Question 1

The concept of investment in human capital indicates that

Accepted Answer

A) union workers are better educated and more productive than nonunion workers. 
B) expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment. 
C) worker productivity correlates negatively with annual earnings. 
D) the level of education is unrelated to the level of one's income. 
A) union workers are better educated and more productive than nonunion workers. 
B) expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment. 
C) worker productivity correlates negatively with annual earnings. 
D) the level of education is unrelated to the level of one's income.

Question 2

Craft unions have typically been most effective in raising wage rates by

Accepted Answer

A) legislating a minimum wage rate above the competitive equilibrium level. 
B) increasing the demand for labor of union members. 
C) decreasing the supply of labor through licensing and training requirements. 
D) organizing all of the employees in a factory or industry and demanding wage hikes. 
A) legislating a minimum wage rate above the competitive equilibrium level. 
B) increasing the demand for labor of union members. 
C) decreasing the supply of labor through licensing and training requirements. 
D) organizing all of the employees in a factory or industry and demanding wage hikes.

Question 3

The consumer price index is 113 in Year 1 and 118 in Year 2.The nominal wage rate is $8 in Year 1 and $9 in Year 2.What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

Accepted Answer

A) 2 percent 
B) 4 percent 
C) 6 percent 
D) 8 percent 
A) 2 percent 
B) 4 percent 
C) 6 percent 
D) 8 percent

Question 4

In a labor dispute in which the existing contract has expired, a

Accepted Answer

A) firm can legally lock up unruly workers. 
B) firm can legally lock out union workers. 
C) union can legally restrict customer access to the firm. 
D) union can legally restrict physical access by management to the firm. 
A) firm can legally lock up unruly workers. 
B) firm can legally lock out union workers. 
C) union can legally restrict customer access to the firm. 
D) union can legally restrict physical access by management to the firm.

Question 5

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal resource cost equals the wage rate.

Accepted Answer

A) True 
 B)False

Question 6

Craft unions

Accepted Answer

A) attempt to organize workers at all skill levels in a firm or industry. 
B) have been declared illegal by federal legislation. 
C) only organize workers who have a particular set of skills. 
D) attempt to increase the supply of their particular type of labor. 
A) attempt to organize workers at all skill levels in a firm or industry. 
B) have been declared illegal by federal legislation. 
C) only organize workers who have a particular set of skills. 
D) attempt to increase the supply of their particular type of labor.

Question 7

A bilateral monopoly situation is one where a

Accepted Answer

A) single firm is a monopolist in two different markets. 
B) market is effectively split between two exclusive monopolies. 
C) monopolistic seller faces a monopsonistic buyer. 
D) firm is a monopoly in the product market and a monopsony in the labor market. 
A) single firm is a monopolist in two different markets. 
B) market is effectively split between two exclusive monopolies. 
C) monopolistic seller faces a monopsonistic buyer. 
D) firm is a monopoly in the product market and a monopsony in the labor market.

Question 8

Real wages in the United States in the long run

Accepted Answer

A) show no discernible relationship to output per worker. 
B) have increased at about the same rate as increases in output per worker. 
C) have increased slower than increases in output per worker. 
D) have increased faster than increases in output per worker. 
A) show no discernible relationship to output per worker. 
B) have increased at about the same rate as increases in output per worker. 
C) have increased slower than increases in output per worker. 
D) have increased faster than increases in output per worker.

Question 9

Authoritative estimates suggest that currently union workers on the average

Accepted Answer

A) achieve no wage advantage over nonunion workers in the same occupation. 
B) realize a 5 percent wage advantage over nonunion workers in the same occupation. 
C) realize a 20-30 percent wage advantage over nonunion workers in the same occupation. 
D) realize a 15 percent wage advantage over nonunion workers in the same occupation. 
A) achieve no wage advantage over nonunion workers in the same occupation. 
B) realize a 5 percent wage advantage over nonunion workers in the same occupation. 
C) realize a 20-30 percent wage advantage over nonunion workers in the same occupation. 
D) realize a 15 percent wage advantage over nonunion workers in the same occupation.

Question 10

Which of the following is not a major reason for the decline of unionism in the U.S.?

Accepted Answer

A) Employment has shifted away from manufacturing toward services. 
B) Management has greatly intensified its opposition to unions. 
C) Consumer demand has shifted toward foreign manufactured goods and away from union-produced domestic goods. 
D) Nonunion firms continue to have poor working conditions. 
A) Employment has shifted away from manufacturing toward services. 
B) Management has greatly intensified its opposition to unions. 
C) Consumer demand has shifted toward foreign manufactured goods and away from union-produced domestic goods. 
D) Nonunion firms continue to have poor working conditions.

Question 11

According to age-earnings data,

Accepted Answer

A) lower-educated workers have similar earnings at age 65 as higher-educated workers. 
B) investments in education result in higher earnings. 
C) high earnings are due to motivation and innate ability, rather than education. 
D) there is no clear relationship between education and worker productivity. 
A) lower-educated workers have similar earnings at age 65 as higher-educated workers. 
B) investments in education result in higher earnings. 
C) high earnings are due to motivation and innate ability, rather than education. 
D) there is no clear relationship between education and worker productivity.

Question 12

A monopsonistic employer

Accepted Answer

A) has a perfectly elastic labor supply curve. 
B) is necessarily a monopolist in the product market. 
C) faces a marginal resource (labor) cost that is greater than the wage rate. 
D) faces a marginal resource (labor) cost that is less than the wage rate. 
A) has a perfectly elastic labor supply curve. 
B) is necessarily a monopolist in the product market. 
C) faces a marginal resource (labor) cost that is greater than the wage rate. 
D) faces a marginal resource (labor) cost that is less than the wage rate.

Question 13

The best example of an industrial union is the

Accepted Answer

A) United Association of Plumbers and Pipefitters. 
B) International Brotherhood of Electrical Workers. 
C) American Medical Association. 
D) United Auto Workers. 
A) United Association of Plumbers and Pipefitters. 
B) International Brotherhood of Electrical Workers. 
C) American Medical Association. 
D) United Auto Workers.

Question 14

Why do skilled workers generally earn more than unskilled workers?

Accepted Answer

A) The demand for unskilled labor is more inelastic than the demand for skilled labor. 
B) Skilled labor has higher marginal revenue products than unskilled labor. 
C) The demand for unskilled labor is greater than the demand for skilled labor. 
D) The supply of skilled labor is greater than the supply of unskilled labor. 
A) The demand for unskilled labor is more inelastic than the demand for skilled labor. 
B) Skilled labor has higher marginal revenue products than unskilled labor. 
C) The demand for unskilled labor is greater than the demand for skilled labor. 
D) The supply of skilled labor is greater than the supply of unskilled labor.

Question 15

According to proponents of human capital theory, education

Accepted Answer

A) increases a worker's productivity. 
B) identifies more productive workers for employers, but does not directly increase productivity. 
C) should result in all workers with college degrees earning more than all workers who hold only high school diplomas. 
D) is an investment with primarily higher returns and lower risks than those available through investments in physical or financial capital. 
A) increases a worker's productivity. 
B) identifies more productive workers for employers, but does not directly increase productivity. 
C) should result in all workers with college degrees earning more than all workers who hold only high school diplomas. 
D) is an investment with primarily higher returns and lower risks than those available through investments in physical or financial capital.

Question 16

A bilateral monopoly case is a situation where two monopolists in two countries are selling competing products in the world market.

Accepted Answer

A) True 
 B)False

Question 17

Nominal monthly wages increase from $1,500 to $1,800, while the price level increases by 4 percent.The percentage change in real monthly wages is about

Accepted Answer

A) 10 percent. 
B) 12 percent. 
C) 14 percent. 
D) 16 percent. 
A) 10 percent. 
B) 12 percent. 
C) 14 percent. 
D) 16 percent.

Question 18

There will be no principal-agent problem if a firm's owner (like a business consultant) does all the work of the firm.

Accepted Answer

A) True 
 B)False

Question 19

Models that analyze how labor unions attempt to raise wage rates include the following, except the

Accepted Answer

A) demand-enhancement model. 
B) exclusive union model. 
C) industrial union model. 
D) credit union model. 
A) demand-enhancement model. 
B) exclusive union model. 
C) industrial union model. 
D) credit union model.

Question 20

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

Accepted Answer

A) increase unemployment in the labor market. 
B) increase firms' demand for labor. 
C) decrease the supply of labor. 
D) cause firms to substitute labor for capital. 
A) increase unemployment in the labor market. 
B) increase firms' demand for labor. 
C) decrease the supply of labor. 
D) cause firms to substitute labor for capital.

Exam 17: Wage Determination

The concept of investment in human capital indicates that

Craft unions have typically been most effective in raising wage rates by

The consumer price index is 113 in Year 1 and 118 in Year 2.The nominal wage rate is $8 in Year 1 and $9 in Year 2.What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

In a labor dispute in which the existing contract has expired, a

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal resource cost equals the wage rate.

Craft unions

A bilateral monopoly situation is one where a

Real wages in the United States in the long run

Authoritative estimates suggest that currently union workers on the average

Which of the following is not a major reason for the decline of unionism in the U.S.?

According to age-earnings data,

A monopsonistic employer

The best example of an industrial union is the

Why do skilled workers generally earn more than unskilled workers?

According to proponents of human capital theory, education

A bilateral monopoly case is a situation where two monopolists in two countries are selling competing products in the world market.

Nominal monthly wages increase from $1,500 to $1,800, while the price level increases by 4 percent.The percentage change in real monthly wages is about

There will be no principal-agent problem if a firm's owner (like a business consultant) does all the work of the firm.

Models that analyze how labor unions attempt to raise wage rates include the following, except the

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

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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