Question

1. We cannot estimate a labor supply curve by regressing observed employment levels on observed wages in an industry:

A.

do have much data on either wages or employment for the U.S. economy.

B.

observed data points are the result of changes in both demand and supply and a plot of the relationship among these points would directly reflect neither demand nor supply.

C.

labor supply curves are always horizontal.

D. labor supply curves are upward sloping

2. an increase in immigration results in an increase in both labor demand and labor supply in a given labor market. This is expected to result in:

A.

higher wages and higher employment levels.

B.

lower wages and lower employment levels.

C.

increased employment, but an indeterminate effect on the wage.

D.None of the above is correct.

3. Firms face asymmetric variable adjustment costs because of

	A.	hiring costs are typically higher than firing costs.
	B.	firing workers can be difficult and costly for legal reasons compared to hiring workers.
	C.	firing workers is relatively easy compared to hiring workers.
	D.	firms vary in size.
	E.	workers are reluctant to change jobs during a recession but not during an expansion.

Answer 1

1. Ans:

option B :observed data points are the result of changes in both demand and supply and a plot of the relationship among these points would directly reflect neither demand nor supply.

2. Option B

lower wages and lower employment levels.

This is true because an iflux of labour is going to drive down the real wage, and dude to lower real wage firms can hire more people.

3. option E

workers are reluctant to change jobs during a recession but not during an expansion.