Question

Assume that the labor market is in a monopsony. The equilibrium is determined by _______.

a. Marginal Cost of Hiring

b. Marginal Cost of Hiring & Demand

c. Marginal Cost of Hiring & Supply

d. Marginal Cost of Hiring & Supply & Demand

2. Assume that the labor market is a monopsony. As the minimum wage increases, the employment _______.

a. remains constant → decreases → increases

b. remains constant → increases → decreases

c. increases → decreases → remains constant

d. increases → remains constant → decreases

3. Skill-biased technological change(SBTC) increases __________.

a. demand for high skill workers

b. wages for high skill workers

c. college premium

d. all of the above

4. Assume skill-biased technological change(SBTC) occurs. The supply of low skill labor _______.

a. increases

b. decreases

c. remains constant

d. cannot be predicted

5. According to "China Syndrome", the labor demand in manufacturing ________, and the labor supply in local services ________.

a. decreases & increases.

b. decreases & decreases.

c. increases & decreases.

d. increases & increases.

Answer 1

Q1. Option b. A monopsonist would hire at a point where Most of labor = MRP or demand
Q2. Option a. As the sole employer the minimum wage would increase supply of labor
Q3. Option d.
Q4. Option a. With the increase in demand for skill biased labors, the demand for low skill labors decrease which increases the supply of labor.
Q5. Option c. With the increase in capital intensive technology the demand for skilled labor increases and supply of local labor services increases