The answer is E, due to the possibility of choosing a better mix of inputs.

41. If the individual labour supply curve is NOT backward-bending, this implies that:

A. Leisure is inferior

B. Consumption is inferior

C. Leisure is normal

D. More than one possibility exists

E. None applies

The answer is D, as a strictly upward-sloping individual labour supply curve can be obtained with both normal and inferior leisure.

42. Assume that a person obtains a non-working income (such as a retirement pension) that he/she did not receive before, with the wage rate and preferences being unchanged. In this case:

A. The individual labour supply will necessarily decrease

B. The individual labour supply will necessarily increase

C. The individual labour supply will increase, only if the income effect is positive

D. The individual labour supply will increase, only if the income effect is negative

E. The individual labour supply will not change

The answer is D, as leisure is inferior in this case.

43. In the following situations, the economic rent to labour is the highest when (ceteris paribus):

A. Labour supply is absolutely elastic and the industry is competitive

B. A trade union exists, and employers compete in the labour market

C. A trade union exists and confronts a single employer

D. A single employer is a monopolist in its output market, and no trade union exists

E. A trade union exists nominally, but has no real bargaining power

The answer is B, as in this case the trade union is not constrained in maximizing the total wage bill and thus economic rents of its members.

44. Which of the following is NOT an explanation to involuntary unemployment?

A. High efficiency wages

B. High reservation wages

C. High equilibrium wages

D. Both A and C

E. Both B and C

The answer is E, by definition.

45. Signalling theories suggest that:

A. More educated workers are likely to be more skillful

B. More educated workers are likely to acquire skills easier

C. Potential employees' education is irrelevant to the employers

D. Employers can determine the potential employees' productivity easily

E. Receiving education is a signal of being unable to get employed instead for some reason

The answer is B, by definition.

46. When evaluating investment decisions, present values of cash flows are typically considered rather than their direct sums, because:

A. Capital depreciates, so its value today is not the same as tomorrow

B. For today's investment, only present cash flows are relevant, but not future ones

C. Cash to be invested has alternative applications that may yield some payoff

D. Nominal and real interest rates usually differ

E. None of the above

The answer is C.

47. Assume that all land in a country is used for either agriculture or industries. If technological progress induces higher productivity of land in the industries, which of the following would you expect to happen in the long run?

A. Higher rental rates for land in the industrial sector only

B. Lower rental rates for land in the industrial sector only

C. Higher rental rates for land in both sectors

D. Lower rental rates for land in both sectors

E. Higher rental rates for land in agriculture only

Date: 2015-12-17; view: 686