Lesson 4.1.6.3

4.1.6.3 Wage determination and employment in perfectly competitive labour markets Quiz: AQA Economics, Unit 1

20 questions

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Lesson 4.1.6.3, Wage determination and employment in perfectly competitive labour markets: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

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The 20 questions

  1. What determines the equilibrium wage rate in a perfectly competitive labour market?

    • Supply and demand
    • Government legislation
    • Monopsony employer power
    • Trade union bargaining

  2. Why are individual firms in a perfectly competitive labour market described as wage takers?

    • Government wage regulation
    • Zero wage-setting power
    • Monopsony wage control
    • Full wage-setting power

  3. A profit-maximising firm hires labour up to the point where the wage rate equals what?

    • Average revenue product
    • Marginal physical product
    • Marginal revenue product
    • Total product value

  4. The market wage is £12 per hour and marginal revenue product is £10. What should the firm do?

    • Reduce employment
    • Increase employment
    • Raise wage rates
    • Maintain current employment

  5. What happens to the equilibrium wage and employment if labour demand increases?

    • Wage and employment rise
    • Wage rises, employment falls
    • Wage and employment fall
    • Wage falls, employment rises

  6. Demand for accountants rises while supply is fixed. What happens to their wage differential relative to nurses?

    • It vanishes
    • It widens
    • It remains unchanged
    • It narrows

  7. Which factor helps explain why relative wage differentials persist between different occupations?

    • Perfect worker mobility
    • Different qualification requirements
    • Identical labour productivity
    • Uniform working conditions

  8. What is the elasticity of the labour supply curve facing an individual firm in a competitive market?

    • Perfectly elastic
    • Perfectly inelastic
    • Unit elastic
    • Relatively inelastic

  9. Which assumption applies to the economists' model of a perfectly competitive labour market?

    • Imperfect information
    • Perfect occupational mobility
    • Monopsony buying power
    • Barriers to entry

  10. What happens to the equilibrium wage and employment when entry requirements for a profession are increased?

    • Wage falls, employment rises
    • Wage rises, employment falls
    • Wage and employment rise
    • Wage and employment fall

  11. Which real-world feature causes a labour market to deviate from perfect competition?

    • Geographical immobility
    • Homogeneous labour
    • Zero transaction costs
    • Perfect information

  12. The wage is £29. MRP is £30 for 50 workers and £28 for 51 workers. How many workers should be hired?

    • 51 workers
    • 49 workers
    • 0 workers
    • 50 workers

  13. In a perfectly competitive labour market, workers are paid a wage equal to their:

    • marginal revenue product
    • total product
    • marginal cost
    • average revenue

  14. What happens to equilibrium wages when the supply of labour increases, assuming demand stays constant?

    • Wages rise
    • Wages fall
    • Wages stay constant
    • Wages become zero

  15. High training costs in an occupation cause equilibrium wages to be higher mainly by reducing:

    • labour demand
    • marginal revenue product
    • worker productivity
    • labour supply

  16. A rise in the market price of a firm's product will cause its demand for labour to:

    • stay unchanged
    • decrease
    • fall to zero
    • increase

  17. Which of the following is an assumption of a perfectly competitive labour market?

    • Monopsony buyer power
    • Wage fixing agreements
    • Perfect labour mobility
    • Trade union control

  18. What is the main outcome of setting a minimum wage above equilibrium in a competitive labour market?

    • Real-wage unemployment
    • Higher employment levels
    • Increased labour demand
    • Labour shortages

  19. In a competitive labour market, profit-maximising firms hire workers up to the point where wage equals:

    • total physical product
    • marginal revenue product
    • marginal cost
    • average revenue product

  20. In a perfectly competitive labour market, two workers with identical skills and output will receive:

    • negotiated wages
    • different wages
    • the same wage
    • minimum wages only

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