Question

1. Which of the following is correct regarding the impact of globalization on the Canadian market?

a) Due to global competition, the resulting change in product price will make the productivity of Canadian labour decrease.

b) The labour demand in the Canadian market will decrease.

c) If Canadian labour and foreign labour are close substitutes, cheaper foreign labour will lead to scale effects, which may increase the demand for Canadian labour and foreign labour.

d) If Canadian labour and foreign labour are complements, cheaper foreign labour will lead to scale effects, which may increase the demand for Canadian labour and foreign labour.

2. Which of the following is correct regarding the elasticity of labour demand?

a) If capital and labour are easily substitutable, the derived demand for labour will be inelastic.

b) If capital and labour are not easily substitutable, the derived demand for labour will be inelastic.

c) If the product demand is elastic, the derived demand for labour will be inelastic.

d) If the share of the labour costs in total costs is large, the derived demand for labour will be inelastic.

3. Which of the following facts are correct regarding international comparison of labour costs and productivity?

a) Canada's labour compensation costs are relatively high compared to other European countries.

b) Canada has relatively low productivity growth since the 1990s compared to many other countries.

c) Canada's unit labour costs fell from 2000 until 2008.

d) Canada's unit labour costs are lower than that of the United States.

The figures below give the production schedule and the product demand schedule for a firm, which has to decide how many workers to hire.

Workers hired	Total Physical Product	Price of output
0	0	$10
1	10	$10
2	18	$10
3	25	$10
4	30	$10
5	34	$10
6	37	$10

4. If the wage = $40 for the time period in question, then the number of workers hired is:

a) 2

b) 3

c) 4

d) 5

5. The primary reason why workers in the fast-food industry tend to be poorly paid is that:

a) The demand for the product that they produce is quite elastic, making the demand for labour wage elastic.

b) It is easy to substitute capital for labour in the industry, making the demand for labour wage elastic.

c) Labour costs comprise a large share of the employer's expenses, making the demand for labour wage inelastic.

d) These workers are seldom unionized.

6. Which of the following statements is false?

a) The quantity demanded for school teachers is equal to the quantity supplied in equilibrium.

b) The demand for school teachers is downward sloping because it is profitable for schools to hire more teachers when wages fall.

c) The demand for school teachers is likely to be wage inelastic.

d) The demand for school teachers is likely to rise when the government decides to cut funding to schools.

7. All of the following statements regarding the marginal product of labour are true except:

a) It is the slope of the total physical product of labour curve.

b) It is equal to the change in output divided by the change in labour input.

c) It eventually diminishes because the capital stock is fixed.

d) It is the increment to revenue obtained by hiring one more unit of a variable factor.

8. In the short run, the demand for labour for a firm is:

a) the marginal product of labour curve.

b) the downward sloping portion of the marginal revenue product curve.

c) upward sloping.

d) usually inelastic.