Chapter 01 Test Bank KEY
1. Because resources are scarce relative to human wants, economics is best described as
A. the science of allocating productive resources fairly.
B. a science of choice.
C. the science of allocating goods and services fairly.
D. the set of natural laws that govern human behavior in the face of adverse conditions.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
2. Labor economics is studied as a distinct subfield of economics because
A. the bulk of national income is received by labor.
B. the concepts of supply and demand must be revised somewhat when applied to labor markets.
C. labor economics can be used to analyze major socioeconomic trends such as the surge in the number of
women workers.
D. All of these choices are correct.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
3. The bulk of national income flows to
A. landowners in the form of rent.
B. capital owners in the form of interest.
C. capital owners in the form of profit.
D. workers in the form of wages and salaries.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
4. As distinct from product market transactions, labor market transactions are unique in that
A. to the seller, the nonmonetary characteristics of the sale can be as important as the price.
B. labor demand curves slope upward.
C. the price of labor is not determined by supply and demand factors.
D. they are less complex.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
5. The concept of demand must be modified when applied to labor markets to reflect the fact that
A. nonmonetary characteristics of jobs may be as important to workers as their pay.
B. labor demand curves slope upward from left to right.
C. the demand for labor is derived from the demand for the various products that labor produces.
D. the demand for output is derived from the demand for labor used to produce that output.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
, Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
6. The "old" view of labor economics stresses _____, while the "new" view focuses upon _____.
A. analysis; markets
B. description; analysis
C. description; institutions
D. institutions; description
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: The "Old" and the "New"
7. Because scarcity forces people to make purposeful choices, labor market participants
A. work as many hours as possible.
B. respond to changes in perceived costs and benefits.
C. make choices that cannot be predicted.
D. must have perfect information.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Economic Perspective
8. The three basic characteristics of the economic perspective are
A. relative scarcity, purposeful behavior, and adaptability.
B. supply, demand, and equilibrium.
C. description, institutions, and facts.
D. prices, quantities, and incomes.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Economic Perspective
9. Which one of the following topics is most suited to macroeconomic analysis?
A. labor supply decisions of married women
B. short-run labor demand in a particular industry
C. the individual decision on how much education to obtain
D. the impact of a recession on the country’s unemployment rate
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
10. Which one of the following topics is most suited to microeconomic analysis?
A. the average level of real wages
B. the unemployment rate
C. the average level of labor productivity
D. mobility and migration decisions
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
, Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
11. Nobel Laureate Gary Becker is known for economic theories in all of the following areas except
A. economics of households.
B. investment in human capital.
C. the "old" labor economics.
D. economics of discrimination.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
12. Nobel Laureate Gary Becker’s basic professional contribution is his
A. application of traditional theories of anthropology to labor markets.
B. application of the economic perspective to law, sociology, demographics, and anthropology.
C. statistical verification of race and gender discrimination.
D. explanation of the limitations of the economic perspective in explaining labor markets.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
13. According to a newspaper account from Washington State, lottery winners in that state
A. usually continued to work when prizes were $1 million or less and usually quit work when prizes
exceeded $4 million.
B. usually continued to work, no matter how large the prize.
C. usually quit work, no matter how large the prize.
D. were less likely to quit work the larger was the prize.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Overview
Chapter 01 Test Bank Summary
# of Questi
Category
ons
AACSB: Reflective Thinking 13
Accessibility: Keyboard Navigation 13
Blooms: Remember 11
Blooms: Understand 2
Difficulty: 1 Easy 11
Difficulty: 2 Medium 2
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry. 6
, Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor
3
markets.
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” a
4
nd those that are primarily “macroeconomic.
Topic: Economic Perspective 2
Topic: Labor Economics as a Discipline 5
Topic: Overview 5
Topic: The "Old" and the "New" 1
Chapter 02 Test Bank KEY
1. In the context of the basic work-leisure model, "work" is defined as
A. time devoted to a paying job or household work.
B. time devoted to a paying job.
C. time devoted to any "undesirable" activity.
D. all time not devoted to rest and relaxation.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
2. In the context of the basic work-leisure model, "leisure" time includes
A. only time devoted to rest and relaxation.
B. any time not devoted to either a paying job or household work.
C. any time devoted to anything desirable.
D. any time not devoted to a paying job.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
3. The slope of an indifference curve at any point reflects the
A. rate at which a person is willing to substitute leisure for income.
B. wage rate.
C. income effect.
D. substitution effect.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
4. Indifference curves are convex to the origin because
A. at a lower income, a person is more willing to sacrifice income for additional leisure.
B. at a lower income, a person is less willing to sacrifice income for additional leisure.
C. at any income level, a person is willing to sacrifice the same amount of income for additional leisure.
D. the marginal rate of substitution of leisure for income is negative.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
1. Because resources are scarce relative to human wants, economics is best described as
A. the science of allocating productive resources fairly.
B. a science of choice.
C. the science of allocating goods and services fairly.
D. the set of natural laws that govern human behavior in the face of adverse conditions.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
2. Labor economics is studied as a distinct subfield of economics because
A. the bulk of national income is received by labor.
B. the concepts of supply and demand must be revised somewhat when applied to labor markets.
C. labor economics can be used to analyze major socioeconomic trends such as the surge in the number of
women workers.
D. All of these choices are correct.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
3. The bulk of national income flows to
A. landowners in the form of rent.
B. capital owners in the form of interest.
C. capital owners in the form of profit.
D. workers in the form of wages and salaries.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
4. As distinct from product market transactions, labor market transactions are unique in that
A. to the seller, the nonmonetary characteristics of the sale can be as important as the price.
B. labor demand curves slope upward.
C. the price of labor is not determined by supply and demand factors.
D. they are less complex.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
5. The concept of demand must be modified when applied to labor markets to reflect the fact that
A. nonmonetary characteristics of jobs may be as important to workers as their pay.
B. labor demand curves slope upward from left to right.
C. the demand for labor is derived from the demand for the various products that labor produces.
D. the demand for output is derived from the demand for labor used to produce that output.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
, Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: Labor Economics as a Discipline
6. The "old" view of labor economics stresses _____, while the "new" view focuses upon _____.
A. analysis; markets
B. description; analysis
C. description; institutions
D. institutions; description
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry.
Topic: The "Old" and the "New"
7. Because scarcity forces people to make purposeful choices, labor market participants
A. work as many hours as possible.
B. respond to changes in perceived costs and benefits.
C. make choices that cannot be predicted.
D. must have perfect information.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Economic Perspective
8. The three basic characteristics of the economic perspective are
A. relative scarcity, purposeful behavior, and adaptability.
B. supply, demand, and equilibrium.
C. description, institutions, and facts.
D. prices, quantities, and incomes.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Economic Perspective
9. Which one of the following topics is most suited to macroeconomic analysis?
A. labor supply decisions of married women
B. short-run labor demand in a particular industry
C. the individual decision on how much education to obtain
D. the impact of a recession on the country’s unemployment rate
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
10. Which one of the following topics is most suited to microeconomic analysis?
A. the average level of real wages
B. the unemployment rate
C. the average level of labor productivity
D. mobility and migration decisions
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
, Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
11. Nobel Laureate Gary Becker is known for economic theories in all of the following areas except
A. economics of households.
B. investment in human capital.
C. the "old" labor economics.
D. economics of discrimination.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
12. Nobel Laureate Gary Becker’s basic professional contribution is his
A. application of traditional theories of anthropology to labor markets.
B. application of the economic perspective to law, sociology, demographics, and anthropology.
C. statistical verification of race and gender discrimination.
D. explanation of the limitations of the economic perspective in explaining labor markets.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” and those that are primarily
“macroeconomic.
Topic: Overview
13. According to a newspaper account from Washington State, lottery winners in that state
A. usually continued to work when prizes were $1 million or less and usually quit work when prizes
exceeded $4 million.
B. usually continued to work, no matter how large the prize.
C. usually quit work, no matter how large the prize.
D. were less likely to quit work the larger was the prize.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor markets.
Topic: Overview
Chapter 01 Test Bank Summary
# of Questi
Category
ons
AACSB: Reflective Thinking 13
Accessibility: Keyboard Navigation 13
Blooms: Remember 11
Blooms: Understand 2
Difficulty: 1 Easy 11
Difficulty: 2 Medium 2
Learning Objective: 01-01 Explain why labor economics is justified as a special field of inquiry. 6
, Learning Objective: 01-02 Describe how the economic perspective can be applied to analysis of labor
3
markets.
Learning Objective: 01-03 Identify those topics in labor economics that are mainly “microeconomic” a
4
nd those that are primarily “macroeconomic.
Topic: Economic Perspective 2
Topic: Labor Economics as a Discipline 5
Topic: Overview 5
Topic: The "Old" and the "New" 1
Chapter 02 Test Bank KEY
1. In the context of the basic work-leisure model, "work" is defined as
A. time devoted to a paying job or household work.
B. time devoted to a paying job.
C. time devoted to any "undesirable" activity.
D. all time not devoted to rest and relaxation.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
2. In the context of the basic work-leisure model, "leisure" time includes
A. only time devoted to rest and relaxation.
B. any time not devoted to either a paying job or household work.
C. any time devoted to anything desirable.
D. any time not devoted to a paying job.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
3. The slope of an indifference curve at any point reflects the
A. rate at which a person is willing to substitute leisure for income.
B. wage rate.
C. income effect.
D. substitution effect.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 02-01 Use the basic income–leisure model to determine an individual’s optimal combination of income and
leisure.
Topic: The Work-Leisure Decision: Basic Model
4. Indifference curves are convex to the origin because
A. at a lower income, a person is more willing to sacrifice income for additional leisure.
B. at a lower income, a person is less willing to sacrifice income for additional leisure.
C. at any income level, a person is willing to sacrifice the same amount of income for additional leisure.
D. the marginal rate of substitution of leisure for income is negative.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
