Question 1

As the wage rate decreases, the amount of time spent on market work usually

Accepted Answer

A) increases because the opportunity cost of nonmarket work increases 
B) increases because of the substitution effect 
C) decreases because of the income effect 
D) decreases because the value of leisure time increases 
E) decreases because the opportunity cost of leisure declines 
A) increases because the opportunity cost of nonmarket work increases 
B) increases because of the substitution effect 
C) decreases because of the income effect 
D) decreases because the value of leisure time increases 
E) decreases because the opportunity cost of leisure declines

Question 2

The amount of time an individual is willing to sell on the labor market varies positively with the value of leisure time.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 12-3   In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

Accepted Answer

A) The substitution effect will cause the person to work more hours. 
B) The income effect will cause the person to work more hours. 
C) The substitution effect will cause the person to work fewer hours. 
D) The income effect will cause the person to work the same number of hours. 
E) The substitution effect will cause the person to work the same number of hours. 
A) The substitution effect will cause the person to work more hours. 
B) The income effect will cause the person to work more hours. 
C) The substitution effect will cause the person to work fewer hours. 
D) The income effect will cause the person to work the same number of hours. 
E) The substitution effect will cause the person to work the same number of hours.

Question 4

When industrial unions negotiate with an entire industry, wage gains come at the cost of

Accepted Answer

A) longer working hours 
B) worse working conditions 
C) reduced total employment 
D) worse products 
E) longer hours 
A) longer working hours 
B) worse working conditions 
C) reduced total employment 
D) worse products 
E) longer hours

Question 5

Most collective bargaining agreements in the United States are reached

Accepted Answer

A) only after binding arbitration 
B) only after a strike 
C) without a strike 
D) only after a strike lasting at least three weeks 
E) only after government intervention to avoid a strike 
A) only after binding arbitration 
B) only after a strike 
C) without a strike 
D) only after a strike lasting at least three weeks 
E) only after government intervention to avoid a strike

Question 6

The success of a strike depends on the union's ability to

Accepted Answer

A) do all of the following 
B) reduce the supply of labor to the firm 
C) reduce the supply of scabs to the firm 
D) remain unified 
E) endure the strike 
A) do all of the following 
B) reduce the supply of labor to the firm 
C) reduce the supply of scabs to the firm 
D) remain unified 
E) endure the strike

Question 7

Restricting the supply of labor in order to increase the wage

Accepted Answer

A) is a tactic used by both craft and industrial unions 
B) is a tactic more likely to be used by the American Medical Association (AM
A) than the United Auto Workers (UAW) 
C) is a tactic more likely to be used by the UAW than the AMA 
D) is a tactic used solely by professional groups such as lawyers 
E) has less effect on the wage than direct negotiation does 
A) is a tactic used by both craft and industrial unions 
B) is a tactic more likely to be used by the American Medical Association (AM
A) than the United Auto Workers (UAW) 
C) is a tactic more likely to be used by the UAW than the AMA 
D) is a tactic used solely by professional groups such as lawyers 
E) has less effect on the wage than direct negotiation does

Question 8

Individuals maximize utility in allocating their time only when

Accepted Answer

A) any change in their use of time reduces their total satisfaction 
B) they consciously and carefully weigh the expected marginal utilities per unit 
C) they consciously and carefully weigh the actual marginal utilities per unit of time spent in each activity 
D) the expected average utility of each activity is equal 
E) people make a concerted effort to measure satisfaction 
A) any change in their use of time reduces their total satisfaction 
B) they consciously and carefully weigh the expected marginal utilities per unit 
C) they consciously and carefully weigh the actual marginal utilities per unit of time spent in each activity 
D) the expected average utility of each activity is equal 
E) people make a concerted effort to measure satisfaction

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 the union raising iniation fees?

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

In order for a strike to be successful, the union must decrease the supply of both union and non-union labor.

Accepted Answer

A) True 
 B)False

Question 11

LeBron James went right from high school to the NBA because he had a low opportunity cost of attending college.

Accepted Answer

A) True 
 B)False

Question 12

The income and substitution effects of a change in the wage rate

Accepted Answer

A) always work in the same direction 
B) always work in opposite directions 
C) work in opposite directions only if the change is a decrease 
D) work in the same direction only if the change is an increase 
E) work in the same direction only if the change is a decrease 
A) always work in the same direction 
B) always work in opposite directions 
C) work in opposite directions only if the change is a decrease 
D) work in the same direction only if the change is an increase 
E) work in the same direction only if the change is a decrease

Question 13

In a labor market dominated by a union, the supply of labor to a firm is depicted as a horizontal line.

Accepted Answer

A) True 
 B)False

Question 14

The United Auto Workers has fought for curbs on imports of foreign-made cars in order to cause

Accepted Answer

A) a rightward shift in the supply of U.S.cars 
B) a leftward shift in the supply of U.S.cars 
C) movement to the left along the supply curve for U.S.cars 
D) movement to the right along the supply curve for U.S.cars 
E) a rightward shift of the demand curve for U.S.cars 
A) a rightward shift in the supply of U.S.cars 
B) a leftward shift in the supply of U.S.cars 
C) movement to the left along the supply curve for U.S.cars 
D) movement to the right along the supply curve for U.S.cars 
E) a rightward shift of the demand curve for U.S.cars

Question 15

Jobs in rural areas generally pay lower wages than jobs in urban areas because there are limits to labor mobility.

Accepted Answer

A) True 
 B)False

Question 16

The substitution effect of a decrease in the wage rate causes the quantity of labor supplied to

Accepted Answer

A) increase 
B) increase only if the individual desires more leisure time 
C) increase only if the substitution effect outweighs the income effect 
D) decrease 
E) decrease only if the individual lowers the value of leisure time 
A) increase 
B) increase only if the individual desires more leisure time 
C) increase only if the substitution effect outweighs the income effect 
D) decrease 
E) decrease only if the individual lowers the value of leisure time

Question 17

Exhibit 12-3   In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

Accepted Answer

A) The substitution effect will cause the person to work more hours. 
B) The income effect will cause the person to work more hours. 
C) The substitution effect will cause the person to work fewer hours. 
D) The income effect will cause the person to work the same number of hours. 
E) The substitution effect will cause the person to work the same number of hours. 
A) The substitution effect will cause the person to work more hours. 
B) The income effect will cause the person to work more hours. 
C) The substitution effect will cause the person to work fewer hours. 
D) The income effect will cause the person to work the same number of hours. 
E) The substitution effect will cause the person to work the same number of hours.

Question 18

A person who wins a large sum of money in the state lottery is likely to

Accepted Answer

A) increase the amount of market work offered at each wage rate 
B) not change the amount of work offered at each wage rate 
C) decrease the amount of work offered at each wage rate 
D) substitute market work for leisure time due to the substitution effect 
E) substitute market work for leisure time due to the income effect 
A) increase the amount of market work offered at each wage rate 
B) not change the amount of work offered at each wage rate 
C) decrease the amount of work offered at each wage rate 
D) substitute market work for leisure time due to the substitution effect 
E) substitute market work for leisure time due to the income effect

Question 19

If leisure is a normal good, then a decrease in income __________ the time allocated to __________.

Accepted Answer

A) decreases; market work 
B) decreases; leisure 
C) decreases; nonmarket work 
D) increases; leisure 
E) increases; market work, nonmarket work, and leisure time 
A) decreases; market work 
B) decreases; leisure 
C) decreases; nonmarket work 
D) increases; leisure 
E) increases; market work, nonmarket work, and leisure time

Question 20

If nonmarket work is a normal good, then an increase in income __________ the time allocated to __________.

Accepted Answer

A) decreases; market work 
B) decreases; leisure 
C) increases; market work 
D) increases; leisure 
E) increases; nonmarket work 
A) decreases; market work 
B) decreases; leisure 
C) increases; market work 
D) increases; leisure 
E) increases; nonmarket work

Exam 12: Labor Markets and Labor Unions

As the wage rate decreases, the amount of time spent on market work usually

The amount of time an individual is willing to sell on the labor market varies positively with the value of leisure time.

Exhibit 12-3 In Exhibit 12-3, which of the following is true when the wage rate increases from $11 to $13?

When industrial unions negotiate with an entire industry, wage gains come at the cost of

Most collective bargaining agreements in the United States are reached

The success of a strike depends on the union's ability to

Restricting the supply of labor in order to increase the wage

Individuals maximize utility in allocating their time only when

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 raising iniation fees?

In order for a strike to be successful, the union must decrease the supply of both union and non-union labor.

LeBron James went right from high school to the NBA because he had a low opportunity cost of attending college.

The income and substitution effects of a change in the wage rate

In a labor market dominated by a union, the supply of labor to a firm is depicted as a horizontal line.

The United Auto Workers has fought for curbs on imports of foreign-made cars in order to cause

Jobs in rural areas generally pay lower wages than jobs in urban areas because there are limits to labor mobility.

The substitution effect of a decrease in the wage rate causes the quantity of labor supplied to

Exhibit 12-3 In Exhibit 12-3, which of the following is true when the wage rate increases from $9 to $11?

A person who wins a large sum of money in the state lottery is likely to

If leisure is a normal good, then a decrease in income __________ the time allocated to __________.

If nonmarket work is a normal good, then an increase in income __________ the time allocated to __________.

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 raising iniation fees?

If leisure is a normal good, then a decrease in income the time allocated to .

If nonmarket work is a normal good, then an increase in income the time allocated to .