1. Why is the demand for labor more elastic in the long run?
A. Output effect
B. Input-substitution effect
C. Both A and B
2. The skills required for gold miners and coal miners are very similar. Suppose the price of coal declines --- what is the expected impact of thsi change on the labor supply curve for gold miners?
A. Does not change
B. Shifts leftward
C. Shifts rightward
3. In a recent editorial printed in the Wall Street Journal, an economist proposed that the federal government remove the minimum wage regulation and provide a fixed payment (e.g., $5,000) to each worker who earns less than the old minimum wage. What impact would this proposed policy have on the labor market?
A. Higher employment and lower wages
B. Lower employment and lower wages
C. Lower employment and higher wages
D. Higher employment and higher wages
4. Based on data from 2007, the top one percent of workers earned more than 20 percent of the income in the US.
A. True B. False
5. According to economists, luck and misfortune have no impact on the differences in income earned by workers.
A. True B. False