Question 1

Which of the following is not a major reason for the decline of unionism in the U.S.?

Accepted Answer

A)  Employment has shifted away from manufacturing toward services. 
B)  Management has greatly intensified its opposition to unions. 
C)  Consumer demand has shifted toward foreign manufactured goods and away from union-produced domestic goods. 
D)  Nonunion firms continue to have poor working conditions. 
A)  Employment has shifted away from manufacturing toward services. 
B)  Management has greatly intensified its opposition to unions. 
C)  Consumer demand has shifted toward foreign manufactured goods and away from union-produced domestic goods. 
D)  Nonunion firms continue to have poor working conditions.

Question 2

Under conditions of imperfect competition in the labor market, union efforts to increase wages

Accepted Answer

A)  will necessarily cause unemployment. 
B)  will necessarily reduce unemployment. 
C)  will strengthen the monopoly power of management. 
D)  may either increase or decrease the level of employment. 
A)  will necessarily cause unemployment. 
B)  will necessarily reduce unemployment. 
C)  will strengthen the monopoly power of management. 
D)  may either increase or decrease the level of employment.

Question 3

Marginal revenue product (MRP) of labor refers to the

Accepted Answer

A)  increase in total revenue resulting from selling an additional unit of output. 
B)  amount by which a firm's total resource cost increases when it employs one more unit of labor. 
C)  increase in total revenue resulting from hiring one more unit of labor. 
D)  price at which additional units of labor can be employed in a monopsonized labor market. 
A)  increase in total revenue resulting from selling an additional unit of output. 
B)  amount by which a firm's total resource cost increases when it employs one more unit of labor. 
C)  increase in total revenue resulting from hiring one more unit of labor. 
D)  price at which additional units of labor can be employed in a monopsonized labor market.

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

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 6

Compensation paid in proportion to the number of units of personal output best describes

Accepted Answer

A)  royalties. 
B)  profit sharing. 
C)  bonuses. 
D)  piece rates. 
A)  royalties. 
B)  profit sharing. 
C)  bonuses. 
D)  piece rates.

Question 7

Inclusive unionism is practiced mostly by

Accepted Answer

A)  professional and semiprofessional employees. 
B)  small unions consisting of skilled workers, such as the bricklayers. 
C)  industrial unions. 
D)  craft unions. 
A)  professional and semiprofessional employees. 
B)  small unions consisting of skilled workers, such as the bricklayers. 
C)  industrial unions. 
D)  craft unions.

Question 8

Wage differentials are fully explained by differences in productivity and human capital among various workers.

Accepted Answer

A) True 
 B)False

Question 9

In the demand-enhancing union model, a union tries to increase the wage rate through actions such as promoting the industry's product or raising labor productivity.

Accepted Answer

A) True 
 B)False

Question 10

Suppose all workers are identical but working for Ajax is more pleasant than working for Acme. In all other nonwage aspects, the two firms offer the same job characteristics. We would expect

Accepted Answer

A)  wage rates at Ajax to be higher than at Acme. 
B)  wage rates at Ajax to be lower than at Acme. 
C)  wage rates at Ajax and Acme to be the same. 
D)  workers at Ajax would have to be monitored more closely than those at Acme. 
A)  wage rates at Ajax to be higher than at Acme. 
B)  wage rates at Ajax to be lower than at Acme. 
C)  wage rates at Ajax and Acme to be the same. 
D)  workers at Ajax would have to be monitored more closely than those at Acme.

Question 11

Nonmonetary considerations tend to be most important in the allocation of

Accepted Answer

A)  land resources. 
B)  capital resources. 
C)  labor resources. 
D)  natural resources. 
A)  land resources. 
B)  capital resources. 
C)  labor resources. 
D)  natural resources.

Question 12

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 13

Which of the following is not correct?

Accepted Answer

A)  Other things equal, a monopsonist will pay a lower wage rate than will a firm hiring labor competitively. 
B)  A monopsonistic employer will pay workers a wage rate equal to their MRP. 
C)  A purely competitive seller will pay workers a wage rate equal to their MRP. 
D)  An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC. 
A)  Other things equal, a monopsonist will pay a lower wage rate than will a firm hiring labor competitively. 
B)  A monopsonistic employer will pay workers a wage rate equal to their MRP. 
C)  A purely competitive seller will pay workers a wage rate equal to their MRP. 
D)  An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC.

Question 14

A major function of the National Labor Relations Board is to

Accepted Answer

A)  monitor potentially inflationary increases in wages. 
B)  provide compulsory arbitration so that strikes and lockouts do not occur. 
C)  set annual wage increases on an industry-by-industry basis. 
D)  investigate and rule on charges of unfair labor practices by either management or unions. 
A)  monitor potentially inflationary increases in wages. 
B)  provide compulsory arbitration so that strikes and lockouts do not occur. 
C)  set annual wage increases on an industry-by-industry basis. 
D)  investigate and rule on charges of unfair labor practices by either management or unions.

Question 15

(Last Word) Regardless of the motives or public benefits of occupational licensing, the primary effect it has on labor markets is to

Accepted Answer

A)  limit or reduce the demand for labor in an industry. 
B)  increase the demand for labor in an industry. 
C)  limit or reduce the supply of labor in an industry. 
D)  increase the supply of labor in an industry. 
A)  limit or reduce the demand for labor in an industry. 
B)  increase the demand for labor in an industry. 
C)  limit or reduce the supply of labor in an industry. 
D)  increase the supply of labor in an industry.

Question 16

Professional sports leagues, like the NFL and the NBA, are good examples of monopsony because

Accepted Answer

A)  they are dominant providers of sports entertainment. 
B)  they are the only employers of professional athletes in their respective sports. 
C)  they are large corporations owned be small groups. 
D)  they operate large facilities and stadiums. 
A)  they are dominant providers of sports entertainment. 
B)  they are the only employers of professional athletes in their respective sports. 
C)  they are large corporations owned be small groups. 
D)  they operate large facilities and stadiums.

Question 17

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 18

Wage differentials occur for all the following reasons except

Accepted Answer

A)  homogeneous workers. 
B)  labor market imperfections. 
C)  noncompeting groups of workers. 
D)  compensating differences to offset nonmonetary differences in jobs. 
A)  homogeneous workers. 
B)  labor market imperfections. 
C)  noncompeting groups of workers. 
D)  compensating differences to offset nonmonetary differences in jobs.

Question 19

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal resource cost equals the wage rate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is correct?

Accepted Answer

A)  The nominal wage may fall, but the real wage can never decline. 
B)  The real wage may fall, but the nominal wage can never decline. 
C)  Both the nominal and the real wage must always rise. 
D)  The nominal and the real wage may both fall. 
A)  The nominal wage may fall, but the real wage can never decline. 
B)  The real wage may fall, but the nominal wage can never decline. 
C)  Both the nominal and the real wage must always rise. 
D)  The nominal and the real wage may both fall.

Exam 17: Wage Determination

Which of the following is not a major reason for the decline of unionism in the U.S.?

Under conditions of imperfect competition in the labor market, union efforts to increase wages

Marginal revenue product (MRP) of labor refers to the

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

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

Compensation paid in proportion to the number of units of personal output best describes

Inclusive unionism is practiced mostly by

Wage differentials are fully explained by differences in productivity and human capital among various workers.

In the demand-enhancing union model, a union tries to increase the wage rate through actions such as promoting the industry's product or raising labor productivity.

Suppose all workers are identical but working for Ajax is more pleasant than working for Acme. In all other nonwage aspects, the two firms offer the same job characteristics. We would expect

Nonmonetary considerations tend to be most important in the allocation of

In 2015, the U.S. unionization rate was

Which of the following is not correct?

A major function of the National Labor Relations Board is to

(Last Word) Regardless of the motives or public benefits of occupational licensing, the primary effect it has on labor markets is to

Professional sports leagues, like the NFL and the NBA, are good examples of monopsony because

Human capital is best defined as

Wage differentials occur for all the following reasons except

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal resource cost equals the wage rate.

Which of the following is correct?

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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