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Econ 440 Midterm 1 Questions and answers 2024/2025 update
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Econ 440 Midterm 1 Questions and answers 2024/2025 update
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Econ 440 Midterm 1 Questions andanswers 2024/2025 update
•Labor economics studies how labor markets work - in relation to individuals as well as social policy
issues like: ANS✔✔ -Reasons behind increase in women's labor force participation rates in industrialized
countries
-Impact of immigration on wage and employment opportunities of native-born workers
-Effects of minimum wages on unemployment rate of low-skilled workers
§Reasons behind rise in wage inequality in the US
-Impact of affirmative action programs on earnings of women and minorities
-Impact of unions, unemployment insurance benefits, etc.
Actors in the labor market ANS✔✔ - workers
- firms
- government
workers will always act in ways that maximize their _______ ANS✔✔ well being
•When we add up the decisions of millions of workers in the economy, we get the __________! ANS✔✔
labor supply curve
Decisions made by Workers in the Labor Market Include ANS✔✔ -Whether to work or not
-How many hours to work
-how much effort to allocate on the job
-Which skills to acquire
-When to quit a job
,-Which occupations to enter
-Whether to join a labor union
Decisions made by Firms in the Labor Market Include ANS✔✔ -How many and which types of workers to
hire and fire
-Length of the workweek
-How much capital to employ
-Whether to offer a safe or risky working environment to its workers
•Firms want to maximize _____ and they do so by making production decisions that best serve ______
ANS✔✔ profits; consumer needs
A firm's demand for labor is a _________________ coming from the desires of consumers ANS✔✔
derived demand
Adding up the hiring and firing decisions of millions of employers generates the economy's ________
ANS✔✔ labor demand curve
We have here an _______ sloping labor supply curve and a _______ sloping labor demand curve
ANS✔✔ upward; downward
Workers and firms enter the labor market with __________ and only when these conflicts are balanced
out, the market reaches an equilibrium (where the supply and demand curves intersect). ANS✔✔
conflicting interests
The government can do the following in the labor market: ANS✔✔ -Tax the worker's earnings
-Subsidize the training of workers
-Impose a payroll tax on firms
, -Put affirmative action policies in place
-Enact legislation that makes some labor market transactions illegal
-Increase supply of workers by encouraging immigration, etc.
____________ help set up the ground rules that guide exchanges in the labor market ANS✔✔
government regulations
Explain the Trans-Atlantic Oil Pipeline ANS✔✔ - oil reserves found in remote alaska were too far away
from consumers therefore needed to create a pipeline
- The project employed about 50,000 workers during the summers of 1974 through 1977
-After the pipeline was built, employment was reduced to a small maintenance crew
- Many of the workers were engineers who had built pipelines across the world; very few of these
engineers were resident Alaskans
- The rest of the workforce consisted of low-skill labor such as truck drivers and excavators; many of
these low-skill workers were resident Alaskans
- theoretically employment and wages should have been temporarily increased
- this was true however it more ended with going back to its long run growth trend before the project
_______ addresses the "What is?" -- questions that can be answered with the tools of economics
without putting any value judgement on whether the outcome is desirable or not ANS✔✔ Positive
economics
"What should be?" questions fall under ________.
•By nature, the answers to these ______ require value judgements: since everybody has different
values, the answers may differ regardless of what the theory or facts tell us ANS✔✔ Normative
Questions
What is labor supply framework? ANS✔✔ - Individuals aim to maximize their well being by consuming
goods and leisure
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