Question 1

The labor supply curve facing a purely competitive employer is _, whereas the labor supply curve facing a monopsonist is .

Accepted Answer

A)  upsloping; horizontal 
B)  downsloping; vertical 
C)  vertical; upsloping 
D)  horizontal; upsloping 
A)  upsloping; horizontal 
B)  downsloping; vertical 
C)  vertical; upsloping 
D)  horizontal; upsloping

Question 2

The minimum wage in the U.S. is

Accepted Answer

A)  set at the federal level, and all states abide by that level. 
B)  set at the federal level, but many states set their own minimums that are higher than the federal level. 
C)  set at the federal level, but many states set their own minimums that are lower than the federal level. 
D)  set at the state level, not by the federal government. 
A)  set at the federal level, and all states abide by that level. 
B)  set at the federal level, but many states set their own minimums that are higher than the federal level. 
C)  set at the federal level, but many states set their own minimums that are lower than the federal level. 
D)  set at the state level, not by the federal government.

Question 3

The productivity and real wages of workers in industrially advanced economies have risen historically partly because

Accepted Answer

A)  workers have acquired less education and training over time. 
B)  workers have been able to use larger quantities of capital equipment. 
C)  over time, the capital equipment used by workers has deteriorated in quality. 
D)  the supply of labor has increased. 
A)  workers have acquired less education and training over time. 
B)  workers have been able to use larger quantities of capital equipment. 
C)  over time, the capital equipment used by workers has deteriorated in quality. 
D)  the supply of labor has increased.

Question 4

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.

Question 5

Strict occupational licensing requirements are favored by 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 6

Featherbedding refers to

Accepted Answer

A)  a situation in which a union forces an employer to hire union workers in preference to nonunion workers. 
B)  the requirement that unneeded workers be retained on a job. 
C)  the refusal by one union to handle or transport goods produced by workers in another union. 
D)  disputes among two or more unions as to which will perform certain jobs. 
A)  a situation in which a union forces an employer to hire union workers in preference to nonunion workers. 
B)  the requirement that unneeded workers be retained on a job. 
C)  the refusal by one union to handle or transport goods produced by workers in another union. 
D)  disputes among two or more unions as to which will perform certain jobs.

Question 7

Productivity measures (such as output per worker-hour) and wage rates adjusted for inflation in the United States are

Accepted Answer

A)  inversely related. 
B)  unrelated. 
C)  directly, but not closely, related. 
D)  directly and closely related. 
A)  inversely related. 
B)  unrelated. 
C)  directly, but not closely, related. 
D)  directly and closely related.

Question 8

Union workers have higher rates of job turnover than do nonunion workers.

Accepted Answer

A) True 
 B)False

Question 9

Increases in the productivity of labor result partly from

Accepted Answer

A)  the law of diminishing returns. 
B)  improvements in technology. 
C)  reductions in wage rates. 
D)  increases in the quantity of labor. 
A)  the law of diminishing returns. 
B)  improvements in technology. 
C)  reductions in wage rates. 
D)  increases in the quantity of labor.

Question 10

If the wage rate in a purely competitive labor market increases, it will cause the

Accepted Answer

A)  marginal resource cost curve for a single competitive firm in the industry to shift down. 
B)  marginal resource cost curve for a single competitive firm in the industry to shift up. 
C)  labor supply curve for a single competitive firm to shift downward. 
D)  labor supply curve for the industry to shift rightward. 
A)  marginal resource cost curve for a single competitive firm in the industry to shift down. 
B)  marginal resource cost curve for a single competitive firm in the industry to shift up. 
C)  labor supply curve for a single competitive firm to shift downward. 
D)  labor supply curve for the industry to shift rightward.

Question 11

A profit-maximizing firm will

Accepted Answer

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

Question 12

The Overnight Construction Company has just signed a collective bargaining contract in which it agrees that all workers it hires must be union members in good standing at the time they are hired. This provision reflects

Accepted Answer

A)  preferential hiring. 
B)  a maintenance-of-membership shop. 
C)  a union shop. 
D)  a closed shop. 
A)  preferential hiring. 
B)  a maintenance-of-membership shop. 
C)  a union shop. 
D)  a closed shop.

Question 13

One reason for the high wage rates in the United States and other advanced economies is the high productivity of labor in these countries.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following might be expected to increase union membership?

Accepted Answer

A)  increased labor force participation by women and young people 
B)  decreased imports of manufactured goods 
C)  increased substitution of capital for labor in the production process 
D)  continued growth of service-related industries 
A)  increased labor force participation by women and young people 
B)  decreased imports of manufactured goods 
C)  increased substitution of capital for labor in the production process 
D)  continued growth of service-related industries

Question 15

Given: MRP = marginal revenue product; MRC = marginal resource cost; W = wage rate. A firm that sells its product in a purely competitive market, but is a monopsonist in its labor market, would hire the quantity of labor where

Accepted Answer

A)  MRP = MRC = W. 
B)  MRP > MRC = W. 
C)  MRP > MRC > W. 
D)  MRP = MRC > W. 
A)  MRP = MRC = W. 
B)  MRP > MRC = W. 
C)  MRP > MRC > W. 
D)  MRP = MRC > W.

Question 16

Which of the following economic effects of unions tends to improve efficiency?

Accepted Answer

A)  featherbedding 
B)  strike or lockout 
C)  union wage advantage 
D)  voice mechanism 
A)  featherbedding 
B)  strike or lockout 
C)  union wage advantage 
D)  voice mechanism

Question 17

The major reason that presidents of major corporations receive an average salary of over $1 million a year, while police officers receive an average salary of about $56,000 a year, can best be explained by

Accepted Answer

A)  discrimination. 
B)  lack of job information. 
C)  compensating differences. 
D)  noncompeting labor groups. 
A)  discrimination. 
B)  lack of job information. 
C)  compensating differences. 
D)  noncompeting labor groups.

Question 18

Which of the following is not a major common topic of collective bargaining?

Accepted Answer

A)  union status 
B)  product marketing 
C)  grievance procedures 
D)  seniority and job security 
A)  union status 
B)  product marketing 
C)  grievance procedures 
D)  seniority and job security

Question 19

There will be no principal-agent problem if a firm's owner (like a business consultant) does all the work of the firm.

Accepted Answer

A) True 
 B)False

Question 20

Some economists claim that unions reduce economic efficiency by

Accepted Answer

A)  providing a voice mechanism for workers. 
B)  insisting that promotions be based on ability rather than seniority. 
C)  imposing restrictions on the kinds of jobs workers may perform. 
D)  increasing worker turnover. 
A)  providing a voice mechanism for workers. 
B)  insisting that promotions be based on ability rather than seniority. 
C)  imposing restrictions on the kinds of jobs workers may perform. 
D)  increasing worker turnover.

Exam 17: Wage Determination

The labor supply curve facing a purely competitive employer is _, whereas the labor supply curve facing a monopsonist is .

The minimum wage in the U.S. is

The productivity and real wages of workers in industrially advanced economies have risen historically partly because

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)

Strict occupational licensing requirements are favored by a(n)

Featherbedding refers to

Productivity measures (such as output per worker-hour) and wage rates adjusted for inflation in the United States are

Union workers have higher rates of job turnover than do nonunion workers.

Increases in the productivity of labor result partly from

If the wage rate in a purely competitive labor market increases, it will cause the

A profit-maximizing firm will

The Overnight Construction Company has just signed a collective bargaining contract in which it agrees that all workers it hires must be union members in good standing at the time they are hired. This provision reflects

One reason for the high wage rates in the United States and other advanced economies is the high productivity of labor in these countries.

Which of the following might be expected to increase union membership?

Given: MRP = marginal revenue product; MRC = marginal resource cost; W = wage rate. A firm that sells its product in a purely competitive market, but is a monopsonist in its labor market, would hire the quantity of labor where

Which of the following economic effects of unions tends to improve efficiency?

The major reason that presidents of major corporations receive an average salary of over $1 million a year, while police officers receive an average salary of about $56,000 a year, can best be explained by

Which of the following is not a major common topic of collective bargaining?

There will be no principal-agent problem if a firm's owner (like a business consultant) does all the work of the firm.

Some economists claim that unions reduce economic efficiency by

Limits, Alternatives, and Choices

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