Question 1 According to the balance of economic resources and unlimited want, wh

Question

Question 1

According to the balance of economic resources and unlimited want, what is the condition of maximising effectiveness in labour market?

Wage level > marginal rate of substitution

Wage level < marginal rate of substitution

Wage level = marginal rate of substitution

Wage level > marginal rate of technical substitution

Question 2

Marginal product of labour is which of the following things?

Product increase when additional unit of labour is hired

Income increase when additional unit of labour is hired

Product value increase when additional unit of labour is hired

Wage increase when additional unit of labour is hired

Question 3

Which of the following is two factors affecting real wage level?

Monetary wage and price index

Time and price indices

Monetary wages and hours

Monetary wages and prices of some commodities

Question 4

Which of the following curve indicates the relationship between unemployment rate and inflation rate?

       A)   Indifference curve

       B)   Keel Lorenz curve

       C)   Utility curve

       D)   Philipps curve

       E)       None of the above

Explanation / Answer

Question 1

According to the balance of economic resources and unlimited want, effectiveness of labor utilization in labor market can be maximized when condition of equality between wage rate prevailing in the market and marginal rate of substitution between labor and other factors of production is achieved.

So, the condition of maximizing effectiveness in labor market is wage level equals marginal rate of substitution.

The correct answer is the option (3).

Question 2

Marginal product of labor refers to the increase in total output produced when one additional unit of labor is employed.

So, marginal product of labor is product increase when additional unit of labor is hired.

Hence, the correct answer is the option (1).

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