Question 1

An industry would be likely to lay off workers following

Accepted Answer

A) an increase in the price of the firm's product. 
B) an increase in the marginal revenue product of labor. 
C) the imposition of a new minimum wage below the current equilibrium wage. 
D) an industrial union's push of wages above the MRP of labor. 
A) an increase in the price of the firm's product. 
B) an increase in the marginal revenue product of labor. 
C) the imposition of a new minimum wage below the current equilibrium wage. 
D) an industrial union's push of wages above the MRP of labor.

Question 2

The American Medical Association, a physicians' union, is a good example of a(n)

Accepted Answer

A) demand-enhancing union. 
B) craft union. 
C) inclusive union. 
D) industrial union. 
A) demand-enhancing union. 
B) craft union. 
C) inclusive union. 
D) industrial union.

Question 3

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

Accepted Answer

A) True 
 B)False

Question 4

A firm that hires labor and sells its product both in purely competitive markets will

Accepted Answer

A) have a horizontal demand curve for labor. 
B) face a downward-sloping demand curve for its product. 
C) have a downward-sloping demand curve for labor. 
D) have a horizontal supply curve for its product. 
A) have a horizontal demand curve for labor. 
B) face a downward-sloping demand curve for its product. 
C) have a downward-sloping demand curve for labor. 
D) have a horizontal supply curve for its product.

Question 5

State right-to-work laws

Accepted Answer

A) have been enacted by over one-half of the states in the nation. 
B) make yellow dog contracts illegal. 
C) allow for union shops while prohibiting closed shops. 
D) make union and agency shops illegal. 
A) have been enacted by over one-half of the states in the nation. 
B) make yellow dog contracts illegal. 
C) allow for union shops while prohibiting closed shops. 
D) make union and agency shops illegal.

Question 6

The principal-agent problem arises in labor markets because

Accepted Answer

A) a firm may realize excessively large profits. 
B) workers may provide less-than-expected work effort. 
C) compensating wage differences do not pay for differences in the nonmonetary aspects of jobs. 
D) human capital investments vary among workers. 
A) a firm may realize excessively large profits. 
B) workers may provide less-than-expected work effort. 
C) compensating wage differences do not pay for differences in the nonmonetary aspects of jobs. 
D) human capital investments vary among workers.

Question 7

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Accepted Answer

A) True 
 B)False

Question 8

Occupational licensing laws were originally created to attain the following goals, except to

Accepted Answer

A) protect the consumers in specific markets from harm. 
B) foster trust among customers of service providers in specific industries. 
C) ensure that service providers in certain industries met high standards of expertise. 
D) reduce the supply of service providers in industries that the government wanted to shrink. 
A) protect the consumers in specific markets from harm. 
B) foster trust among customers of service providers in specific industries. 
C) ensure that service providers in certain industries met high standards of expertise. 
D) reduce the supply of service providers in industries that the government wanted to shrink.

Question 9

A profit-maximizing firm will

Accepted Answer

A) expand employment if marginal revenue product equals marginal resource cost. 
B) reduce employment if marginal revenue product equals marginal resource cost. 
C) reduce employment if marginal revenue product is less than marginal resource cost. 
D) expand employment if marginal revenue product is less than marginal resource cost. 
A) expand employment if marginal revenue product equals marginal resource cost. 
B) reduce employment if marginal revenue product equals marginal resource cost. 
C) reduce employment if marginal revenue product is less than marginal resource cost. 
D) expand employment if marginal revenue product is less than marginal resource cost.

Question 10

Empirical studies suggest that the efficiency loss associated with the misallocation of labor caused by the union wage advantage is

Accepted Answer

A) $6 billion per year. 
B) about 2 percent of domestic output. 
C) less than one-half of 1 percent of domestic output. 
D) about 4 percent of domestic output. 
A) $6 billion per year. 
B) about 2 percent of domestic output. 
C) less than one-half of 1 percent of domestic output. 
D) about 4 percent of domestic output.

Question 11

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Accepted Answer

A) be unaffected. 
B) rise by 4 percent. 
C) fall by 4 percent. 
D) rise by 8 percent. 
A) be unaffected. 
B) rise by 4 percent. 
C) fall by 4 percent. 
D) rise by 8 percent.

Question 12

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

Accepted Answer

A) True 
 B)False

Question 13

Collective bargaining occurs under a framework of rules established in the

Accepted Answer

A) Sherman Act. 
B) Clayton Act. 
C) National Labor Relations Act. 
D) Employer-Employee Dispute Act. 
A) Sherman Act. 
B) Clayton Act. 
C) National Labor Relations Act. 
D) Employer-Employee Dispute Act.

Question 14

Compensating differences in wages

Accepted Answer

A) compensate workers for differences in their human capital. 
B) reward workers differently based on differences in the desirability of jobs. 
C) describe the tendency for the wages of all occupations to adjust to the median level. 
D) do not exist if jobs have different nonmonetary characteristics. 
A) compensate workers for differences in their human capital. 
B) reward workers differently based on differences in the desirability of jobs. 
C) describe the tendency for the wages of all occupations to adjust to the median level. 
D) do not exist if jobs have different nonmonetary characteristics.

Question 15

In which of the following U.S.occupations is the rate of unionization the lowest?

Accepted Answer

A) transportation workers 
B) teachers 
C) legal workers 
D) sales workers 
A) transportation workers 
B) teachers 
C) legal workers 
D) sales workers

Question 16

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent.In this case, the percentage change in the real annual wage is about

Accepted Answer

A) −1 percent. 
B) −2 percent. 
C) 3 percent. 
D) 5 percent. 
A) −1 percent. 
B) −2 percent. 
C) 3 percent. 
D) 5 percent.

Question 17

Unions prefer

Accepted Answer

A) open shops to agency shops. 
B) agency shops to closed shops. 
C) agency shops to union shops. 
D) union shops to agency shops. 
A) open shops to agency shops. 
B) agency shops to closed shops. 
C) agency shops to union shops. 
D) union shops to agency shops.

Question 18

Education is a form of human capital, and it helps explain wage differentials.Topic: The Minimum-Wage Controversy

Accepted Answer

A) True 
 B)False

Question 19

Noncompeting groups of workers are the result of geographic immobility.

Accepted Answer

A) True 
 B)False

Question 20

Assume the Ajax Mining Company hires 80 percent of the nonunion labor force of Mother Lode, New Mexico.Also, suppose that this labor force is highly immobile.Economists would describe this employer as a(n)

Accepted Answer

A) monopolist. 
B) oligopolist. 
C) monopsonist. 
D) monopolistic competitor. 
A) monopolist. 
B) oligopolist. 
C) monopsonist. 
D) monopolistic competitor.

Exam 17: Wage Determination

An industry would be likely to lay off workers following

The American Medical Association, a physicians' union, is a good example of a(n)

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

A firm that hires labor and sells its product both in purely competitive markets will

State right-to-work laws

The principal-agent problem arises in labor markets because

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Occupational licensing laws were originally created to attain the following goals, except to

A profit-maximizing firm will

Empirical studies suggest that the efficiency loss associated with the misallocation of labor caused by the union wage advantage is

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

A bilateral monopoly case is a situation where a firm is a monopolist in its product market and is also a monopsonist in the market where it acquires its major resource.

Collective bargaining occurs under a framework of rules established in the

Compensating differences in wages

In which of the following U.S.occupations is the rate of unionization the lowest?

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent.In this case, the percentage change in the real annual wage is about

Unions prefer

Education is a form of human capital, and it helps explain wage differentials.Topic: The Minimum-Wage Controversy

Noncompeting groups of workers are the result of geographic immobility.

Assume the Ajax Mining Company hires 80 percent of the nonunion labor force of Mother Lode, New Mexico.Also, suppose that this labor force is highly immobile.Economists would describe this employer as a(n)

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

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The Demand for Resources

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

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Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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Immigration

An Introduction to Macroeconomics

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Money, Banking, and Financial Institutions

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Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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