Question 1

The demand for labor curve bends backward whenever the income and substitution effects work in opposite directions.

Accepted Answer

A) True 
 B)False

Question 2

After reading an economics textbook about labor supply and utility maximization, Amelia Ruiz said, "I don't allocate my time like that." Her professor replied,

Accepted Answer

A) "You caught us.Economists do not know what they are talking about." 
B) "This proves that you will always choose to spend your time in nonmarket work." 
C) "You act as if you allocated your time to derive the same expected net marginal utility from the last unit of time spent in each alternative use." 
D) "Don't you want to use your unlimited resources to satisfy your finite wants?" 
E) "It is obvious that labor supply is a derived demand based on marginal revenue product." 
A) "You caught us.Economists do not know what they are talking about." 
B) "This proves that you will always choose to spend your time in nonmarket work." 
C) "You act as if you allocated your time to derive the same expected net marginal utility from the last unit of time spent in each alternative use." 
D) "Don't you want to use your unlimited resources to satisfy your finite wants?" 
E) "It is obvious that labor supply is a derived demand based on marginal revenue product."

Question 3

Truck drivers usually earn more than secretaries because

Accepted Answer

A) drivers require more education and training 
B) truck drivers have more flexibility in their daily activities 
C) truckers face greater risks 
D) secretaries have higher productivity than truckers 
E) truckers are discriminated against 
A) drivers require more education and training 
B) truck drivers have more flexibility in their daily activities 
C) truckers face greater risks 
D) secretaries have higher productivity than truckers 
E) truckers are discriminated against

Question 4

The relationship between income and education is clear.At every age, those with more education earn more.

Accepted Answer

A) True 
 B)False

Question 5

Of the several ways that the United Auto Workers can increase the wages of its members,

Accepted Answer

A) none can also increase employment 
B) only direct negotiation of a wage above the competitive level can also increase employment 
C) only restricting the supply of labor can also increase employment 
D) only increasing the demand for labor can also increase employment 
E) only binding arbitration can also increase employment 
A) none can also increase employment 
B) only direct negotiation of a wage above the competitive level can also increase employment 
C) only restricting the supply of labor can also increase employment 
D) only increasing the demand for labor can also increase employment 
E) only binding arbitration can also increase employment

Question 6

The source of power for a labor union is its ability to

Accepted Answer

A) increase the supply of labor 
B) decrease the demand for capital 
C) increase the quantity supplied of labor 
D) decrease the quantity supplied of labor 
E) decrease the supply of labor 
A) increase the supply of labor 
B) decrease the demand for capital 
C) increase the quantity supplied of labor 
D) decrease the quantity supplied of labor 
E) decrease the supply of labor

Question 7

Which of the following is an example of featherbedding?

Accepted Answer

A) a craft union's restricting entry into its profession 
B) a union-imposed wage floor 
C) an increase in labor productivity that results from a decrease in quit rates 
D) attempts to reduce the sale of nonunion goods 
E) a construction workers union's requiring an unnecessarily large number of workers to do a particular job 
A) a craft union's restricting entry into its profession 
B) a union-imposed wage floor 
C) an increase in labor productivity that results from a decrease in quit rates 
D) attempts to reduce the sale of nonunion goods 
E) a construction workers union's requiring an unnecessarily large number of workers to do a particular job

Question 8

If the United Auto Workers successfully negotiates a wage that is higher than the competitive wage,

Accepted Answer

A) there is no excess supply of labor because everyone who wants to work at the union wage can get a job 
B) there is no excess demand for labor because everyone who wants to work at the union wage can get a job 
C) the union must ration the available jobs 
D) all workers are better off 
E) more workers are employed than at the competitive wage 
A) there is no excess supply of labor because everyone who wants to work at the union wage can get a job 
B) there is no excess demand for labor because everyone who wants to work at the union wage can get a job 
C) the union must ration the available jobs 
D) all workers are better off 
E) more workers are employed than at the competitive wage

Question 9

Exhibit 12-9   In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is represented by the demand curve D0 and Supply curve S0.Which of the market equilibria is the most likely outcome of a successful union campaign by the United Autoworkers to restrict the import of imported automobiles?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
E) either a or d 
A) a 
B) b 
C) c 
D) d 
E) either a or d

Question 10

Featherbedding ultimately results in greater worker efficiency and therefore greater productivity and higher wages.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following could explain a decrease in the demand for labor in a particular job?

Accepted Answer

A) additional training that increases the productivity of each unit of labor in this market 
B) an increase in the amount of risk associated with this job 
C) a decrease in the amount of risk associated with this job 
D) an improvement in the working conditions associated with this job 
E) a decrease in the productivity of each unit of labor in this market 
A) additional training that increases the productivity of each unit of labor in this market 
B) an increase in the amount of risk associated with this job 
C) a decrease in the amount of risk associated with this job 
D) an improvement in the working conditions associated with this job 
E) a decrease in the productivity of each unit of labor in this market

Question 12

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Accepted Answer

A) True 
 B)False

Question 13

Unions whose membership includes all workers in a particular product market, whether skilled or unskilled, are known as

Accepted Answer

A) craft unions 
B) exclusive unions 
C) national unions 
D) regional unions 
E) industrial unions 
A) craft unions 
B) exclusive unions 
C) national unions 
D) regional unions 
E) industrial unions

Question 14

The union participation rate in the United States is

Accepted Answer

A) highest among government employees 
B) highest among private sector workers 
C) highest in the smokestack industries 
D) highest in the service sector 
E) higher than in Sweden 
A) highest among government employees 
B) highest among private sector workers 
C) highest in the smokestack industries 
D) highest in the service sector 
E) higher than in Sweden

Question 15

Two reasons why a few individuals earn very high pay in the sports and entertainment fields are that their

Accepted Answer

A) marginal productivity is high and entry into those industries is restricted 
B) marginal productivity is high and the cross-elasticity of demand between their services and the services of other employees is also high 
C) marginal productivity is high and there is open competition for their talents 
D) wage elasticity of supply is high and there is open competition for their talents 
E) marginal productivity is high and they are prohibited from changing employers 
A) marginal productivity is high and entry into those industries is restricted 
B) marginal productivity is high and the cross-elasticity of demand between their services and the services of other employees is also high 
C) marginal productivity is high and there is open competition for their talents 
D) wage elasticity of supply is high and there is open competition for their talents 
E) marginal productivity is high and they are prohibited from changing employers

Question 16

An industry with a strong union (e.g., UAW)

Accepted Answer

A) will increase wages in the nonunion sector of the industry 
B) will increase employment for union workers when wages increase 
C) can force employers to hire all unions members regardless of the wage 
D) can increase the demand for union workers by increasing turnover and reducing productivity 
E) can bargain for wages that are greater than the market's equilibrium wage 
A) will increase wages in the nonunion sector of the industry 
B) will increase employment for union workers when wages increase 
C) can force employers to hire all unions members regardless of the wage 
D) can increase the demand for union workers by increasing turnover and reducing productivity 
E) can bargain for wages that are greater than the market's equilibrium wage

Question 17

Exhibit 12-1   Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change outweigh the substitution effect?

Accepted Answer

A) between points a and b 
B) between points a and c 
C) between points b and c 
D) between points b and d 
E) between points c and d 
A) between points a and b 
B) between points a and c 
C) between points b and c 
D) between points b and d 
E) between points c and d

Question 18

Exhibit 12-4   Consider Exhibit 12-4.If the wage rate is $9, how many hours per week will this person work?

Accepted Answer

A) 30 hours 
B) 36 hours 
C) 40 hours 
D) 45 hours 
E) 48 hours 
A) 30 hours 
B) 36 hours 
C) 40 hours 
D) 45 hours 
E) 48 hours

Question 19

People generally view leisure

Accepted Answer

A) as an inferior good 
B) as a normal good 
C) as a source of disutility 
D) as more valuable per unit the more they have of it 
E) as unrelated to utility maximization 
A) as an inferior good 
B) as a normal good 
C) as a source of disutility 
D) as more valuable per unit the more they have of it 
E) as unrelated to utility maximization

Question 20

Exhibit 12-9   In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is represented by the demand curve D0 and Supply curve S0.Which of the market equilibria is the most likely outcome of the union practice of featherbedding?

Accepted Answer

A) a 
B) b 
C) c 
D) d 
E) either a or d 
A) a 
B) b 
C) c 
D) d 
E) either a or d

Exam 12: Labor Markets and Labor Unions

The demand for labor curve bends backward whenever the income and substitution effects work in opposite directions.

After reading an economics textbook about labor supply and utility maximization, Amelia Ruiz said, "I don't allocate my time like that." Her professor replied,

Truck drivers usually earn more than secretaries because

The relationship between income and education is clear.At every age, those with more education earn more.

Of the several ways that the United Auto Workers can increase the wages of its members,

The source of power for a labor union is its ability to

Which of the following is an example of featherbedding?

If the United Auto Workers successfully negotiates a wage that is higher than the competitive wage,

Featherbedding ultimately results in greater worker efficiency and therefore greater productivity and higher wages.

Which of the following could explain a decrease in the demand for labor in a particular job?

Other things equal, the wage rate will be higher in a job that requires close monitoring by a supervisor since few individuals are eager to work in such an environment.

Unions whose membership includes all workers in a particular product market, whether skilled or unskilled, are known as

The union participation rate in the United States is

Two reasons why a few individuals earn very high pay in the sports and entertainment fields are that their

An industry with a strong union (e.g., UAW)

Exhibit 12-1 Along which part of the labor supply curve in Exhibit 12-1 does the income effect of a wage change outweigh the substitution effect?

Exhibit 12-4 Consider Exhibit 12-4.If the wage rate is $9, how many hours per week will this person work?

People generally view leisure

Exhibit 12-9 In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is represented by the demand curve D0 and Supply curve S0.Which of the market equilibria is the most likely outcome of the union practice of featherbedding?

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Elasticity of Demand and Supply

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Exhibit 12-9 In Exhibit 12-9, the labor supply and labor demand in a unionized labor market is represented by the demand curve D₀ and Supply curve S₀.Which of the market equilibria is the most likely outcome of the union practice of featherbedding?