Question

The MC_E exceeds the wage for a monopsony firm:

	A.	because the government imposes higher costs on monopsony firms.
	B.	the firm is the only seller of the good.
	C.	because the monopsony firm faces a downward sloping demand curve for its product.
	D.	a firm must pay a higher wage not just to an additional worker but to all other workers when a new worker is hired.

The minimum wage is less effective as a policy tool than other measures because:

	A.	a large proportion of minimum wage recipients are not from low-income households.
	B.	empirical evidence, such as the Card-Krueger minimum wage study, strongly suggests that higher minimum wages always result in dramatic reductions in employment.
	C.	Both of the above are correct.
	D.	None of the above is correct.

Isoprofit curves relating wages and the risk of on-the-job injury are downward sloping and concave because:

	A.	the government requires firms to minimize risk.
	B.	the cost of risk-reduction falls as the level of risk is reduced.
	C.	workers will only accept additional risk if they receive a compensating wage differential.
	D.	the cost of risk-reduction rises as the level of risk is reduced.

Answer 1

The MCE exceeds the wage for a monopsony firm:

Ans. C) because the monopsony firm faces a downward sloping demand curve for its product.

The minimum wage is less effective as a policy tool than other measures because:

Ans. C) Both of the above are correct.

Isoprofit curves relating wages and the risk of on-the-job injury are downward sloping and concave because:

Ans. D) the cost of risk-reduction rises as the level of risk is reduced.

Reducing risk of job injury is at first relatively cheaper but becomes more expensive the further risk is reduced.