Question 1

Leisure is

Accepted Answer

A) subject to the law of diminishing marginal utility 
B) usually considered an inferior good 
C) a complementary good with nonmarket work 
D) a complementary good with market work 
E) an irrational way to spend valuable time 
A) subject to the law of diminishing marginal utility 
B) usually considered an inferior good 
C) a complementary good with nonmarket work 
D) a complementary good with market work 
E) an irrational way to spend valuable time

Question 2

Unions and employers use collective bargaining to negotiate

Accepted Answer

A) wages only 
B) wages and employee benefits only 
C) employee benefits only 
D) working conditions only 
E) wages, employee benefits, and working conditions 
A) wages only 
B) wages and employee benefits only 
C) employee benefits only 
D) working conditions only 
E) wages, employee benefits, and working conditions

Question 3

Unions can affect the demand for, but not the supply of, labor.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 12-2   In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Accepted Answer

A) The income effect dominates the substitution effect. 
B) The substitution effect dominates the income effect. 
C) No labor is supplied. 
D) The income effect equals the substitution effect. 
E) The supply curve is horizontal. 
A) The income effect dominates the substitution effect. 
B) The substitution effect dominates the income effect. 
C) No labor is supplied. 
D) The income effect equals the substitution effect. 
E) The supply curve is horizontal.

Question 5

Every individual has a labor supply curve in each market where there is a possible use for his/her labor.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is not a form of nonmarket work?

Accepted Answer

A) working on your car at home 
B) doing your laundry in a laundromat 
C) making bread for a dinner at your sister's house 
D) caring for your sister's children as a favor 
E) babysitting for a fee 
A) working on your car at home 
B) doing your laundry in a laundromat 
C) making bread for a dinner at your sister's house 
D) caring for your sister's children as a favor 
E) babysitting for a fee

Question 7

Union membership has continued to grow faster than the labor force in the United States since World War II.

Accepted Answer

A) True 
 B)False

Question 8

People who can earn higher market wages

Accepted Answer

A) have a greater net utility associated with nonmarket work 
B) supply more hours to market work than people with lower wages 
C) are less likely to perform nonmarket work 
D) are more likely to view leisure as an inferior good 
E) experience less disutility associated with market work 
A) have a greater net utility associated with nonmarket work 
B) supply more hours to market work than people with lower wages 
C) are less likely to perform nonmarket work 
D) are more likely to view leisure as an inferior good 
E) experience less disutility associated with market work

Question 9

Exhibit 12-1   Along which part of the labor supply curve in Exhibit 12-1 does the substitution effect of a wage change outweigh the income 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 10

Which of the following could explain an increase in the equilibrium wage rate for a particular job?

Accepted Answer

A) a decrease in the amount of training needed to perform this job 
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) increased migration of workers to this geographic location 
A) a decrease in the amount of training needed to perform this job 
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) increased migration of workers to this geographic location

Question 11

Exhibit 12-4   In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

Accepted Answer

A) $6 
B) $7 
C) $9 
D) $12 
E) less than $12 
A) $6 
B) $7 
C) $9 
D) $12 
E) less than $12

Question 12

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 to get the public to buy the products made by union labor?

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 13

Which of the following would not shift demand curve for union labor to the right?

Accepted Answer

A) increased demand for union-made goods 
B) increased labor productivity by lowering quit rates 
C) increased supply of products that compete with union-made products 
D) increased labor productivity through better labor-management relations 
E) appeals to consumers to buy only union-made products 
A) increased demand for union-made goods 
B) increased labor productivity by lowering quit rates 
C) increased supply of products that compete with union-made products 
D) increased labor productivity through better labor-management relations 
E) appeals to consumers to buy only union-made products

Question 14

Exhibit 12-2   In Exhibit 12-2, which of the following is true at a wage rate of $14?

Accepted Answer

A) The income effect dominates the substitution effect. 
B) The substitution effect dominates the income effect. 
C) No labor is supplied. 
D) The income effect equals the substitution effect. 
E) The supply curve is horizontal. 
A) The income effect dominates the substitution effect. 
B) The substitution effect dominates the income effect. 
C) No labor is supplied. 
D) The income effect equals the substitution effect. 
E) The supply curve is horizontal.

Question 15

Unions are less likely to strike today than in the past because

Accepted Answer

A) employers are more willing to hire strike breakers 
B) fewer workers, both union and nonunion, are willing to cross picket lines 
C) most workers in the U.S.cannot permanently lose their jobs 
D) real wages have increased over the last 20 years 
E) many high-profile strikes (e.g., Caterpillar)have resulted in union victories 
A) employers are more willing to hire strike breakers 
B) fewer workers, both union and nonunion, are willing to cross picket lines 
C) most workers in the U.S.cannot permanently lose their jobs 
D) real wages have increased over the last 20 years 
E) many high-profile strikes (e.g., Caterpillar)have resulted in union victories

Question 16

A labor union is a group of

Accepted Answer

A) employees who join together to improve their working conditions 
B) firms that join together to hire workers 
C) firms that work together to negotiate better prices in the market 
D) farmers who work together to receive better prices for their agricultural products 
E) workers and firm owners who join together to improve working conditions 
A) employees who join together to improve their working conditions 
B) firms that join together to hire workers 
C) firms that work together to negotiate better prices in the market 
D) farmers who work together to receive better prices for their agricultural products 
E) workers and firm owners who join together to improve working conditions

Question 17

Nonmarket work includes time spent

Accepted Answer

A) producing goods and services for your employer 
B) pursuing hobbies and crafts 
C) engaging in strenuous physical exercise to reduce your weight 
D) producing your own goods and services 
E) managing your own firm 
A) producing goods and services for your employer 
B) pursuing hobbies and crafts 
C) engaging in strenuous physical exercise to reduce your weight 
D) producing your own goods and services 
E) managing your own firm

Question 18

The union participation rate in the United States is

Accepted Answer

A) lowest among service workers in the private sector 
B) highest among service workers in the private sector 
C) lowest among service workers in the public sector 
D) highest in heavy industry 
E) highest in high-technology industries 
A) lowest among service workers in the private sector 
B) highest among service workers in the private sector 
C) lowest among service workers in the public sector 
D) highest in heavy industry 
E) highest in high-technology industries

Question 19

In a winner-take-all labor market,

Accepted Answer

A) anyone who is hired at any wage is a winner 
B) any firm that can hire a worker is a winner 
C) a few key people critical to the overall success of the enterprise are rewarded with substantial pay 
D) the person most critical to the overall success of an enterprise is rewarded with substantial pay, and everyone else is paid the median wage 
E) only one worker is paid 
A) anyone who is hired at any wage is a winner 
B) any firm that can hire a worker is a winner 
C) a few key people critical to the overall success of the enterprise are rewarded with substantial pay 
D) the person most critical to the overall success of an enterprise is rewarded with substantial pay, and everyone else is paid the median wage 
E) only one worker is paid

Question 20

By itself, the substitution effect of an increase in the wage rate will

Accepted Answer

A) always lead to an increase in the quantity of labor supplied 
B) always lead to a decrease in the quantity of labor supplied 
C) lead to an increase in the quantity of labor supplied only if leisure is like a normal good 
D) lead to an increase in the quantity of labor supplied only if leisure is not a normal good 
E) lead to an increase in the quantity of labor supplied only if the income effect works in the same direction 
A) always lead to an increase in the quantity of labor supplied 
B) always lead to a decrease in the quantity of labor supplied 
C) lead to an increase in the quantity of labor supplied only if leisure is like a normal good 
D) lead to an increase in the quantity of labor supplied only if leisure is not a normal good 
E) lead to an increase in the quantity of labor supplied only if the income effect works in the same direction

Exam 12: Labor Markets and Labor Unions

Leisure is

Unions and employers use collective bargaining to negotiate

Unions can affect the demand for, but not the supply of, labor.

Exhibit 12-2 In Exhibit 12-2, which of the following is true if the wage rate decreases from $14 to $6 per hour?

Every individual has a labor supply curve in each market where there is a possible use for his/her labor.

Which of the following is not a form of nonmarket work?

Union membership has continued to grow faster than the labor force in the United States since World War II.

People who can earn higher market wages

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

Which of the following could explain an increase in the equilibrium wage rate for a particular job?

Exhibit 12-4 In Exhibit 12-4, how much will the employer have to pay per hour to get this worker to work 48 hours per week?

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 to get the public to buy the products made by union labor?

Which of the following would not shift demand curve for union labor to the right?

Exhibit 12-2 In Exhibit 12-2, which of the following is true at a wage rate of $14?

Unions are less likely to strike today than in the past because

A labor union is a group of

Nonmarket work includes time spent

The union participation rate in the United States is

In a winner-take-all labor market,

By itself, the substitution effect of an increase in the wage rate will

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

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