Question 1

If the minimum wage is set too high, in some labor markets we can expect to see

Accepted Answer

A)  a shortage of labor. 
B)  an increase in on-the-job training. 
C)  a surplus of labor. 
D)  a decline in wage costs. 
A)  a shortage of labor. 
B)  an increase in on-the-job training. 
C)  a surplus of labor. 
D)  a decline in wage costs.

Question 2

Which would be an example of a negative side effect of pay-for-performance plans?

Accepted Answer

A)  Profit sharing plans will tend to decrease the "free-ride" that some workers get by being part of a team. 
B)  Employers get greater effort from workers by paying them a relatively high, above-equilibrium wage. 
C)  Workers have to take additional schooling to learn skills that will enable them to keep their jobs. 
D)  An increase in production from piece work can result in a decline in product quality. 
A)  Profit sharing plans will tend to decrease the "free-ride" that some workers get by being part of a team. 
B)  Employers get greater effort from workers by paying them a relatively high, above-equilibrium wage. 
C)  Workers have to take additional schooling to learn skills that will enable them to keep their jobs. 
D)  An increase in production from piece work can result in a decline in product quality.

Question 3

(Consider This) The main idea highlighted in the story about artist Pablo Picasso is

Accepted Answer

A)  derived demand. 
B)  human capital. 
C)  opportunity cost. 
D)  occupational licensure. 
A)  derived demand. 
B)  human capital. 
C)  opportunity cost. 
D)  occupational licensure.

Question 4

The monopsonist in a nonunionized labor market pays a wage rate below the MRP of labor.

Accepted Answer

A) True 
 B)False

Question 5

If there is a decrease in the demand for union electrical workers and at the same time there is a drastic cutback in the numbers of electricians trained by the union, then the

Accepted Answer

A)  wages of electricians are likely to increase and the quantity employed will decrease. 
B)  wages of electricians are likely to increase and the quantity employed will increase. 
C)  quantity employed will increase, but the effect on wages is indeterminate. 
D)  quantity employed will decrease, but the effect on wages is indeterminate. 
A)  wages of electricians are likely to increase and the quantity employed will decrease. 
B)  wages of electricians are likely to increase and the quantity employed will increase. 
C)  quantity employed will increase, but the effect on wages is indeterminate. 
D)  quantity employed will decrease, but the effect on wages is indeterminate.

Question 6

The American Medical Association, a physicians' union, is a good example of 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 7

Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that

Accepted Answer

A)  the minimum wage only applies to a small percentage of the labor force. 
B)  many who benefit from the minimum wage are teenagers or not poor. 
C)  the government has been unable to enforce the minimum wage. 
D)  the average level of wages in the economy is considerably higher than the minimum wage. 
A)  the minimum wage only applies to a small percentage of the labor force. 
B)  many who benefit from the minimum wage are teenagers or not poor. 
C)  the government has been unable to enforce the minimum wage. 
D)  the average level of wages in the economy is considerably higher than the minimum wage.

Question 8

Efficiency wages are established at below-equilibrium levels.

Accepted Answer

A) True 
 B)False

Question 9

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

Accepted Answer

A) True 
 B)False

Question 10

Craft unions tend to do all of the following except

Accepted Answer

A)  adopting restrictive membership policies. 
B)  supporting strict restrictions on immigration. 
C)  pushing for mandatory membership for all workers. 
D)  requiring apprenticeships or occupational licensing. 
A)  adopting restrictive membership policies. 
B)  supporting strict restrictions on immigration. 
C)  pushing for mandatory membership for all workers. 
D)  requiring apprenticeships or occupational licensing.

Question 11

The supply curve of labor faced by an individual firm in a purely competitive labor market is horizontal.

Accepted Answer

A) True 
 B)False

Question 12

Other things constant, which of the following is inversely related to inflation?

Accepted Answer

A)  nominal wage only 
B)  real wage only 
C)  average price level in the economy 
D)  both nominal wage and real wage 
A)  nominal wage only 
B)  real wage only 
C)  average price level in the economy 
D)  both nominal wage and real wage

Question 13

In the context of labor markets, shirking refers to

Accepted Answer

A)  the nonmonetary disadvantages of certain jobs. 
B)  the neglecting or evading of work. 
C)  the elimination of monitoring costs. 
D)  any scheme where pay is directly related to worker output. 
A)  the nonmonetary disadvantages of certain jobs. 
B)  the neglecting or evading of work. 
C)  the elimination of monitoring costs. 
D)  any scheme where pay is directly related to worker output.

Question 14

The market supply curve for labor is upsloping because

Accepted Answer

A)  of diminishing returns. 
B)  employers as a group must pay higher wage rates to obtain more workers. 
C)  of declining MRC. 
D)  each employer is a "wage taker." 
A)  of diminishing returns. 
B)  employers as a group must pay higher wage rates to obtain more workers. 
C)  of declining MRC. 
D)  each employer is a "wage taker."

Question 15

Minimum-wage legislation is less likely to have adverse effects on employment when the

Accepted Answer

A)  affected labor market is monopsonistic. 
B)  economy has high unemployment. 
C)  derived demand for labor is shifting to the left. 
D)  demand for labor is relatively elastic. 
A)  affected labor market is monopsonistic. 
B)  economy has high unemployment. 
C)  derived demand for labor is shifting to the left. 
D)  demand for labor is relatively elastic.

Question 16

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

Accepted Answer

A) True 
 B)False

Question 17

Human capital investment refers to spending on education and worker training.

Accepted Answer

A) True 
 B)False

Question 18

Which statement is correct?

Accepted Answer

A)  The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage. 
B)  The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage. 
C)  The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage. 
D)  The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage. 
A)  The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage. 
B)  The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage. 
C)  The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage. 
D)  The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

Question 19

In which of the following U.S. occupations is the rate of unionization the lowest?

Accepted Answer

A)  transportation workers 
B)  teachers 
C)  legal workers 
D)  sales workers 
A)  transportation workers 
B)  teachers 
C)  legal workers 
D)  sales workers

Question 20

Which of the following statements is correct?

Accepted Answer

A)  There is clear evidence that unions have increased the average level of real wage rates for all workers. 
B)  When fringe benefits are taken into account, the overall compensation of union and nonunion workers is equal. 
C)  Approximately 10 percent of all work time is lost annually because of strikes. 
D)  There were 12 major work stoppages in the United States in 2015. 
A)  There is clear evidence that unions have increased the average level of real wage rates for all workers. 
B)  When fringe benefits are taken into account, the overall compensation of union and nonunion workers is equal. 
C)  Approximately 10 percent of all work time is lost annually because of strikes. 
D)  There were 12 major work stoppages in the United States in 2015.

Exam 17: Wage Determination

If the minimum wage is set too high, in some labor markets we can expect to see

Which would be an example of a negative side effect of pay-for-performance plans?

(Consider This) The main idea highlighted in the story about artist Pablo Picasso is

The monopsonist in a nonunionized labor market pays a wage rate below the MRP of labor.

If there is a decrease in the demand for union electrical workers and at the same time there is a drastic cutback in the numbers of electricians trained by the union, then the

The American Medical Association, a physicians' union, is a good example of a(n)

Critics of the minimum wage argue that as an antipoverty device, it is "poorly targeted." By this they mean that

Efficiency wages are established at below-equilibrium levels.

Professions that require their practitioners to pass a licensure exam, like accountants and doctors, exemplify the exclusive union model of how a labor union raises wage rates.

Craft unions tend to do all of the following except

The supply curve of labor faced by an individual firm in a purely competitive labor market is horizontal.

Other things constant, which of the following is inversely related to inflation?

In the context of labor markets, shirking refers to

The market supply curve for labor is upsloping because

Minimum-wage legislation is less likely to have adverse effects on employment when the

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

Human capital investment refers to spending on education and worker training.

Which statement is correct?

In which of the following U.S. occupations is the rate of unionization the lowest?

Which of the following statements 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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