Question

1) Which of the following would unambiguously predict a decrease in desired hours of work? a. The substitution effect of a wage decrease
 b. The income effect of a wage decrease
 c. A wage increase d. The substitution effect of a decline in income tax rates

2) For income and leisure time, a higher level of utility is achieved by moving to the _____ on an indifference _____. 
 a. Northeast; curve 
b. Southwest; curve
 c. Northeast; map 
d. Southwest; map

3)The higher the individual's wage rate: 
a. The steeper the budget constraint 
b. The lower the marginal rate of substitution of leisure for income
 c. The greater the desired number of hours of work 
d. The greater the desired number of hours of leisure

4)According to the Human Capital Model, the total economic cost of formal education typically does not include: 
 a. Expenditures for tuition, books, and fees
 b. Earnings foregone by choosing not to enter the labor force 
c. Expenditures for room and board
 d. Transportation expenses to and from college

5) Compared to a high-wage worker, a low-wage worker will tend to: 
a. Pursue more goods-intensive activities 
b. Pursue more time-intensive activities. 
c. Pursue fewer time-intensive activities. 
d. Sacrifice time-intensive activities in favor of goods-intensive activities

6) A few years ago, based on concepts similar to those used to estimate U.S. employment figures, the Canadian adult non-institutionalized population was 24 million, the labor force was 16 million, and the number of people employed was 14 million. According to these numbers, the Canadian labor-force participation rate and unemployment rate were about a. 67 percent and 8.3 percent. b. 67 percent and 12.5 percent. c. 58 percent and 8.3 percent. d. 58 percent and 12.5 percent.

7)All else equal, the social rate of return to education will be lower than the private return if: a. there are external benefits to education b. the social return correctly calculates benefits using after-tax values c. the social return correctly calculates costs by including education subsidies d. more educated workers have lower crime rates and unemployment rates

8) General training: 
 Will be paid for by the employee in the form of a reduced wage 
b. Raises the trainee's value only to the firm that is providing the training 
c. Helps to make labor a quasi-fixed resource
 d. Reduces the worker's value to the firm, because the worker's wage rate would have to rise

9)A female whose annual earnings now are LE2,000 and considers taking a two-year Masters program that would require leaving work. Her annual tuition fees, books, stationary, etc. cost LE 3000. If she plans to retire after two years from finishing her study and she expects that her annual earnings will become LE6,000 after finishing her studies. Suppose the interest rate is 10%, the net present value of this investment is: a. zero & shouldn’t invest c. about – LE 80 & should invest b. about – LE 3250& shouldn’t invest d. about + LE 3750& should invest

10)A competitive firm will never choose to operate in stage(s): 
 a. I or II 
b. I or III 
c. II or III 
d. III only

answers with justifications please

Answer 1

1) Answer: (a) The substitution effect of a wage decrease

The substitution effect says that when wage falls leisure is relatively less expensive so the worker will buy more leisure and work less. So, the substitution effect would unambiguously predict a decrease in desired hours of work.

2) (c) northeast; map

A higher level of utility is achieved by moving to the north-east in an indifference map.

3) Ans: (a) the steeper the budget constraint

As the wage rate increases, the budget constraint gets steeper.