____ 26. The labour supply curve is fundamentally a representation of the tradeo
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Question
____ 26. The labour supply curve is fundamentally a representation of the tradeoff people face. What is this tradeoff between?
a.
work and the wage rate
b.
work and leisure
c.
the wage rate and productivity
d.
technology and the wage rate
Scenario 18-4
Rocchetta Industries manufactures and supplies bottled water in Mexico. As a result of a contamination of water supplies at many of Mexico’s resort communities, the demand for bottled water has increased.
____ 27. Refer to Scenario 18-4. As a result of the contamination, what would we expect would happen to the value of the marginal product for Rocchetta Industries’ workers?
a.
It would be offset by a decrease in wages.
b.
It would be unaffected by a rise in demand for bottled water.
c.
It would rise since the price of bottled water increases.
d.
It would fall since the marginal product of labour decreases.
Figure 18-2
____ 28. Refer to Figure 18-2. What happens to the profit earned by apple producers and to the wage earned by apple pickers when the price of apples rises?
a.
Profit will rise. and the wage will fall.
b.
Profit will fall, and the wage will rise.
c.
Both profit and the wage will rise.
d.
Both profit and the wage will fall.
Figure 18-4
____ 29. Refer to Figure 18-4. Which of the following factors could possibly explain the shift of the labour demand curve from D1 to D2?
a.
a change in workers’ attitudes toward the work–leisure tradeoff
b.
decreases in wages in other labour markets
c.
an increase in the price of firms’ output
d.
new technology that replaces workers
____ 30. With regard to capital, which of the following is it important to distinguish between?
a.
the supply price of capital and the demand price of capital
b.
the rental price of capital and the purchase price of capital
c.
firms and the demanders of capital
d.
the suppliers of capital and the owners of capital
a.
work and the wage rate
b.
work and leisure
c.
the wage rate and productivity
d.
technology and the wage rate
Explanation / Answer
Question 26
Labor supply curve shows the quantity of labor supplied at different wage rates.
As person works more, he or she has less time for leisure and vice-versa.
So, in a sense, labor supply curve by indicating hours worked at particular wage rate also depict hours devoid of leisure.
Thus, labor supply curve represents trade-off between work and leisure.
Hence, the correct answer is the option (b).
Question 27
Given the supply of bottled water, increase in demand for bottled water will lead to increase in price of bottled water.
Value of marginal product is calculated by multiplying the price of bottled water by marginal product.
So, increase in price of bottled water will lead to increase in the value of the marginal product.
Hence, the correct answer is the option (c).
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