Question 1

Which statement is correct?

Accepted Answer

A) The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage. 
B) The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage. 
C) The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage. 
D) The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage. 
A) The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage. 
B) The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage. 
C) The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage. 
D) The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

Question 2

Human capital is best defined as

Accepted Answer

A) the productive skills and knowledge that workers acquire from education and training. 
B) the substitution of labor for machinery in the production process. 
C) any piece of machinery that must be combined with labor to be productive. 
D) the exchange of money for real assets. 
A) the productive skills and knowledge that workers acquire from education and training. 
B) the substitution of labor for machinery in the production process. 
C) any piece of machinery that must be combined with labor to be productive. 
D) the exchange of money for real assets.

Question 3

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Accepted Answer

A) wage rate or price of labor. 
B) price of the product. 
C) marginal cost of one extra unit of output. 
D) average cost of each unit of output. 
A) wage rate or price of labor. 
B) price of the product. 
C) marginal cost of one extra unit of output. 
D) average cost of each unit of output.

Question 4

The principal-agent problem, as applied to the labor market, would have the

Accepted Answer

A) employer as the agent and the worker as the principal. 
B) employer as the principal and the worker as the agent. 
C) employer and worker as the principals, and the customer as the agent. 
D) customer as the principal, and the employer and worker as the agents. 
A) employer as the agent and the worker as the principal. 
B) employer as the principal and the worker as the agent. 
C) employer and worker as the principals, and the customer as the agent. 
D) customer as the principal, and the employer and worker as the agents.

Question 5

In monopsony,

Accepted Answer

A) each firm employs a small portion of the total supply of labor. 
B) the workforce is highly mobile. 
C) the wage rate paid by the employer varies directly with the number of workers employed. 
D) the employer is a "wage taker." 
A) each firm employs a small portion of the total supply of labor. 
B) the workforce is highly mobile. 
C) the wage rate paid by the employer varies directly with the number of workers employed. 
D) the employer is a "wage taker."

Question 6

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Accepted Answer

A) results in a less-experienced workforce. 
B) increases the incentive for firms to provide training to their workers. 
C) allows firms to employ a greater number of younger, more energetic workers. 
D) increases the incentive for firms to substitute labor for capital in the production process. 
A) results in a less-experienced workforce. 
B) increases the incentive for firms to provide training to their workers. 
C) allows firms to employ a greater number of younger, more energetic workers. 
D) increases the incentive for firms to substitute labor for capital in the production process.

Question 7

Critics of minimum-wage legislation argue that it

Accepted Answer

A) keeps inefficient producers in business. 
B) reduces employment. 
C) undermines incentives to work. 
D) is deflationary. 
A) keeps inefficient producers in business. 
B) reduces employment. 
C) undermines incentives to work. 
D) is deflationary.

Question 8

Labor unions may attempt to raise wage rates by

Accepted Answer

A) increasing the supply of labor. 
B) forcing employers, under the threat of a strike, to pay above-equilibrium wage rates. 
C) decreasing the demand for labor. 
D) increasing the price of complementary resources. 
A) increasing the supply of labor. 
B) forcing employers, under the threat of a strike, to pay above-equilibrium wage rates. 
C) decreasing the demand for labor. 
D) increasing the price of complementary resources.

Question 9

In 2015, the U.S.unionization rate was

Accepted Answer

A) 5.5 percent, down by nearly one-half from the rate in the mid-1950s. 
B) 16.4 percent, up by about one-fourth from the rate in the mid-1950s. 
C) 11.1 percent, down by more than one-half from the rate in the mid-1950s. 
D) 22 percent, down by 3 percentage points from the mid-1950s. 
A) 5.5 percent, down by nearly one-half from the rate in the mid-1950s. 
B) 16.4 percent, up by about one-fourth from the rate in the mid-1950s. 
C) 11.1 percent, down by more than one-half from the rate in the mid-1950s. 
D) 22 percent, down by 3 percentage points from the mid-1950s.

Question 10

Some economists claim that unions reduce economic efficiency by

Accepted Answer

A) providing a voice mechanism for workers. 
B) insisting that promotions be based on ability rather than seniority. 
C) imposing restrictions on the kinds of jobs workers may perform. 
D) increasing worker turnover. 
A) providing a voice mechanism for workers. 
B) insisting that promotions be based on ability rather than seniority. 
C) imposing restrictions on the kinds of jobs workers may perform. 
D) increasing worker turnover.

Question 11

One clear effect of labor unions is an increase in the wage rates of their members.

Accepted Answer

A) True 
 B)False

Question 12

A bilateral monopoly is a situation where a firm is

Accepted Answer

A) a monopoly in its product market and is a monopsony in its labor market. 
B) the only employer of a resource and is acquiring that resource from a single supplier. 
C) one of only two firms that produce a particular product. 
D) the only buyer of a resource and also the only seller of a product. 
A) a monopoly in its product market and is a monopsony in its labor market. 
B) the only employer of a resource and is acquiring that resource from a single supplier. 
C) one of only two firms that produce a particular product. 
D) the only buyer of a resource and also the only seller of a product.

Question 13

If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market,

Accepted Answer

A) the resulting wage rate will always be above the competitive level. 
B) employment may either increase or decrease. 
C) employment will increase. 
D) employment will decrease. 
A) the resulting wage rate will always be above the competitive level. 
B) employment may either increase or decrease. 
C) employment will increase. 
D) employment will decrease.

Question 14

African Americans have higher unionization rates than whites.

Accepted Answer

A) True 
 B)False

Question 15

Economists regard expenditures on education as investments because

Accepted Answer

A) they are subject to tax deductions at the same rate as are expenditures on machinery and equipment. 
B) education is economically beneficial at the same time it is being acquired. 
C) such expenditures are current costs that are intended to enhance future earnings. 
D) they differ from expenditures on health and worker mobility. 
A) they are subject to tax deductions at the same rate as are expenditures on machinery and equipment. 
B) education is economically beneficial at the same time it is being acquired. 
C) such expenditures are current costs that are intended to enhance future earnings. 
D) they differ from expenditures on health and worker mobility.

Question 16

According to the U.S.Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

Accepted Answer

A) surgeons 
B) financial managers 
C) petroleum engineers 
D) law professors 
A) surgeons 
B) financial managers 
C) petroleum engineers 
D) law professors

Question 17

Efficiency wages are established at below-equilibrium levels.

Accepted Answer

A) True 
 B)False

Question 18

Other things being equal, the wages of clerical workers would tend to decrease if there was an increase in

Accepted Answer

A) the marginal revenue product of clerical workers. 
B) the minimum entry requirements for clerical work. 
C) the period of training required for clerical work. 
D) nonmonetary benefits available to clerical workers. 
A) the marginal revenue product of clerical workers. 
B) the minimum entry requirements for clerical work. 
C) the period of training required for clerical work. 
D) nonmonetary benefits available to clerical workers.

Question 19

The critical feature of a monopsonistic labor market is that the employer

Accepted Answer

A) has a perfectly elastic demand curve for labor. 
B) can hire any number of workers it chooses at the going wage rate. 
C) faces an upsloping labor supply curve. 
D) faces a perfectly inelastic labor supply curve. 
A) has a perfectly elastic demand curve for labor. 
B) can hire any number of workers it chooses at the going wage rate. 
C) faces an upsloping labor supply curve. 
D) faces a perfectly inelastic labor supply curve.

Question 20

(Last Word) Which of the following statements is true about occupational licensing in the United States?

Accepted Answer

A) In the 1950s only about 5 percent of jobs required an occupational license; today about one-third of jobs require a license. 
B) The proportion of jobs requiring occupational licenses has remained relatively stable since the 1950s. 
C) Occupational licensing benefits consumers by reducing firms' costs and lowering output prices. 
D) Occupational licensing enhances employment opportunities for poorer workers. 
A) In the 1950s only about 5 percent of jobs required an occupational license; today about one-third of jobs require a license. 
B) The proportion of jobs requiring occupational licenses has remained relatively stable since the 1950s. 
C) Occupational licensing benefits consumers by reducing firms' costs and lowering output prices. 
D) Occupational licensing enhances employment opportunities for poorer workers.

Exam 17: Wage Determination

Which statement is correct?

Human capital is best defined as

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

The principal-agent problem, as applied to the labor market, would have the

In monopsony,

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Critics of minimum-wage legislation argue that it

Labor unions may attempt to raise wage rates by

In 2015, the U.S.unionization rate was

Some economists claim that unions reduce economic efficiency by

One clear effect of labor unions is an increase in the wage rates of their members.

A bilateral monopoly is a situation where a firm is

If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market,

African Americans have higher unionization rates than whites.

Economists regard expenditures on education as investments because

According to the U.S.Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

Efficiency wages are established at below-equilibrium levels.

Other things being equal, the wages of clerical workers would tend to decrease if there was an increase in

The critical feature of a monopsonistic labor market is that the employer

(Last Word) Which of the following statements is true about occupational licensing in the United States?

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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