) The labor market reaches an equilibrium wage and employment level.
Firms will keep hiring workers until the cost of hiring is equal to the value they get from the workers' output. Other options are incorrect because T...
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