1. ECO 550 Week 10 Chapter 15 Quiz 8
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Question 1
1 . Which of the following is a cost borne by an employee?
The cost incurred in looking for alternative job opportunities
A fall in overall productivity as a result of hiring the wrong person
The cost of training in the new firm
The cost of extra work done by existing employees due to an unfilled position
Question 2
1. An important distinction between the labor market and the market for commodities is:
that contracts are arrived at more easily in the former.
the individual attributes of the buyer and seller hold far more importance in
the former case.
that it is impossible to prevent breach of contract in the labor market.
that the market for commodities is a matching market while the former is not.
Question 3
1. A written contract between an employer and an employee creates value as long as:
the benefits exceed the costs of forming and enforcing it.
the productivity of the employee is equivalent to the wage.
on-the-job learning is unimportant.
the relationship between the employer and the employee is short-term.
Question 4
1. Marginal product of labor is:
the extra output produced by an additional worker, all else unchanged.

2. the extra wage earned by an additional worker, all else unchanged.
the total output produced when an extra worker is hired.
the total revenue earned when an extra worker is hired.
Question 5
1. In competitive markets, the elasticity of labor supply is:
unrelated to time.
inversely proportional to time elapsed since a wage change.
unity.
directly proportional to time elapsed since a wage change.
Question 6
1. Opportunistic behavior on the part of the employer is possible because:
contracts are often incomplete and leave room for implicit understandings
between the two parties.
employees often reduce their effort level if they are important to the company.
it is difficult to monitor all employees and their performances.
good quality work can be easily measured.
Question 7
1. Which of the following events will cause a downward movement along the value of
marginal product of labor curve?
An increase in wage rate
An increase in price of the product
A decrease in wage rate
A decrease in price of the product
Question 8
1. _____ represents a firm’s demand curve for labor.
The value of marginal product
Marginal product
Marginal revenue curve

3. The horizontal line at the market wage rate
Question 9
1. Which of the following will have a downward impact on efficiency wages?
Low monitoring costs
Excess supply in the labor market
High equilibrium wage rate
Excess demand in the labor market
Question 10
1. Jason is a salesman who gets 40 percent of the revenue he generates for his company.
This is an example of payment by _____.
piece rent
fixed salary
executive compensation
share contract
Question 11
1. In long-term job attachments, a worker’s wage:
always exceeds his productivity.
always falls below his productivity.
is lower than his productivity at the beginning, then equals it, and then
exceeds the same.
is higher than his productivity at the beginning, then equals it, and then falls
below the same.
Question 12
1. A competitive firm hires workers as long as:
marginal product of labor is positive.
value of marginal product of labor is positive.
marginal product of labor is greater than the wage rate.
value of marginal product of labor is greater than the wage rate.

4. Question 13
1. Influence cost is a type of _____ incurred while filling positions that have similar
responsibilities but carry different pay.
deadweight loss
opportunity cost
externality
social cost
Question 14
1. Assume that a firm is operating in the short run and all resources are fixed except for
labor. The total product curve for this firm will increase at a decreasing rate because:
value of marginal product of labor is unchanged as more labor is hired.
marginal product of labor will decline as more labor is hired.
value of marginal product of labor will increase as more labor is hired.
marginal product of labor is unchanged as more labor is hired.
Question 15
1. The general health of the population of a country improves as its medical support system
improves. Which of the following is a likely outcome of this?
Marginal product of labor will increase.
Value of marginal product of labor will fall.
The equilibrium wage rate will decline.
There will be excess supply of labor in the market.