Question 1

Jack and Jill have identical skills and training, but Jill earns higher wages in her job. Which of the following reasons would best explain why Jill earns more than Jack?

Accepted Answer

A)  Jack has a chronic illness and would lose health care coverage if he changed jobs. 
B)  Jill suffers from gender discrimination in the workplace. 
C)  Jack has better access to information about available jobs in his field. 
D)  Jill is reluctant to move to a new city because she wants to live near family. 
A)  Jack has a chronic illness and would lose health care coverage if he changed jobs. 
B)  Jill suffers from gender discrimination in the workplace. 
C)  Jack has better access to information about available jobs in his field. 
D)  Jill is reluctant to move to a new city because she wants to live near family.

Question 2

An industrial union

Accepted Answer

A)  is most concerned with increasing the demand for workers in an industry. 
B)  restricts the supply of labor through licensing requirements. 
C)  organizes a wide range of workers in an industry to gain bargaining power. 
D)  is most effective in a purely competitive industry. 
A)  is most concerned with increasing the demand for workers in an industry. 
B)  restricts the supply of labor through licensing requirements. 
C)  organizes a wide range of workers in an industry to gain bargaining power. 
D)  is most effective in a purely competitive industry.

Question 3

(Last Word) Despite the fact that occupational licensing in many industries is unnecessary for the protection of consumers, these licensing requirements are implemented or increased because of

Accepted Answer

A)  the principal-agent problem. 
B)  inclusive unions. 
C)  the special-interest effect. 
D)  efficiency wages. 
A)  the principal-agent problem. 
B)  inclusive unions. 
C)  the special-interest effect. 
D)  efficiency wages.

Question 4

Right-to-work laws prohibit the formation of labor unions.

Accepted Answer

A) True 
 B)False

Question 5

There is no evidence that unions are able to increase wage rates above those that the market would otherwise provide.

Accepted Answer

A) True 
 B)False

Question 6

The real wage will rise if the nominal wage

Accepted Answer

A)  falls more rapidly than the general price level. 
B)  increases at the same rate as labor productivity. 
C)  increases more rapidly than the general price level. 
D)  falls at the same rate as the general price level. 
A)  falls more rapidly than the general price level. 
B)  increases at the same rate as labor productivity. 
C)  increases more rapidly than the general price level. 
D)  falls at the same rate as the general price level.

Question 7

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 8

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $150 and three workers are employed per day, the price of a unit of output must be $\begin{array}{|c|c|}
\hline \text { Number of Workers }\
\text { Employed Per Day } & \text { Total Firm Output Per } \
&\text { Day }\
\hline 1 & 0 \
\hline 2 & 5 \
\hline 3 & 20 \
\hline 4 & 35 \
\hline 5 & 38\
\hline 
\end{array}$

Accepted Answer

A)  $1,000. 
B)  $100. 
C)  $20. 
D)  $10. 
A)  $1,000. 
B)  $100. 
C)  $20. 
D)  $10.

Question 9

If all workers were homogeneous, all jobs were equally attractive to workers, and labor markets were perfectly competitive,

Accepted Answer

A)  compensating differences would cause wage differentials. 
B)  noncompeting groups of workers would result in wage differentials. 
C)  all workers would receive the same wage rate. 
D)  worker mobility would occur such that wage differentials would widen. 
A)  compensating differences would cause wage differentials. 
B)  noncompeting groups of workers would result in wage differentials. 
C)  all workers would receive the same wage rate. 
D)  worker mobility would occur such that wage differentials would widen.

Question 10

Minimum wage laws have contributed to higher unemployment levels among teenagers and minorities.

Accepted Answer

A) True 
 B)False

Question 11

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 12

AFL-CIO stands for

Accepted Answer

A)  American Federation of Labor-Congress of Industrial Organizations. 
B)  American Federation of Labor-Committee for Industrial Opportunity. 
C)  Assembly of Factory Laborers-Congress of Industrial Organizations. 
D)  Assembly of Factory Laborers-Committee for Industrial Opportunity. 
A)  American Federation of Labor-Congress of Industrial Organizations. 
B)  American Federation of Labor-Committee for Industrial Opportunity. 
C)  Assembly of Factory Laborers-Congress of Industrial Organizations. 
D)  Assembly of Factory Laborers-Committee for Industrial Opportunity.

Question 13

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?

Accepted Answer

A)  A worker takes 20-minute coffee breaks although the employer allots only 15 minutes for this purpose. 
B)  A worker is on the job 50 hours per week although only 40 hours are required for promotion. 
C)  A worker opts for early retirement in response to the firm's incentive plan. 
D)  A worker's productivity is independent of the wage paid. 
A)  A worker takes 20-minute coffee breaks although the employer allots only 15 minutes for this purpose. 
B)  A worker is on the job 50 hours per week although only 40 hours are required for promotion. 
C)  A worker opts for early retirement in response to the firm's incentive plan. 
D)  A worker's productivity is independent of the wage paid.

Question 14

If a firm is hiring a certain type of labor under purely competitive conditions,

Accepted Answer

A)  its labor demand curve will be perfectly elastic at the market-determined wage rate. 
B)  the labor supply curve will lie above the marginal labor cost curve. 
C)  the labor supply and marginal labor (resource) cost curves will coincide and be upsloping. 
D)  the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic. 
A)  its labor demand curve will be perfectly elastic at the market-determined wage rate. 
B)  the labor supply curve will lie above the marginal labor cost curve. 
C)  the labor supply and marginal labor (resource) cost curves will coincide and be upsloping. 
D)  the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.

Question 15

Unions might support a higher minimum wage because

Accepted Answer

A)  their constitutions obligate them to do so. 
B)  they feel a higher minimum wage will lower labor's tax payments for welfare programs. 
C)  a higher minimum wage makes less-skilled workers less substitutable for union workers. 
D)  the minimum wage is better targeted than are alternative income-maintenance programs. 
A)  their constitutions obligate them to do so. 
B)  they feel a higher minimum wage will lower labor's tax payments for welfare programs. 
C)  a higher minimum wage makes less-skilled workers less substitutable for union workers. 
D)  the minimum wage is better targeted than are alternative income-maintenance programs.

Question 16

Since 1960, real hourly compensation in the United States has approximately

Accepted Answer

A)  remained the same. 
B)  risen by 40 percent. 
C)  doubled. 
D)  tripled. 
A)  remained the same. 
B)  risen by 40 percent. 
C)  doubled. 
D)  tripled.

Question 17

Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

Accepted Answer

A) True 
 B)False

Question 18

Other things equal, the monopsonistic employer will pay a

Accepted Answer

A)  lower wage rate and hire fewer workers than will a purely competitive employer. 
B)  higher wage rate but hire fewer workers than will a purely competitive employer. 
C)  lower wage rate but hire a larger number of workers than will a purely competitive employer. 
D)  higher wage rate and hire a larger number of workers than will a purely competitive employer. 
A)  lower wage rate and hire fewer workers than will a purely competitive employer. 
B)  higher wage rate but hire fewer workers than will a purely competitive employer. 
C)  lower wage rate but hire a larger number of workers than will a purely competitive employer. 
D)  higher wage rate and hire a larger number of workers than will a purely competitive employer.

Question 19

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 20

Which of the following is not an example of a market imperfection that might explain persistent wage differentials within an occupation?

Accepted Answer

A)  geographic immobility of workers 
B)  discrimination 
C)  noncompeting groups 
D)  poor information about job opportunities and pay 
A)  geographic immobility of workers 
B)  discrimination 
C)  noncompeting groups 
D)  poor information about job opportunities and pay

Exam 17: Wage Determination

Jack and Jill have identical skills and training, but Jill earns higher wages in her job. Which of the following reasons would best explain why Jill earns more than Jack?

An industrial union

(Last Word) Despite the fact that occupational licensing in many industries is unnecessary for the protection of consumers, these licensing requirements are implemented or increased because of

Right-to-work laws prohibit the formation of labor unions.

There is no evidence that unions are able to increase wage rates above those that the market would otherwise provide.

The real wage will rise if the nominal wage

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

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $150 and three workers are employed per day, the price of a unit of output must be Number of Workers Employed Per Day Total Firm Output Per Day 1 0 2 5 3 20 4 35 5 38

If all workers were homogeneous, all jobs were equally attractive to workers, and labor markets were perfectly competitive,

Minimum wage laws have contributed to higher unemployment levels among teenagers and minorities.

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

AFL-CIO stands for

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?

If a firm is hiring a certain type of labor under purely competitive conditions,

Unions might support a higher minimum wage because

Since 1960, real hourly compensation in the United States has approximately

Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

Other things equal, the monopsonistic employer will pay a

The concept of investment in human capital indicates that

Which of the following is not an example of a market imperfection that might explain persistent wage differentials within an occupation?

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

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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