Question 1

What relationship exists between marginal factor cost (MFC)and wage for a monopsony firm? Explain why this is so.

Accepted Answer

MFC is greater than wage for a monopsony

Question 2

Exhibit 28-12
  
-Refer to Exhibit 28-12.As the firm increases employment from 4 to 5 workers,its marginal factor cost (MFC)is

Accepted Answer

A)  $13. 
B)  $15. 
C)  $5.60. 
D)  $28. 
A)  $13. 
B)  $15. 
C)  $5.60. 
D)  $28.

Question 3

A monopsonist's wage rate is

Accepted Answer

A)  the same as marginal factor cost. 
B)  greater than marginal factor cost. 
C)  less than marginal factor cost. 
D)  the same as marginal revenue product. 
E)  a and d 
A)  the same as marginal factor cost. 
B)  greater than marginal factor cost. 
C)  less than marginal factor cost. 
D)  the same as marginal revenue product. 
E)  a and d

Question 4

In the case of a monopsony,higher wage rates (over some range)do not necessarily imply fewer persons working.

Accepted Answer

A) True 
 B)False

Question 5

In the United States,the percentage of national income that goes to labor (union plus nonunion)was higher when union membership was relatively high and unions were strong,compared to when union membership was relatively low.

Accepted Answer

A) True 
 B)False

Question 6

Labor union A faces a greater cutback in labor for a given wage increase than does labor union B.It follows that the

Accepted Answer

A)  demand for workers in labor union A is greater than the demand for workers in labor union B. 
B)  elasticity of demand for workers in labor union B is greater than the elasticity of demand for workers in labor union A. 
C)  demand for workers in labor union B is greater than the demand for workers in labor union A. 
D)  elasticity of demand for workers in labor union A is greater than the elasticity of demand for workers in labor union B. 
E)  a and d 
A)  demand for workers in labor union A is greater than the demand for workers in labor union B. 
B)  elasticity of demand for workers in labor union B is greater than the elasticity of demand for workers in labor union A. 
C)  demand for workers in labor union B is greater than the demand for workers in labor union A. 
D)  elasticity of demand for workers in labor union A is greater than the elasticity of demand for workers in labor union B. 
E)  a and d

Question 7

Exhibit 28-8
  
-Refer to Exhibit 28-8.In the absence of collective bargaining,what quantity of labor would the profit-maximizing monoposonist hire?

Accepted Answer

A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 
E)  Q5 
A)  Q1 
B)  Q2 
C)  Q3 
D)  Q4 
E)  Q5

Question 8

Among the stated objectives of the National Collegiate Athletic Association (NCAA)regulations is to

Accepted Answer

A)  maintain the amateur standing of college athletes. 
B)  prevent schools with more money from getting all of the good players. 
C)  enhance the competitiveness of college sports. 
D)  all of the above 
A)  maintain the amateur standing of college athletes. 
B)  prevent schools with more money from getting all of the good players. 
C)  enhance the competitiveness of college sports. 
D)  all of the above

Question 9

Exhibit 28-7
  
-Refer to Exhibit 28-7.For each quantity of labor hired (after the first worker),marginal factor cost (MFC)will

Accepted Answer

A)  be less than column (2). 
B)  exceed column (2). 
C)  be less than column (3). 
D)  exceed column (3). 
E)  b and d 
A)  be less than column (2). 
B)  exceed column (2). 
C)  be less than column (3). 
D)  exceed column (3). 
E)  b and d

Question 10

Which of the following statements is true?

Accepted Answer

A)  The union-as-collective-voice view of the labor union holds that labor unions have a negative impact on productivity and efficiency. 
B)  The traditional view of the labor union is that the union acts as a collective voice for workers and probably leads to lower quit rates (among employees). 
C)  The union-as-collective-voice view of the labor union holds that labor unions often have unnecessary staffing requirements, which means that they insist that only certain persons be allowed to do certain jobs. 
D)  b and c 
E)  none of the above 
A)  The union-as-collective-voice view of the labor union holds that labor unions have a negative impact on productivity and efficiency. 
B)  The traditional view of the labor union is that the union acts as a collective voice for workers and probably leads to lower quit rates (among employees). 
C)  The union-as-collective-voice view of the labor union holds that labor unions often have unnecessary staffing requirements, which means that they insist that only certain persons be allowed to do certain jobs. 
D)  b and c 
E)  none of the above

Question 11

Exhibit 28-10
  
-Refer to Exhibit 28-10.If the firm in the exhibit is a monopsony,it will hire __________ quantity of labor and pay its workers the wage rate of __________.

Accepted Answer

A)  Q2; W3 
B)  Q2; W1 
C)  Q1; W2 
D)  Q1; W4 
E)  none of the above 
A)  Q2; W3 
B)  Q2; W1 
C)  Q1; W2 
D)  Q1; W4 
E)  none of the above

Question 12

"Collective bargaining" refers to

Accepted Answer

A)  negotiations between labor unions and management about wage rates and other issues. 
B)  negotiations among labor unions over jurisdictional control. 
C)  negotiations between labor, management, and government over the drafting of labor laws. 
D)  b and c 
E)  none of the above 
A)  negotiations between labor unions and management about wage rates and other issues. 
B)  negotiations among labor unions over jurisdictional control. 
C)  negotiations between labor, management, and government over the drafting of labor laws. 
D)  b and c 
E)  none of the above

Question 13

Exhibit 28-8
  
-Refer to Exhibit 28-8.In the absence of collective bargaining,what wage rate would the profit-maximizing monoposonist pay?

Accepted Answer

A)  W1 
B)  W2 
C)  W3 
D)  W4 
E)  W5 
A)  W1 
B)  W2 
C)  W3 
D)  W4 
E)  W5

Question 14

Exhibit 28-8
  
-Refer to Exhibit 28-8.Suppose that initially there is no collective bargaining and the monoposonist maximizes profit.Then the workers form a union and negotiate a wage of W?.What will happen to the total wage bill?

Accepted Answer

A)  It will definitely rise. 
B)  It will definitely fall. 
C)  It will definitely stay the same. 
D)  It may rise, fall, or remain the same. 
A)  It will definitely rise. 
B)  It will definitely fall. 
C)  It will definitely stay the same. 
D)  It may rise, fall, or remain the same.

Question 15

Exhibit 28-6
  
-Unions typically argue that state right-to-work laws

Accepted Answer

A)  are unfair. 
B)  constrain unions' abilities to control the supply of labor in a market. 
C)  are inconsistent with the Taft-Hartley Act. 
D)  legalize union shops. 
A)  are unfair. 
B)  constrain unions' abilities to control the supply of labor in a market. 
C)  are inconsistent with the Taft-Hartley Act. 
D)  legalize union shops.

Question 16

Exhibit 28-12
  
-Refer to Exhibit 28-12.For each quantity of labor hired (after the first worker),marginal factor cost will be

Accepted Answer

A)  less than the corresponding amount in column (2). 
B)  greater than the corresponding amount in column (2). 
C)  less than the corresponding amount in column (3). 
D)  greater than the corresponding amount in column (3). 
E)  b and d 
A)  less than the corresponding amount in column (2). 
B)  greater than the corresponding amount in column (2). 
C)  less than the corresponding amount in column (3). 
D)  greater than the corresponding amount in column (3). 
E)  b and d

Question 17

Which of the following is false?

Accepted Answer

A)  The evidence seems to show that there are only a few, if any, instances of pure monopsony in the real world. 
B)  In a monopsony setting, it is possible for a minimum wage to actually increase the number of workers hired. 
C)  Although in a monopsony setting it is possible for a minimum wage to actually increase the number of workers hired, it is not possible to raise wage rates continually and always increase employment, too. 
D)  The marginal factor cost for a monopsonist is less than the wage rate it pays workers. 
A)  The evidence seems to show that there are only a few, if any, instances of pure monopsony in the real world. 
B)  In a monopsony setting, it is possible for a minimum wage to actually increase the number of workers hired. 
C)  Although in a monopsony setting it is possible for a minimum wage to actually increase the number of workers hired, it is not possible to raise wage rates continually and always increase employment, too. 
D)  The marginal factor cost for a monopsonist is less than the wage rate it pays workers.

Question 18

Exhibit 28-11
  
-Refer to Exhibit 28-11.The firm in the exhibit is a monopsony.We have deliberately not identified the three curves in the exhibit.They are simply curves 1,2,and 3.If (union)collective bargaining with the monopsony guarantees the wage rate that workers will be paid is W2,then the factor supply curve is

Accepted Answer

A)  curve 2. 
B)  curve 3. 
C)  the curve that starts at W2, goes to point B, then down to point C, then moves up curve 2. 
D)  the curve that starts at W2, goes to point D, and then moves up curve 2. 
E)  the curve that starts at W2 and goes to point D. 
A)  curve 2. 
B)  curve 3. 
C)  the curve that starts at W2, goes to point B, then down to point C, then moves up curve 2. 
D)  the curve that starts at W2, goes to point D, and then moves up curve 2. 
E)  the curve that starts at W2 and goes to point D.

Question 19

Exhibit 28-7
  
-Refer to Exhibit 28-7.As the firm increases employment from 30 to 40 workers,its total labor cost

Accepted Answer

A)  decreases by $190. 
B)  increases by $160. 
C)  increases by $60. 
D)  increases by $100. 
A)  decreases by $190. 
B)  increases by $160. 
C)  increases by $60. 
D)  increases by $100.

Question 20

A monopsonist firm faces an upward sloping supply of labor curve and its marginal factor cost curve lies below its labor supply curve.

Accepted Answer

A) True 
 B)False

Exam 28: Wages,Unions,and Labor

What relationship exists between marginal factor cost (MFC)and wage for a monopsony firm? Explain why this is so.

Exhibit 28-12 -Refer to Exhibit 28-12.As the firm increases employment from 4 to 5 workers,its marginal factor cost (MFC)is

A monopsonist's wage rate is

In the case of a monopsony,higher wage rates (over some range)do not necessarily imply fewer persons working.

In the United States,the percentage of national income that goes to labor (union plus nonunion)was higher when union membership was relatively high and unions were strong,compared to when union membership was relatively low.

Labor union A faces a greater cutback in labor for a given wage increase than does labor union B.It follows that the

Exhibit 28-8 -Refer to Exhibit 28-8.In the absence of collective bargaining,what quantity of labor would the profit-maximizing monoposonist hire?

Among the stated objectives of the National Collegiate Athletic Association (NCAA)regulations is to

Exhibit 28-7 -Refer to Exhibit 28-7.For each quantity of labor hired (after the first worker),marginal factor cost (MFC)will

Which of the following statements is true?

Exhibit 28-10 -Refer to Exhibit 28-10.If the firm in the exhibit is a monopsony,it will hire __________ quantity of labor and pay its workers the wage rate of __________.

"Collective bargaining" refers to

Exhibit 28-8 -Refer to Exhibit 28-8.In the absence of collective bargaining,what wage rate would the profit-maximizing monoposonist pay?

Exhibit 28-8 -Refer to Exhibit 28-8.Suppose that initially there is no collective bargaining and the monoposonist maximizes profit.Then the workers form a union and negotiate a wage of W?.What will happen to the total wage bill?

Exhibit 28-6 -Unions typically argue that state right-to-work laws

Exhibit 28-12 -Refer to Exhibit 28-12.For each quantity of labor hired (after the first worker),marginal factor cost will be

Which of the following is false?

Exhibit 28-7 -Refer to Exhibit 28-7.As the firm increases employment from 30 to 40 workers,its total labor cost

A monopsonist firm faces an upward sloping supply of labor curve and its marginal factor cost curve lies below its labor supply curve.

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Exhibit 28-10 -Refer to Exhibit 28-10.If the firm in the exhibit is a monopsony,it will hire quantity of labor and pay its workers the wage rate of .