Economics MCQs

Page No. 233

If the real wage is too high in the labour market ?


aThe quantity demanded of labour is higher than the quantity supplied

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bThe quantity demanded of labour equals the quantity supplied

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cThe quantity demanded of labour is lower than the quantity supplied

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dIt will automatically adjust in the short run to bring equilibrium

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Supply side policies are most appropriate to cure ?


aInvoluntary unemployment

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bCyclical unemployment

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c Voluntary unemployment

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d A fall in aggregate demand

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If the minimum wage is set above the equilibrium wage rate, then another thing unchanged ?


aThere will be equilibrium in the labour market

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bThere will excess demand in the labour market

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cThere will be excess supply in the labour market

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dMore people will be employed

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In a perfectly competitive labour market firms are wage takers and the marginal cost of labour equals?


aThe average cost of labour

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bThe marginal product

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c The marginal revenue

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d The total cost of labour

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Demand for labour is more likely to be wage inelastic if ?


aWages are a small proportion of total costs

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bDemand for the final product is price elastic

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cIt is easy to replace labour

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dCapital is a good substitute for labour

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A decrease in the supply of labour is likely to lead to ?


a A lower equilibrium wage and lower quantity of labour

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bA lower equilibrium wage and higher quantity of labour

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c A higher equilibrium wage and higher quantity of labour

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dA higher equilibrium wage and lower quantity of labour

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The Marginal Revenue Product is likely to be wage inelastic if ?


aLabour costs are a high percentage of total costs

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bDemand for the final product is price inelastic

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cIt is relatively easy to substitute capital for labour

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dThere are many substitutes for the final product

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IF Unemployment insurance were so generous that it paid laid off workers 95 percent of their regular salary ?


aFrictional Unemployment would fall

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bThe official unemployment rate would probably understate true unemployment

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cThe official unemployment rate would probably overstate true unemployment

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dNone of these answers

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Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium ?


aUnemployment due to unions

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bUnemployment due to efficiency wages

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cFrictional Unemployment

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d Unemployment due to minimum-wage laws

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Which of the following statements about efficiency wage theory is true ?


aPaying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities

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bFirms do not have a choice about whether they pay efficiency wages or not because these wages are determined by law

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cPaying the lowest possible wage is always the most efficient (Profitable)

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dPaying above the competitive equilibrium wage may improve worker health lower worker turnover improve worker quality and increase worker effort

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