Q1: If the price of tea were to rise by 8%, demand for tea is expected to fall by 13%.

All else being equal, this would be evidence that the elasticity of labor demand in the tea market is ____

Unit Elastic

Relatively inelastic

Root Elastic

Relatively Elastic

Q2: The formula for a firm's marginal revenue product is=3^1/2 This firm hires 36 workers when it is optimizing.What is the market wage?

Q3:There is a labor surplus in the market.This means that jobs are relatively a. more b. less, scarce, workers are relativelyc. more d. less scarce, and there is pressure on wages to goe. up f. down

Q4: Working conditions improve across the entire labor market.All else equal, we expect the labor supply curve to shift out.

True

False

Q5: An individual has a utility function over Leisure and Income such that=^1/21/2 This individual has a budget constraint=(24)+ The best possible wage this individual can earn in the labor market is $2 per hour.This individual is $30 in debt (they have negative non-labor income).

If this individual is earning a utility level of 4, which of the following are true?

The worker could be supplying 1 unit of Labor

The worker could be earning $10

The worker could be supplying 8 units of labor

The worker is maximizing their utility given their budget

The worker's Marginal Rate of Substitution at the point where the budget constraint intersects the indifference curve is equal to -2

Q6: The wage paid to workers who manufacture chewing gum increases by 7%.Firms in the industry respond by reducing employment by 3%.The Elasticity of Labor Demand in the chewing gum industry is ____

Relatively elastic

Relatively inelastic

Unit Elastic

Root Elastic