Demand for Labor

Description: This quiz will test your understanding of the concept of demand for labor in economics.
Number of Questions: 15
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Tags: labor economics demand for labor employment
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What is the primary determinant of the demand for labor?

  1. Wage rate

  2. Price of the final product

  3. Cost of capital

  4. Level of technology


Correct Option: B
Explanation:

The demand for labor is primarily determined by the price of the final product that the labor is used to produce. A higher price for the final product will lead to a higher demand for labor.

What is the relationship between the demand for labor and the wage rate?

  1. Positive

  2. Negative

  3. U-shaped

  4. Inverted U-shaped


Correct Option: B
Explanation:

The relationship between the demand for labor and the wage rate is typically negative. This means that as the wage rate increases, the demand for labor decreases.

What is the impact of technological progress on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific technology


Correct Option: D
Explanation:

The impact of technological progress on the demand for labor depends on the specific technology being introduced. Some technologies may increase the demand for labor, while others may decrease it.

What is the relationship between the demand for labor and the level of output?

  1. Positive

  2. Negative

  3. U-shaped

  4. Inverted U-shaped


Correct Option: A
Explanation:

The relationship between the demand for labor and the level of output is typically positive. This means that as the level of output increases, the demand for labor also increases.

What is the impact of a minimum wage law on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific minimum wage


Correct Option: B
Explanation:

A minimum wage law typically decreases the demand for labor, as it raises the cost of hiring workers.

What is the impact of a trade agreement on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific trade agreement


Correct Option: D
Explanation:

The impact of a trade agreement on the demand for labor depends on the specific terms of the agreement. Some trade agreements may increase the demand for labor, while others may decrease it.

What is the impact of a recession on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific recession


Correct Option: B
Explanation:

A recession typically decreases the demand for labor, as businesses reduce their production and hiring.

What is the impact of an increase in the cost of capital on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific cost of capital


Correct Option: B
Explanation:

An increase in the cost of capital typically decreases the demand for labor, as businesses are less likely to invest in new projects and hire new workers.

What is the impact of a decrease in the price of a complementary input on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific complementary input


Correct Option: A
Explanation:

A decrease in the price of a complementary input typically increases the demand for labor, as businesses are able to produce more output with the same amount of labor.

What is the impact of a decrease in the price of a substitute input on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific substitute input


Correct Option: B
Explanation:

A decrease in the price of a substitute input typically decreases the demand for labor, as businesses are able to produce the same output with less labor.

What is the impact of a decrease in the expected future demand for a product on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific product


Correct Option: B
Explanation:

A decrease in the expected future demand for a product typically decreases the demand for labor, as businesses are less likely to hire new workers to produce that product.

What is the impact of an increase in the unemployment rate on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific unemployment rate


Correct Option: B
Explanation:

An increase in the unemployment rate typically decreases the demand for labor, as businesses are less likely to hire new workers when there are already many unemployed workers available.

What is the impact of an increase in the labor force participation rate on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific labor force participation rate


Correct Option: A
Explanation:

An increase in the labor force participation rate typically increases the demand for labor, as more people are available to work.

What is the impact of an increase in the productivity of labor on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific productivity increase


Correct Option: A
Explanation:

An increase in the productivity of labor typically increases the demand for labor, as businesses are able to produce more output with the same amount of labor.

What is the impact of an increase in the demand for leisure on the demand for labor?

  1. Increases demand for labor

  2. Decreases demand for labor

  3. Has no impact on demand for labor

  4. Depends on the specific demand for leisure


Correct Option: B
Explanation:

An increase in the demand for leisure typically decreases the demand for labor, as people are less willing to work when they have more opportunities for leisure activities.

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