Choose the correct answer for each question.

1. A profit-maximizing firm will continue to hire additional units of labour until __________ equals the ____________

   1.   ?    marginal cost of labour, marginal revenue product
      
   2.   ?    marginal revenue, marginal cost
   3.   ?    long run marginal revenue, long run marginal cost
   4.   ?    labour output ratio, capital output ratio

2. The participation rate of male and female workers in the UK labour force is affected by

   1.   ?    The level of real wages
   2.   ?    The level of non-wage income provided by the benefits system
   3.   ?    The rate of direct tax such as income tax
   4.   ?    All of the above

3. Human capital is best defined as

   1.   ?    The number of qualifications held by the workforce
   2.   ?    The number of people employed who own their own house
   3.   ?    The number of years a person stays in full-time education
   4.   ?    The stock of expertise and qualifications accumulated by the workforce

4. The most important long term cause of wage differentials between occupations is

   1.   ?    The level of the national minimum wage
   2.   ?    The level of trade union membership
   3.   ?    The relative danger of different jobs
   4.   ?    The changing skill requirements of different jobs

5. The opportunity cost of choosing the delay entry to the labour market and take a degree at university is best measured by

   1.   ?    Money spent on tuition fees, living expenses and textbooks
   2.   ?    The earnings foregone by remaining in higher education for three or more years
   3.   ?    Money spent on tuition fees, living expenses, textbooks and the interest on student loans
   4.   ?    The number of pints bought over a three year period in the Student Union bar

6. Trade unions are better placed to achieve a higher wage differential the more _______________ and the more ___________

   1.   ?    inelastic the demand for labour, they can restrict the supply of labour
   2.   ?    members they have, militant they behave
   3.   ?    the economy is growing, people prefer leisure to working
   4.   ?    productivity is growing, job vacancies exist

7. The demand for a factor of productionsuch as labour and capital, not for its own sake, but for use in the production of goods and services is called a _______________.

   1.   ?    High Level Demand
   2.   ?    Derived Demand
   3.   ?    Factor Demand
   4.   ?    Supply-side Demand

8. The introduction of a National Minimum Wage in the UK economy has had most effect on the relative pay and earnings of

   1.   ?    Full time workers employed in the motor industry
   2.   ?    Part time workers employed in financial services
   3.   ?    Part time female workers in the service sector
   4.   ?    Full-time workers employed in government administration

9. Which two conditions from those listed below are most likely to lead to a rise in trade union bargaining power with employers?
   
   (a) An increase in competition in product markets
   (b) A sustained increase in real national output
   (c) An increase in shortages of skilled labour
   (d) A rise in import competition from overseas suppliers

   1.   ?    (a) and (d)
   2.   ?    (a) and (b)
   3.   ?    (b) and (c)
   4.   ?    (c) and (d)

10. True or False, the National Minimum Wage can lead to higher wages and higher employment in labour markets that are monopsonistic

    1.   ?    True
    2.   ?    False

11. True or False, more than half of the employed labour force in the UK is currently a member of a trade union

    1.   ?    True
    2.   ?    False

12. An increase in the supply of a labour will _______ the price of the factor, _______ the quantity used of the factor, and the income will _______.

    1.   ?    increase; decrease; either increase or decrease
    2.   ?    decrease; increase; either increase or decrease
    3.   ?    decrease; increase; decrease
    4.   ?    increase; increase; increase