Markets for Factors of Production LOSC习题精选 2010, including, capital, discuss

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LOS c: Describe the factors determining the supply of labor, including the substitution and income effects, and discuss the factors related to changes in the supply of labor, including capital accumulation.

The idea that workers will consume less leisure when the wage rate is increased is called the:

A) income effect.

B) substitution effect.

C) incentive effect.

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The substitution effect results in less consumption of leisure (more hours of labor supplied) when the wage rate is increased.

 

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When smaller amounts of additional labor are supplied in response to increases in the wages offered, this is known as the:

A) substitution effect.

B) income effect.

C) marginal rate of substitution.

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The income effect results in smaller additions to the labor supply as wages increase. Like any good, income received in the form of wages has a decreasing marginal utility. When the point is reached at which the utility received is equal to the marginal cost of leisure foregone, the maximum amount of labor that will be offered is reached.

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Which of the following factors is least likely to affect the supply of labor?

A) The aggregate requirement for labor.

B) The accumulation of capital.

C) Wages offered.

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Wages, the size of the adult population (i.e., the available labor force), and the accumulation of capital are all factors that affect the supply of labor. The aggregate requirement for labor is a demand issue that will ultimately help to determine the equilibrium level of wages and quantities offered.

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When workers agree to forego leisure to undertake labor and receive wages, the term that is applied in labor supply economics is the:

A) income effect.

B) marginal rate of substitution.

C) substitution effect.

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In labor supply economics, the term applied to the decision by workers to forego leisure and undertake labor for wages is the substitution effect.