Question 1

The principal-agent problem in labor markets arises because of the possibility of shirking by workers.

Accepted Answer

A) True 
 B)False  True

Question 2

Many economists are critical of the minimum wage because they believe that it

Accepted Answer

A) hurts the efforts of labor unions. 
B) reduces the number of available job opportunities. 
C) conflicts with policies designed to equalize the distribution of income. 
D) causes labor shortages in affected markets. 
A) hurts the efforts of labor unions. 
B) reduces the number of available job opportunities. 
C) conflicts with policies designed to equalize the distribution of income. 
D) causes labor shortages in affected markets. B

Question 3

In recent years, total compensation to workers has risen faster than the take-home pay of average workers.This implies that

Accepted Answer

A) something is wrong with the statistics on either compensation or take-home pay. 
B) fringe benefits have become a larger share of total worker compensation. 
C) direct payments have become a larger share of total worker compensation. 
D) workers' pay has been declining slightly in recent years. 
A) something is wrong with the statistics on either compensation or take-home pay. 
B) fringe benefits have become a larger share of total worker compensation. 
C) direct payments have become a larger share of total worker compensation. 
D) workers' pay has been declining slightly in recent years. B

Question 4

Which of the following might be expected to increase union membership?

Accepted Answer

A) increased labor force participation by women and young people 
B) decreased imports of manufactured goods 
C) increased substitution of capital for labor in the production process 
D) continued growth of service-related industries 
A) increased labor force participation by women and young people 
B) decreased imports of manufactured goods 
C) increased substitution of capital for labor in the production process 
D) continued growth of service-related industries

Question 5

A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree.The basic reason for this wage differential is

Accepted Answer

A) efficiency wages. 
B) compensating differences. 
C) investment in human capital. 
D) nonmonetary aspects of work. 
A) efficiency wages. 
B) compensating differences. 
C) investment in human capital. 
D) nonmonetary aspects of work.

Question 6

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Accepted Answer

A) True 
 B)False

Question 7

If an employer has to raise the wage rate of workers in order to employ more labor, then the marginal labor cost curve of the employer

Accepted Answer

A) lies above the supply curve of labor. 
B) is the supply curve of labor that it faces. 
C) lies below the supply curve of labor. 
D) is a downward-sloping curve. 
A) lies above the supply curve of labor. 
B) is the supply curve of labor that it faces. 
C) lies below the supply curve of labor. 
D) is a downward-sloping curve.

Question 8

Professional sports leagues, like the NFL and the NBA, are good examples of monopsony because

Accepted Answer

A) they are dominant providers of sports entertainment. 
B) they are the only employers of professional athletes in their respective sports. 
C) they are large corporations owned be small groups. 
D) they operate large facilities and stadiums. 
A) they are dominant providers of sports entertainment. 
B) they are the only employers of professional athletes in their respective sports. 
C) they are large corporations owned be small groups. 
D) they operate large facilities and stadiums.

Question 9

Since the mid-1950s, union membership has declined as a percentage of employed wage and salary workers.

Accepted Answer

A) True 
 B)False

Question 10

If there is a decrease in the demand for union electrical workers and at the same time there is a drastic cutback in the numbers of electricians trained by the union, then the

Accepted Answer

A) wages of electricians are likely to increase and the quantity employed will decrease. 
B) wages of electricians are likely to increase and the quantity employed will increase. 
C) quantity employed will increase, but the effect on wages is indeterminate. 
D) quantity employed will decrease, but the effect on wages is indeterminate. 
A) wages of electricians are likely to increase and the quantity employed will decrease. 
B) wages of electricians are likely to increase and the quantity employed will increase. 
C) quantity employed will increase, but the effect on wages is indeterminate. 
D) quantity employed will decrease, but the effect on wages is indeterminate.

Question 11

Bilateral monopoly occurs where

Accepted Answer

A) a monopsonistic employer bargains with an inclusive union. 
B) a monopsonistic employer bargains with an exclusive union. 
C) a craft union bargains with a purely competitive employer. 
D) an industrial union bargains with a purely competitive employer. 
A) a monopsonistic employer bargains with an inclusive union. 
B) a monopsonistic employer bargains with an exclusive union. 
C) a craft union bargains with a purely competitive employer. 
D) an industrial union bargains with a purely competitive employer.

Question 12

A union might increase the demand for the labor services of its members by

Accepted Answer

A) decreasing the demand for the product it is producing. 
B) decreasing the prices of complementary inputs. 
C) decreasing the prices of substitute inputs. 
D) increasing the prices of complementary inputs. 
A) decreasing the demand for the product it is producing. 
B) decreasing the prices of complementary inputs. 
C) decreasing the prices of substitute inputs. 
D) increasing the prices of complementary inputs.

Question 13

Wage differentials occur for all the following reasons except

Accepted Answer

A) homogeneous workers. 
B) labor market imperfections. 
C) noncompeting groups of workers. 
D) compensating differences to offset nonmonetary differences in jobs. 
A) homogeneous workers. 
B) labor market imperfections. 
C) noncompeting groups of workers. 
D) compensating differences to offset nonmonetary differences in jobs.

Question 14

In the United States, the rate of unionization is

Accepted Answer

A) higher for sales workers than for transportation workers. 
B) lower for managers than for teachers. 
C) lower for production workers than for sales workers. 
D) higher for social workers than for protective service workers. 
A) higher for sales workers than for transportation workers. 
B) lower for managers than for teachers. 
C) lower for production workers than for sales workers. 
D) higher for social workers than for protective service workers.

Question 15

Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that

Accepted Answer

A) the minimum wage only applies to a small percentage of the labor force. 
B) many who benefit from the minimum wage are teenagers or not poor. 
C) the government has been unable to enforce the minimum wage. 
D) the average level of wages in the economy is considerably higher than the minimum wage. 
A) the minimum wage only applies to a small percentage of the labor force. 
B) many who benefit from the minimum wage are teenagers or not poor. 
C) the government has been unable to enforce the minimum wage. 
D) the average level of wages in the economy is considerably higher than the minimum wage.

Question 16

Traveling sales representative Harold Hill only calls on clients four days a week rather than the five days expected by his employer.This is an example of

Accepted Answer

A) equalizing differences. 
B) a nonmonetary job disadvantage. 
C) shirking. 
D) the free-rider problem. 
A) equalizing differences. 
B) a nonmonetary job disadvantage. 
C) shirking. 
D) the free-rider problem.

Question 17

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is most likely to be an example of monopsony?

Accepted Answer

A) the market for fast-food workers in a large summer resort town 
B) the market for card dealers in Las Vegas 
C) the market for Major League Baseball umpires 
D) the market for retail sales clerks in a major city 
A) the market for fast-food workers in a large summer resort town 
B) the market for card dealers in Las Vegas 
C) the market for Major League Baseball umpires 
D) the market for retail sales clerks in a major city

Question 19

The principal-agent problem as it applies to labor employment refers to

Accepted Answer

A) employer and workers wanting the firm to survive and thrive. 
B) firms having the profit motive, while workers may be shirking on the job. 
C) employers having a problem finding qualified workers. 
D) workers facing a problem finding employment. 
A) employer and workers wanting the firm to survive and thrive. 
B) firms having the profit motive, while workers may be shirking on the job. 
C) employers having a problem finding qualified workers. 
D) workers facing a problem finding employment.

Question 20

(Consider This) Which of the following statements is true about the relationship between take-home pay and fringe benefits for U.S.middle-class workers over the past several decades?

Accepted Answer

A) The ratio of take-home pay to fringe benefits has remained relatively constant. 
B) The ratio of take-home pay to fringe benefits has risen significantly. 
C) The ratio of take-home pay to fringe benefits has fallen significantly. 
D) Both have declined steadily. 
A) The ratio of take-home pay to fringe benefits has remained relatively constant. 
B) The ratio of take-home pay to fringe benefits has risen significantly. 
C) The ratio of take-home pay to fringe benefits has fallen significantly. 
D) Both have declined steadily.

Exam 17: Wage Determination

The principal-agent problem in labor markets arises because of the possibility of shirking by workers.

Many economists are critical of the minimum wage because they believe that it

In recent years, total compensation to workers has risen faster than the take-home pay of average workers.This implies that

Which of the following might be expected to increase union membership?

A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree.The basic reason for this wage differential is

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

If an employer has to raise the wage rate of workers in order to employ more labor, then the marginal labor cost curve of the employer

Professional sports leagues, like the NFL and the NBA, are good examples of monopsony because

Since the mid-1950s, union membership has declined as a percentage of employed wage and salary workers.

If there is a decrease in the demand for union electrical workers and at the same time there is a drastic cutback in the numbers of electricians trained by the union, then the

Bilateral monopoly occurs where

A union might increase the demand for the labor services of its members by

Wage differentials occur for all the following reasons except

In the United States, the rate of unionization is

Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that

Traveling sales representative Harold Hill only calls on clients four days a week rather than the five days expected by his employer.This is an example of

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

Which of the following is most likely to be an example of monopsony?

The principal-agent problem as it applies to labor employment refers to

(Consider This) Which of the following statements is true about the relationship between take-home pay and fringe benefits for U.S.middle-class workers over the past several decades?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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