Question 1

Union leaders who focus on increasing the size of their union will generally accept a wage just above the competitive level.

Accepted Answer

A) True 
 B)False

Question 2

An argument that has been advanced to explain high teenage unemployment is

Accepted Answer

A)  lack of job experience. 
B)  limited education. 
C)  a minimum-wage requirement higher than their marginal revenue products. 
D)  all of the above. 
A)  lack of job experience. 
B)  limited education. 
C)  a minimum-wage requirement higher than their marginal revenue products. 
D)  all of the above.

Question 3

Those who view education as a sorting mechanism emphasize that employers value

Accepted Answer

A)  the skills that people who attend college have already acquired before they enter college. 
B)  the docility and deference to authority learned in the classroom. 
C)  the analytic ability of the highly educated worker. 
D)  the work habits picked up in the home and school. 
A)  the skills that people who attend college have already acquired before they enter college. 
B)  the docility and deference to authority learned in the classroom. 
C)  the analytic ability of the highly educated worker. 
D)  the work habits picked up in the home and school.

Question 4

The substitution effect is thought to dominate the behavior of low-wage workers.

Accepted Answer

A) True 
 B)False

Question 5

For which of the following workers would the income effect be more likely to outweigh the substitution effect of an increase in wage?

Accepted Answer

A)  gardener 
B)  teacher 
C)  professional athlete 
D)  plumber 
A)  gardener 
B)  teacher 
C)  professional athlete 
D)  plumber

Question 6

A monopsonist hires labor in a market with perfectly competitive supply.Whenever she hires an additional worker,

Accepted Answer

A)  she must reduce the wage paid to all workers already hired. 
B)  she will not change the wage paid to all workers already hired. 
C)  she must raise the wage paid to all workers already hired. 
D)  she may or may not choose to change the wage paid to all workers already hired. 
A)  she must reduce the wage paid to all workers already hired. 
B)  she will not change the wage paid to all workers already hired. 
C)  she must raise the wage paid to all workers already hired. 
D)  she may or may not choose to change the wage paid to all workers already hired.

Question 7

The labor supply curve starts to bend backward at the point where

Accepted Answer

A)  the total utility of leisure exceeds the total disutility of labor. 
B)  the marginal utility of additional income becomes zero. 
C)  the income effect comes to dominate the substitution effect. 
D)  the substitution effect comes to dominate the income effect. 
A)  the total utility of leisure exceeds the total disutility of labor. 
B)  the marginal utility of additional income becomes zero. 
C)  the income effect comes to dominate the substitution effect. 
D)  the substitution effect comes to dominate the income effect.

Question 8

An investment in yourself is an investment in what economists call human capital.

Accepted Answer

A) True 
 B)False

Question 9

In comparison to the U.S., Germany has a relatively low percentage of union membership.

Accepted Answer

A) True 
 B)False

Question 10

High-wage workers are

Accepted Answer

A)  more likely than low-wage workers to supply more labor when the wage rate rises. 
B)  about as likely as low-wage workers to supply more labor when the wage rate rises. 
C)  less likely than low-wage workers to supply more labor when the wage rate rises. 
D)  The available evidence does not indicate how high-wage workers and low-wage workers differ in responding to changes in the wage rate. 
A)  more likely than low-wage workers to supply more labor when the wage rate rises. 
B)  about as likely as low-wage workers to supply more labor when the wage rate rises. 
C)  less likely than low-wage workers to supply more labor when the wage rate rises. 
D)  The available evidence does not indicate how high-wage workers and low-wage workers differ in responding to changes in the wage rate.

Question 11

When large oligopolistic firms negotiate with the unions of their employees, the resulting bargaining process closely resembles

Accepted Answer

A)  perfect competition. 
B)  a dual labor market. 
C)  monopolistic competition. 
D)  bilateral monopoly. 
A)  perfect competition. 
B)  a dual labor market. 
C)  monopolistic competition. 
D)  bilateral monopoly.

Question 12

The primary reason unionization in the United States has been declining is the shift of the U.S.labor force into service industries and out of manufacturing.

Accepted Answer

A) True 
 B)False

Question 13

Expenditures for attending college can be viewed as an investment in human capital.

Accepted Answer

A) True 
 B)False

Question 14

Firms use collective bargaining to set higher market prices for their products.

Accepted Answer

A) True 
 B)False

Question 15

Assume that the government provides a cash transfer to each family regardless of their market earnings.Given this transfer, which of the following hypotheses about labor supply is correct?

Accepted Answer

A)  Labor supply will increase because the income effect outweighs the substitution effect. 
B)  Labor supply will increase because leisure is an inferior good. 
C)  The income effect will reduce labor supply; there is no substitution effect. 
D)  Labor supply will be constant since wages are unaffected. 
A)  Labor supply will increase because the income effect outweighs the substitution effect. 
B)  Labor supply will increase because leisure is an inferior good. 
C)  The income effect will reduce labor supply; there is no substitution effect. 
D)  Labor supply will be constant since wages are unaffected.

Question 16

When workers purchase more leisure and work less at higher wages, the supply curve

Accepted Answer

A)  is vertical. 
B)  is horizontal. 
C)  is positively sloped. 
D)  is backward bending. 
A)  is vertical. 
B)  is horizontal. 
C)  is positively sloped. 
D)  is backward bending.

Question 17

Union membership in the United States has fallen compared to what it was in the 1950s.

Accepted Answer

A) True 
 B)False

Question 18

Explain how a bilateral monopoly equilibrium outcome differs from a purely competitive outcome.

Accepted Answer

In pure competition, there are so many s

Question 19

If education acts purely as a sorting mechanism, then students are as productive when they enter college as when they leave.

Accepted Answer

A) True 
 B)False

Question 20

There is only a small difference in wages between college graduates and workers who did not attend college.

Accepted Answer

A) True 
 B)False

Exam 20: Labor and Entrepreneurship: The Human Inputs

Union leaders who focus on increasing the size of their union will generally accept a wage just above the competitive level.

An argument that has been advanced to explain high teenage unemployment is

Those who view education as a sorting mechanism emphasize that employers value

The substitution effect is thought to dominate the behavior of low-wage workers.

For which of the following workers would the income effect be more likely to outweigh the substitution effect of an increase in wage?

A monopsonist hires labor in a market with perfectly competitive supply.Whenever she hires an additional worker,

The labor supply curve starts to bend backward at the point where

An investment in yourself is an investment in what economists call human capital.

In comparison to the U.S., Germany has a relatively low percentage of union membership.

High-wage workers are

When large oligopolistic firms negotiate with the unions of their employees, the resulting bargaining process closely resembles

The primary reason unionization in the United States has been declining is the shift of the U.S.labor force into service industries and out of manufacturing.

Expenditures for attending college can be viewed as an investment in human capital.

Firms use collective bargaining to set higher market prices for their products.

Assume that the government provides a cash transfer to each family regardless of their market earnings.Given this transfer, which of the following hypotheses about labor supply is correct?

When workers purchase more leisure and work less at higher wages, the supply curve

Union membership in the United States has fallen compared to what it was in the 1950s.

Explain how a bilateral monopoly equilibrium outcome differs from a purely competitive outcome.

If education acts purely as a sorting mechanism, then students are as productive when they enter college as when they leave.

There is only a small difference in wages between college graduates and workers who did not attend college.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Exchange Rates and the Macroeconomy

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