Discouraged workers are part of the hidden unemployment phenomenon
Discouraged workers are considered to be marginally attached to the labour force
Discouraged workers behave in a similar fashion as added workers.
References
Multiple Choice Difficulty: Medium Learning Objective: 02-05 Interpret the
economic and other factors affecting a
married woman's decision to work, and
show how this decision can be captured
within the labour supply model.
8.
Award: 10.00 points
Suppose a worker is observed to be working but is forced to work fewer hours than she really
wants to work. Which of the following statements is true?
The indifference curve that she is on is tangent to the budget line.
She is on an indifference curve which is lower than the one which is tangent to her budget
line.
She is on an indifference curve which is higher than the one which is tangent to her
budget line.
She is on an indifference curve which is lower than the one which passes through the
point on the budget line corresponding to zero hours of work.
She is not on an indifference curve.
References
Multiple Choice Learning Objective:
02-02 Illustrate
graphically how the
labour supply model
reflects the income
and leisure trade-
offs that consumers
face in deciding
whether and how
much to work.
Difficulty: Hard Learning Objective:
02-03 Distinguish
theoretically
between the work
choices made by
individuals and the
economic
opportunities that
they choose from.
9.
Award: 10.00 points
The slope of the indifference curve at the lower right-hand corner of the income/leisure diagram,
where zero hours of work are supplied to the labour market, is equal to:
the prevailing market wage.
the reservation wage.
the level of non-market income.
the slope of the budget constraint.
the difference between the market wage and the reservation wage
References
Multiple Choice Learning Objective:
02-02 Illustrate
graphically how the
labour supply model
reflects the income
and leisure trade-
offs that consumers
face in deciding
whether and how
much to work.
Difficulty:
Medium
Learning Objective:
02-03 Distinguish
theoretically
between the work
choices made by
individuals and the
economic
opportunities that
they choose from.
10.
Award: 10.00 points
11.
Award: 10.00 points
The reservation wage is defined as:
the wage of the reservation clerk in the tourism industry.
the maximum wage that an employer is willing to pay a worker for a given job.
the minimum wage that an employee is willing to accept for a given job.
the equilibrium wage.
the wage rate at which zero hours of labour is supplied by the workers.
References
Multiple Choice Difficulty: Easy Learning Objective: 02-03 Distinguish
theoretically between the work choices
made by individuals and the economic
opportunities that they choose from.
All of the following patterns of labour market behaviour can be analyzed with the income-leisure
framework, except:
moonlighting
overtime work
labour force participation
underemployment
worksharing
References
Multiple Choice Difficulty: Easy Learning Objective: 02-05 Interpret the
economic and other factors affecting a
married woman's decision to work, and
show how this decision can be captured
within the labour supply model.
12.
Award: 10.00 points
Consider the situation of a worker who is ‘at the corner equilibrium' i.e., he or she is supplying zero
hours of work and consuming 16 hours of leisure. In context of the income-leisure framework, which
of the following statements is false?
The indifference curve is steeper than the budget line.
The marginal rate of substitution between income and leisure is greater than the wage rate
in absolute value terms.
The indifference curve is flatter than the budget line.
The rate at which the worker is willing to exchange income for leisure is not equal to the
market rate for the exchange of income for leisure.
Marginally, the worker values an hour of leisure more than she values an hour's worth of
income.
References
Multiple Choice Difficulty: Hard Learning Objective: 02-02 Illustrate
graphically how the labour supply model
reflects the income and leisure trade-offs
that consumers face in deciding whether