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Labor Mid

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Raeha Tul Jannat Buzdar
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8 views

Labor Mid

Uploaded by

Raeha Tul Jannat Buzdar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INTERNATIONAL ISLAMIC UNIVERSITY ISLAMABAD

International Institute of Islamic Economics


School of Economics

Mid-Term EXAMINATIONS, Spring2024


Labor Economics (ECN-436)

Total marks 20
Q1 is compulsory. Time allowed: 75min Dr: Misbah Aslam

Q.1

1. Labor economists sometimes refer to labor demand as “derived” demand. In this context,
where does “derived” come from?

A. the firm’s production function


B. the union’s willingness to accept a lower wage
C. consumer demand for the firm’s product
D. the firm’s profit
E. the degree of competition in the firm’s industry

2. What is likely to happen to the demand for firemen as building codes change to require
firewalls and sprinklers to be included in all new construction?

A. The demand for firemen will fall as the demand for fire protection services falls.
B. The demand for firemen will increase as the supply of firemen falls when old buildings are
replaced with newer buildings.
C. The demand for firemen will remain unchanged as firemen do not build new construction.
D. The demand for firemen will increase as long as wages paid to workers on new construction
projects exceed the minimum wage.
E. The demand for firemen will remain unchanged as long as the property tax-base increases when
the new construction projects are completed.

3. What is likely to happen to the supply of firemen as building codes change to require
firewalls and sprinklers to be included in all new construction?

A. The supply of firemen will fall because there will be fewer fires.
B. The supply of firemen will increase because there will be fewer fires.
C. The supply of firemen will remain unchanged because the supply curve relates the number of fire
fighters to the wage, not to the number of fires
D. The supply of firemen will increase as long as wages paid to workers on new construction
projects is also increasing.
E. The supply of firemen will decrease as long as the property tax-base increases when the new
construction projects are completed.

4. Which of the following is a normative rather than a positive statement?

1
A. The minimum wage is $7.25 per hour.
B. Public education should be funded primarily at the state level.
C. The federal debt exceeds $8 trillion
D. At its peak, unemployment exceeded 10% during the 2007–08 recession.
E. The average real wage of high-school dropouts has fallen by 10% since 1970.

5. Which of the following is not a leading actor in labor markets?


A. Government
B. Firms
C. Workers
D. Consumers
E. unions

6. The extra output, measured in dollars, that accrues to society when an additional unit of
labor is employed” best describes:
A. Marginal product
B. Marginal revenue product
C. Value of marginal product
D. Total revenue product
7. Which of the following best describes the output effect of a wage increase?
A. The firm's marginal cost increases, the firm desires to produce less output, and therefore less
labor is required
B. The cost of labor is relatively higher causing the firm to use relatively less labor
C. The firm's marginal cost falls, the firm desires to produce more output, and therefore more labor
is required
D. The firm's labor demand curve becomes more inelastic, causing it to employ less labor

Q.2 Note: Comment whether the following statements are true false or uncertain justify your
argument with help of graph or formula. Attempt any 3 parts each having 5 marks.

a) The hiring decision of a perfectly discriminating monopsonist “does not exploit” workers as
compared to a nondiscriminating monopsonist.
b) The short-run and long-run impact of immigration on the wages of native workers depends
on whether native workers and immigrants are substitutes or Complements.
c) When the wage changes, the employment decision of the firm is made by only substitution
effects in the long run.
d) The increase in wage rate or household productivity leads to specialization.

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