and how much to work.
13.
Award: 10.00 points
Which one of the following regarding to an individual's budget constraint is correct?
The slope of the budget constraint is determined by the market wage rate.
The level of non-labour income determines the intercept of the budget constraint.
The slope of the budget constraint is determined by the reservation wage rate
The slope of the budget constraint is equal to the marginal rate of substitution between
income and leisure
The slope of the budget constraint is higher for a full-time worker than for a part-time
worker.
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: Easy Learning Objective:
02-03 Distinguish
theoretically
between the work
choices made by
individuals and the
economic
opportunities that
they choose from.
14.
Award: 10.00 points
15.
Award: 10.00 points
In the neo-classical model of labour supply, which of the following is always true?
If leisure is a normal good, a wage increase causes an increase in hours worked.
If leisure is a normal good, a wage increase causes a decrease in hours worked.
The income effect and the substitution effect work in the same direction.
The substitution effect causes the worker to work more hours if wages increase.
None of these options
References
Multiple Choice Difficulty: Medium Learning Objective: 02-04 Explain, using
diagrams, how an increase in the wage
rate leads to offsetting income and
substitution effects, and how this yields
an ambiguous effect of wage changes on
labour supply.
Over the backward bending portion of the labour supply curve,
The substitution effect of a wage change dominates the income effect.
Leisure becomes an inferior good.
The wage elasticity of labour demand is inelastic.
There is no longer a trade-off between income and leisure.
The wage elasticity of labour supply is negative.
References
Multiple Choice Difficulty: Medium Learning Objective: 02-04 Explain, using
diagrams, how an increase in the wage
rate leads to offsetting income and
substitution effects, and how this yields
an ambiguous effect of wage changes on
labour supply.
16.
Award: 10.00 points
17.
Award: 10.00 points
For a worker who is deciding how many hours of labour to supply, all of the following are true
except that:
The marginal rate of substitution between income and leisure is equal to the wage rate.
The rate at which she is willing to exchange leisure for income equals the rate at which the
market allows her to do it.
The slope of the budget line equals the slope of the indifference curve.
The income effect of a wage change equals the substitution effect.
The worker cannot increase total utility by working more or fewer hours.
References
Multiple Choice Difficulty: Hard Learning Objective: 02-04 Explain, using
diagrams, how an increase in the wage
rate leads to offsetting income and
substitution effects, and how this yields
an ambiguous effect of wage changes on
labour supply.
Which of the following statements most closely applies to the labour force participation decision?
It consists of the choice to allocate a portion of one's time to labour market activities as
opposed to non-market activities.
It occurs when one accepts an employment position and is working.
It occurs when one is actively seeking work.
It includes paid and unpaid work.
It doesn't include unemployed workers.
References
Multiple Choice Difficulty: Easy Learning Objective: 02-01 Define the key
elements of labour force
measurementemployment,
unemployment, labour force participation,
and hours workedand explain how they
are measured and reported by Statistics
Canada.
18.
Award: 10.00 points
19.
Award: 10.00 points
The portion of the population that is surveyed as potential labour force participants consists of:
the civilian non-institutional population.
the unemployed plus the employed population.
the entire civilian population that is 15 years of age or older.
Individuals who do hold jobs
the entire population of Canada.
References