Which statement about a rise in the wage rate is correct?
Correct answer A. It will decrease total earnings if the demand for labour is wage elastic
Topic / 36 questions
Labour Market MCQs
Labour Market MCQs cover how wages and employment are determined, including labour supply, unions, minimum wage laws and unemployment. They help economics students and candidates preparing for CSS, PMS, UGC NET and BCS. Each question has an instant answer, so you can test your grasp of labour economics concepts quickly and confidently.
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
What is a fall in the demand for labour likely to cause?
Correct answer D. A lower equilibrium wage and lower quantity of labour
Which statement correctly describes the marginal revenue product curve?
Correct answer A. It is downward sloping due to the law of diminishing returns
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Up to what point will a profit-maximising firm employ labour?
Correct answer B. Marginal revenue product = marginal cost of labour
When workers cannot take up a job because of the cost of moving, what is this called?
Correct answer D. Geographical immobility
What name is given to unemployment caused by a fall in aggregate demand?
Correct answer C. Cyclical unemployment
Which change is likely to reduce the natural rate of unemployment?
Correct answer D. More training is available for the unemployed
Which policy might the government adopt when the economy suffers from cyclical unemployment?
Correct answer B. Cut taxes
Which of these would NOT count as a supply-side measure?
Correct answer D. Increasing spending on existing industries
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Weaker demand raises unemployment, which cuts spending and so reduces demand even further. What is this process called?
Correct answer C. The downward multiplier
What name is given to the level of unemployment an economy normally experiences?
Correct answer C. The natural rate of unemployment
A miner has been out of work for so long that he has given up looking for a job. How is he classified?
Correct answer C. Not in the labour force
Which type of unemployment is caused by the wage being kept above the competitive equilibrium wage?
Correct answer A. Structural unemployment
What is meant by a reservation wage?
Correct answer B. The minimum wage the worker is willing to accept
Shifts in demand between sectors tend to increase which type of unemployment?
Correct answer C. Frictional unemployment
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Why is some frictional unemployment unavoidable?
Correct answer B. Because there are changes in the demand for labour among different firms
Which statement about efficiency wage theory is correct?
Correct answer A. Paying above the competitive equilibrium wage may improve worker health, lower worker turnover, improve worker quality and increase worker effort
Which type of unemployment would still exist even with the wage at the competitive equilibrium?
Correct answer A. Frictional unemployment
If unemployment insurance were so generous that it paid laid-off workers 95 per cent of their usual salary, what would likely happen?
Correct answer D. The official unemployment rate would probably overstate true unemployment
When is the marginal revenue product of labour likely to be wage inelastic?
Correct answer A. Demand for the final product is price inelastic
About Labour Market MCQs
This Economics topic looks at the market where workers sell their time and firms buy it. Questions cover the reservation wage, the effect of a minimum wage set above the equilibrium wage, how trade unions can raise or lower efficiency, and how generous unemployment insurance affects job search. You will also calculate the labour force, which equals the employed plus the unemployed, and judge which government policies would or would not reduce unemployment. Labour economics is a regular part of microeconomics and macroeconomics papers, and figure-based questions reward careful reading of the data.
Exams that include Labour Market MCQs
Pakistan
- CSS
- PMS
- FPSC
- PPSC
- Lecturer tests
- Banking job tests
India
- UPSC CSE
- UGC NET
- IBPS PO
- SBI PO
Bangladesh
- BCS
- Bangladesh Bank recruitment
- Bank job exams
Frequently asked questions
What is a reservation wage?
A reservation wage is the lowest wage at which a worker is willing to accept a particular job. If the offered wage is below it, the person prefers to keep searching or stay out of work. Generous unemployment benefits tend to raise reservation wages.
How does a minimum wage affect employment?
In the standard competitive model, a minimum wage set above the equilibrium wage raises the pay of those who keep their jobs but reduces the quantity of labour demanded, creating unemployment. The effect is usually strongest for low-skilled and young workers.
How many Labour Market MCQs are on MCQs360?
MCQs360 has 39 Labour Market MCQs, each with an instant answer. They are free and need no sign-up. Practise the figure-based questions slowly, writing down employed and unemployed totals, because small arithmetic slips are the most common reason for wrong answers.
Last reviewed October 2026