Question 1

The demand for labor determines the

Accepted Answer

A) Total number of people who want to work. 
B) Number of available jobs. 
C) Willingness and ability of people to work at alternative wage rates. 
D) Minimum wage rate. 
A) Total number of people who want to work. 
B) Number of available jobs. 
C) Willingness and ability of people to work at alternative wage rates. 
D) Minimum wage rate. B

Question 2

The willingness of firms to hire labor is represented by the market labor demand curve.

Accepted Answer

A) True 
 B)False  True

Question 3

Discuss the impact of unions on relative wages (that is,compare the wages of union workers with those of nonunion workers).

Accepted Answer

As a result of union efforts to limit the supply of labor in certain industries,excluded workers have had to move to nonunion industries.The effect of these movements has been to raise wages in unionized industries and lower wages in nonunionized industries.There is a general consensus that unions have increased the relative wages of unionized workers by 15 to 20 percent.

Question 4

The decline in unionization can be explained by all of the following except

Accepted Answer

A) Increased worldwide investment barriers. 
B) Increased global competition. 
C) Downsizing of major corporations. 
D) A relative decline in manufacturing. 
A) Increased worldwide investment barriers. 
B) Increased global competition. 
C) Downsizing of major corporations. 
D) A relative decline in manufacturing.

Question 5

The labor share of total income is the proportion of total income earned by

Accepted Answer

A) The unionized workforce. 
B) The nonunionized workforce. 
C) All workers. 
D) All households. 
A) The unionized workforce. 
B) The nonunionized workforce. 
C) All workers. 
D) All households.

Question 6

A profit-maximizing monopsonist will hire workers at the point where the marginal factor cost curve intersects the

Accepted Answer

A) Marginal wage curve. 
B) Labor supply curve. 
C) Equilibrium wage. 
D) Marginal revenue product curve. 
A) Marginal wage curve. 
B) Labor supply curve. 
C) Equilibrium wage. 
D) Marginal revenue product curve.

Question 7

From a union's perspective,the optimal level of employment is determined by the intersection of the

Accepted Answer

A) Labor demand curve and the labor supply curve. 
B) Marginal wage curve and the labor supply curve. 
C) Labor demand curve and the marginal wage curve. 
D) Labor demand curve and the marginal factor cost curve. 
A) Labor demand curve and the labor supply curve. 
B) Marginal wage curve and the labor supply curve. 
C) Labor demand curve and the marginal wage curve. 
D) Labor demand curve and the marginal factor cost curve.

Question 8

In determining how much labor union workers will offer,the union concerns itself mainly with the

Accepted Answer

A) Marginal revenue product curve. 
B) Labor demand curve. 
C) Market wage curve. 
D) Marginal wage curve. 
A) Marginal revenue product curve. 
B) Labor demand curve. 
C) Market wage curve. 
D) Marginal wage curve.

Question 9

Which of the following is not true about the wage level in a bilateral monopoly?

Accepted Answer

A) It is determined by negotiation. 
B) It is below the wage where the marginal factor cost curve intersects the labor demand curve. 
C) It is above the wage level where the marginal wage intersects the labor supply curve. 
D) It is determined by supply and demand. 
A) It is determined by negotiation. 
B) It is below the wage where the marginal factor cost curve intersects the labor demand curve. 
C) It is above the wage level where the marginal wage intersects the labor supply curve. 
D) It is determined by supply and demand.

Question 10

In Figure 31.2,what is the difference between the marginal revenue product of the last worker hired by the monopsonist and the wages the monopsonist pays the last worker?

Accepted Answer

A) $3 per hour. 
B) $5 per hour. 
C) $4 per hour. 
D) $2 per hour. 
A) $3 per hour. 
B) $5 per hour. 
C) $4 per hour. 
D) $2 per hour.

Question 11

The United Farm Workers have been unsuccessful for decades in their attempts to organize California's strawberry pickers because the workers

Accepted Answer

A) Know that replacement workers are readily available. 
B) Don't care about earning higher wages. 
C) Don't understand English. 
D) Are members of a union shop. 
A) Know that replacement workers are readily available. 
B) Don't care about earning higher wages. 
C) Don't understand English. 
D) Are members of a union shop.

Question 12

Table 31.1 $$\begin{array} { | r | c | c | c | } 
\hline \begin{array} { c } 
\text { Wage rate (dollars } \
\text { per hour) }
\end{array} & \begin{array} { c } 
\text { Labor demanded } \
\text { (workers) }
\end{array} & \begin{array} { c } 
\text { Total labor cost } \
\text { (dollars per hour) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Wage (dollars per } \
\text { worker) }
\end{array} \
\hline \$ 26 & 0 & & \text { - } \
\hline 24 & 2 & & \
\hline 18 & 4 & & \
\hline 14 & 6 & & \
\hline 10 & 8 & & \
\hline
\end{array}$$ Table 31.1 shows the number of workers a firm is willing to hire per hour at different wage rates.Complete the table by computing the total wage bill (total labor cost)and the marginal wage.Assume the union collects dues of 1 percent of the total wage bill.At what wage in Table 31.1 would the union maximize the amount of dues it collects?

Accepted Answer

A) $10 per hour. 
B) $14 per hour. 
C) $18 per hour. 
D) $22 per hour. 
A) $10 per hour. 
B) $14 per hour. 
C) $18 per hour. 
D) $22 per hour.

Question 13

Effective labor unions have an impact on prices of goods their workers produce.

Accepted Answer

A) True 
 B)False

Question 14

A monopsonist will hire fewer workers at a lower wage rate than would prevail in a competitive market.

Accepted Answer

A) True 
 B)False

Question 15

A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is

Accepted Answer

A) Inelastic. 
B) Elastic. 
C) Unitary. 
D) Perfectly elastic. 
A) Inelastic. 
B) Elastic. 
C) Unitary. 
D) Perfectly elastic.

Question 16

If there are many employers in a market and each has limited market power,the demand for labor is likely to be characterized as

Accepted Answer

A) Competitive. 
B) Monopsonistic. 
C) Oligopolistic. 
D) Monopolistic. 
A) Competitive. 
B) Monopsonistic. 
C) Oligopolistic. 
D) Monopolistic.

Question 17

In order to increase their power,unions have been merging across craft and industry lines.

Accepted Answer

A) True 
 B)False

Question 18

The wage rate that a monopsonist would find most profitable is the wage

Accepted Answer

A) At the intersection of the marginal wage curve and the marginal cost curve. 
B) On the labor supply curve corresponding to the level of employment at which the marginal factor cost curve (for labor)intersects the labor demand curve. 
C) On the labor demand curve corresponding to the level of employment at which the marginal factor cost equals market supply. 
D) On the labor demand curve at the wage where the marginal factor cost curve intersects the demand curve for labor. 
A) At the intersection of the marginal wage curve and the marginal cost curve. 
B) On the labor supply curve corresponding to the level of employment at which the marginal factor cost curve (for labor)intersects the labor demand curve. 
C) On the labor demand curve corresponding to the level of employment at which the marginal factor cost equals market supply. 
D) On the labor demand curve at the wage where the marginal factor cost curve intersects the demand curve for labor.

Question 19

In equilibrium,the monopsonist's labor demand will

Accepted Answer

A) Exceed labor supply. 
B) Be greater than the marginal factor cost. 
C) Equal labor supply. 
D) Be less than the marginal factor cost. 
A) Exceed labor supply. 
B) Be greater than the marginal factor cost. 
C) Equal labor supply. 
D) Be less than the marginal factor cost.

Question 20

The percentage of the labor force that belongs to a union is known as the

Accepted Answer

A) Union share rate. 
B) Unionization rate. 
C) Union participation rate. 
D) Unionized percentage rate. 
A) Union share rate. 
B) Unionization rate. 
C) Union participation rate. 
D) Unionized percentage rate.

Exam 31: Labor Unions

The demand for labor determines the

The willingness of firms to hire labor is represented by the market labor demand curve.

Discuss the impact of unions on relative wages (that is,compare the wages of union workers with those of nonunion workers).

The decline in unionization can be explained by all of the following except

The labor share of total income is the proportion of total income earned by

A profit-maximizing monopsonist will hire workers at the point where the marginal factor cost curve intersects the

From a union's perspective,the optimal level of employment is determined by the intersection of the

In determining how much labor union workers will offer,the union concerns itself mainly with the

Which of the following is not true about the wage level in a bilateral monopoly?

In Figure 31.2,what is the difference between the marginal revenue product of the last worker hired by the monopsonist and the wages the monopsonist pays the last worker?

The United Farm Workers have been unsuccessful for decades in their attempts to organize California's strawberry pickers because the workers

Effective labor unions have an impact on prices of goods their workers produce.

A monopsonist will hire fewer workers at a lower wage rate than would prevail in a competitive market.

A firm that attempts to pass along the cost of higher union wages to consumers in the form of higher prices will be more successful if the price elasticity of demand for its product is

If there are many employers in a market and each has limited market power,the demand for labor is likely to be characterized as

In order to increase their power,unions have been merging across craft and industry lines.

The wage rate that a monopsonist would find most profitable is the wage

In equilibrium,the monopsonist's labor demand will

The percentage of the labor force that belongs to a union is known as the

Economics: the Core Issues

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Theory Versus Reality

Consumer Choice

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