Question 1

A monopsonist can pick the ____, while a monopolist can pick the ____.

Accepted Answer

A)  price it will charge; wage it will pay 
B)  wage it will pay; price it will charge 
C)  number of competitors; number of buyers 
D)  marginal product of labor; marginal cost of labor 
A)  price it will charge; wage it will pay 
B)  wage it will pay; price it will charge 
C)  number of competitors; number of buyers 
D)  marginal product of labor; marginal cost of labor

Question 2

Exhibit 11-12 A monopsonist
 
In Exhibit 11-12, at the profit-maximizing level of employment, the firm's MFC is equal to ____ and the firm's MRP is equal to ____.

Accepted Answer

A)  $30; $30 
B)  $25; $27 
C)  $30; $25 
D)  $27; $30 
A)  $30; $30 
B)  $25; $27 
C)  $30; $25 
D)  $27; $30

Question 3

Exhibit 11-10 Labor and wage rate data
 
In Exhibit 11-10, the marginal factor cost of the 8th employee is:

Accepted Answer

A)  $14. 
B)  $13. 
C)  $21. 
D)  $112. 
A)  $14. 
B)  $13. 
C)  $21. 
D)  $112.

Question 4

Exhibit 11-10 Labor and wage rate data
 
In Exhibit 11-10, the total wage cost of hiring 7 employees is:

Accepted Answer

A)  $15. 
B)  $91. 
C)  $13. 
D)  $19. 
E)  $112. 
A)  $15. 
B)  $91. 
C)  $13. 
D)  $19. 
E)  $112.

Question 5

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?

Accepted Answer

A)  $40. 
B)  $45. 
C)  $50. 
D)  $55. 
A)  $40. 
B)  $45. 
C)  $50. 
D)  $55.

Question 6

Which part of the United States has the largest union membership measured as the percentage of civilian employees in unions?

Accepted Answer

A)  south-western states 
B)  western states that do not border the Pacific Ocean 
C)  south-eastern states 
D)  mid-western states 
A)  south-western states 
B)  western states that do not border the Pacific Ocean 
C)  south-eastern states 
D)  mid-western states

Question 7

The labor supply curve facing an individual employer in a perfectly competitive labor market is:

Accepted Answer

A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  the MRP curve. 
A)  upward sloping. 
B)  downward sloping. 
C)  horizontal. 
D)  the MRP curve.

Question 8

The MFC curve increases for a monopsonist because:

Accepted Answer

A)  as more workers are hired, all workers receive higher wages. 
B)  output price rises as a firm's market power increases. 
C)  hiring more workers does not affect wages. 
D)  the later workers hired are less productive. 
A)  as more workers are hired, all workers receive higher wages. 
B)  output price rises as a firm's market power increases. 
C)  hiring more workers does not affect wages. 
D)  the later workers hired are less productive.

Question 9

If the price of labor falls, we can expect:

Accepted Answer

A)  demand for labor will increase. 
B)  quantity demanded of labor will increase. 
C)  demand for labor will decrease. 
D)  quantity demanded of labor will decrease. 
A)  demand for labor will increase. 
B)  quantity demanded of labor will increase. 
C)  demand for labor will decrease. 
D)  quantity demanded of labor will decrease.

Question 10

If more and better technology is used for producing wheat in the United States than in a lesser-developed country, then the:

Accepted Answer

A)  MRP of the U.S. workers will be higher than the MRP of the workers in the lesser-developed country. 
B)  MRP of the U.S. workers will be lower than the MRP of the workers in the lesser-developed country. 
C)  demand for the U.S. workers will be lower than the demand for the workers in the lesser developed country. 
D)  price of wheat will be higher in the United States than in the lesser-developed country. 
A)  MRP of the U.S. workers will be higher than the MRP of the workers in the lesser-developed country. 
B)  MRP of the U.S. workers will be lower than the MRP of the workers in the lesser-developed country. 
C)  demand for the U.S. workers will be lower than the demand for the workers in the lesser developed country. 
D)  price of wheat will be higher in the United States than in the lesser-developed country.

Question 11

A technological advance that increases labor productivity will:

Accepted Answer

A)  decrease the demand for labor as MP falls. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises. 
A)  decrease the demand for labor as MP falls. 
B)  decrease the demand for labor as fewer workers are needed. 
C)  decrease the supply of labor as fewer workers are needed. 
D)  increase the demand for labor as MP rises.

Question 12

Which of the following can shift the labor demand curve to the right?

Accepted Answer

A)  decrease in product price 
B)  increase in wages 
C)  increase in productivity 
D)  decrease in the marginal product 
A)  decrease in product price 
B)  increase in wages 
C)  increase in productivity 
D)  decrease in the marginal product

Question 13

Suppose a monopsonist wants to hire more workers. If it has to pay the same wage to all of its workers, the:

Accepted Answer

A)  marginal factor cost will fall while the wage will rise. 
B)  wage will fall while the marginal factor cost will rise. 
C)  difference between the wage and marginal factor cost will become smaller. 
D)  wage and the marginal factor cost will increase. 
A)  marginal factor cost will fall while the wage will rise. 
B)  wage will fall while the marginal factor cost will rise. 
C)  difference between the wage and marginal factor cost will become smaller. 
D)  wage and the marginal factor cost will increase.

Question 14

Dividing the change in total revenue by the change in labor gives:

Accepted Answer

A)  marginal product of labor. 
B)  marginal revenue product of labor. 
C)  the price of the output. 
D)  demand for the output. 
A)  marginal product of labor. 
B)  marginal revenue product of labor. 
C)  the price of the output. 
D)  demand for the output.

Question 15

Which of the following statements concerning the supply of labor is true ?

Accepted Answer

A)  The wage rate has no effect on the supply of labor. 
B)  The labor supply curve is downward sloping. 
C)  The supply of labor is determined by the prevailing wage rate. 
D)  The typical labor supply curve is upward sloping. 
A)  The wage rate has no effect on the supply of labor. 
B)  The labor supply curve is downward sloping. 
C)  The supply of labor is determined by the prevailing wage rate. 
D)  The typical labor supply curve is upward sloping.

Question 16

Firms should hire additional units of a resource as long as the:

Accepted Answer

A)  marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. 
B)  marginal product of the resource is less than the price of the resource. 
C)  price of the output produced is positive. 
D)  marginal revenue product of the resource exceeds the cost of an additional unit of the resource. 
A)  marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced. 
B)  marginal product of the resource is less than the price of the resource. 
C)  price of the output produced is positive. 
D)  marginal revenue product of the resource exceeds the cost of an additional unit of the resource.

Question 17

Exhibit 11-12 A monopsonist
 
In Exhibit 11-12, suppose this labor market is unionized by a powerful union which forces a wage of $35 upon the industry. The firm would respond by hiring ____ workers and paying a wage of ____.

Accepted Answer

A)  40; $35 
B)  60; $30 
C)  70; $27 
D)  60; $35 
A)  40; $35 
B)  60; $30 
C)  70; $27 
D)  60; $35

Question 18

The best number of workers for any employer to hire is that quantity in which:

Accepted Answer

A)  the marginal revenue product equals the marginal factor cost. 
B)  the marginal revenue product exceeds the marginal factor cost. 
C)  total costs are minimized. 
D)  total revenue is maximized. 
A)  the marginal revenue product equals the marginal factor cost. 
B)  the marginal revenue product exceeds the marginal factor cost. 
C)  total costs are minimized. 
D)  total revenue is maximized.

Question 19

Suppose a change in technology increases the marginal product of labor. The result is a(n):

Accepted Answer

A)  downward movement along the demand for labor curve. 
B)  rightward shift in the demand for labor curve. 
C)  leftward shift in the demand for labor curve. 
D)  upward movement along the demand for labor curve. 
A)  downward movement along the demand for labor curve. 
B)  rightward shift in the demand for labor curve. 
C)  leftward shift in the demand for labor curve. 
D)  upward movement along the demand for labor curve.

Question 20

A union may negotiate limits on workload in order to increase the demand for labor and raise workers' salaries. This practice is known as:

Accepted Answer

A)  featherbedding. 
B)  human capital formation. 
C)  monopsonistic bargaining. 
D)  artificial demand stimulus. 
A)  featherbedding. 
B)  human capital formation. 
C)  monopsonistic bargaining. 
D)  artificial demand stimulus.

Exam 11: Labor Markets

A monopsonist can pick the ____, while a monopolist can pick the ____.

Exhibit 11-12 A monopsonist In Exhibit 11-12, at the profit-maximizing level of employment, the firm's MFC is equal to ____ and the firm's MRP is equal to ____.

Exhibit 11-10 Labor and wage rate data In Exhibit 11-10, the marginal factor cost of the 8th employee is:

Exhibit 11-10 Labor and wage rate data In Exhibit 11-10, the total wage cost of hiring 7 employees is:

Suppose a monopsonist hires its second worker and this hiring has a marginal factor cost of $75 per day. If the market wage is now $62.50 per day, what was the first employee earning when she worked alone?

Which part of the United States has the largest union membership measured as the percentage of civilian employees in unions?

The labor supply curve facing an individual employer in a perfectly competitive labor market is:

The MFC curve increases for a monopsonist because:

If the price of labor falls, we can expect:

If more and better technology is used for producing wheat in the United States than in a lesser-developed country, then the:

A technological advance that increases labor productivity will:

Which of the following can shift the labor demand curve to the right?

Suppose a monopsonist wants to hire more workers. If it has to pay the same wage to all of its workers, the:

Dividing the change in total revenue by the change in labor gives:

Which of the following statements concerning the supply of labor is true ?

Firms should hire additional units of a resource as long as the:

Exhibit 11-12 A monopsonist In Exhibit 11-12, suppose this labor market is unionized by a powerful union which forces a wage of $35 upon the industry. The firm would respond by hiring ____ workers and paying a wage of ____.

The best number of workers for any employer to hire is that quantity in which:

Suppose a change in technology increases the marginal product of labor. The result is a(n):

A union may negotiate limits on workload in order to increase the demand for labor and raise workers' salaries. This practice is known as:

Introducing the Economic Way of Thinking

Production Possibilities Opportunity Cost and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand and Supply

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Income Distribution Poverty and Discrimination

Antitrust and Regulation

Environmental Economics

Gross Domestic Product

Business Cycles and Unemployment

Inflation

The Keynesian Model

The Keynesian Model in Action

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits Surpluses and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

The Phillips Curve and Expectations Theory

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Understanding Direct and Inverse Relationships between Variables

Filters

A monopsonist can pick the , while a monopolist can pick the .

Exhibit 11-12 A monopsonist In Exhibit 11-12, at the profit-maximizing level of employment, the firm's MFC is equal to and the firm's MRP is equal to .

Exhibit 11-12 A monopsonist In Exhibit 11-12, suppose this labor market is unionized by a powerful union which forces a wage of $35 upon the industry. The firm would respond by hiring workers and paying a wage of .