Question 1

Nominal monthly wages increase from $1,500 to $1,800, while the price level increases by 4 percent. The percentage change in real monthly wages is about

Accepted Answer

A)  10 percent. 
B)  12 percent. 
C)  14 percent. 
D)  16 percent. 
A)  10 percent. 
B)  12 percent. 
C)  14 percent. 
D)  16 percent.

Question 2

According to age-earnings data,

Accepted Answer

A)  lower-educated workers have similar earnings at age 65 as higher-educated workers. 
B)  investments in education result in higher earnings. 
C)  high earnings are due to motivation and innate ability, rather than education. 
D)  there is no clear relationship between education and worker productivity. 
A)  lower-educated workers have similar earnings at age 65 as higher-educated workers. 
B)  investments in education result in higher earnings. 
C)  high earnings are due to motivation and innate ability, rather than education. 
D)  there is no clear relationship between education and worker productivity.

Question 3

Collective bargaining occurs under a framework of rules established in the

Accepted Answer

A)  Sherman Act. 
B)  Clayton Act. 
C)  National Labor Relations Act. 
D)  Employer-Employee Dispute Act. 
A)  Sherman Act. 
B)  Clayton Act. 
C)  National Labor Relations Act. 
D)  Employer-Employee Dispute Act.

Question 4

A profit-maximizing firm operates in purely competitive product and resource markets, with the resource and production schedules shown in the table. $\begin{array} { | c | c |} 
\hline\text { Workers } & \begin{array} { c } 
\text { Total } \
\text { Production }
\end{array} \
\hline 8 & 440 \
\hline 7 & 410 \
\hline 6 & 370 \
\hline 5 & 320 \
\hline 4 & 260 \
\hline 3 & 180 \
\hline 2 & 110 \
\hline 1 & 55 \
\hline
\end{array}$ The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ?

Accepted Answer

A)  4 
B)  5 
C)  6 
D)  7 
A)  4 
B)  5 
C)  6 
D)  7

Question 5

In the United States,

Accepted Answer

A)  African Americans have higher unionization rates than whites. 
B)  women have higher unionization rates than men. 
C)  managers have higher unionization rates than transportation workers. 
D)  workers in mining have higher unionization rates than workers in government. 
A)  African Americans have higher unionization rates than whites. 
B)  women have higher unionization rates than men. 
C)  managers have higher unionization rates than transportation workers. 
D)  workers in mining have higher unionization rates than workers in government.

Question 6

Suppose in some economy there are 100 million workers; 10 million of those workers work in retail trade, and 1 million of the retail workers belong to unions. Total union membership in this economy is 40 million. The rate of unionization in retail trade is

Accepted Answer

A)  1 percent. 
B)  10 percent. 
C)  40 percent. 
D)  100 percent. 
A)  1 percent. 
B)  10 percent. 
C)  40 percent. 
D)  100 percent.

Question 7

For a monopsonist in the labor market, the marginal resource cost of labor is

Accepted Answer

A)  higher than the wage rate or price of labor. 
B)  less than the wage rate or price of labor. 
C)  equal to the wage rate or price of labor. 
D)  inversely related to the wage rate or price of labor. 
A)  higher than the wage rate or price of labor. 
B)  less than the wage rate or price of labor. 
C)  equal to the wage rate or price of labor. 
D)  inversely related to the wage rate or price of labor.

Question 8

A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

Accepted Answer

A) True 
 B)False

Question 9

Stock options as a form of payment are designed to

Accepted Answer

A)  evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law. 
B)  boost the overall earnings of minimum-wage workers. 
C)  offset monopsony. 
D)  address the principal-agent problem. 
A)  evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law. 
B)  boost the overall earnings of minimum-wage workers. 
C)  offset monopsony. 
D)  address the principal-agent problem.

Question 10

Suppose that under its collective bargaining agreement, the ABC Corporation can hire nonunion workers, but such workers must join the union within 30 days. This agreement embodies

Accepted Answer

A)  an open shop. 
B)  a closed shop. 
C)  a union shop. 
D)  an agency shop. 
A)  an open shop. 
B)  a closed shop. 
C)  a union shop. 
D)  an agency shop.

Question 11

Which union status provides the weakest form of union security?

Accepted Answer

A)  open shop 
B)  agency shop 
C)  union shop 
D)  closed shop 
A)  open shop 
B)  agency shop 
C)  union shop 
D)  closed shop

Question 12

Empirical studies suggest that the efficiency loss associated with the misallocation of labor caused by the union wage advantage is

Accepted Answer

A)  $6 billion per year. 
B)  about 2 percent of domestic output. 
C)  less than one-half of 1 percent of domestic output. 
D)  about 4 percent of domestic output. 
A)  $6 billion per year. 
B)  about 2 percent of domestic output. 
C)  less than one-half of 1 percent of domestic output. 
D)  about 4 percent of domestic output.

Question 13

A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree. The basic reason for this wage differential is

Accepted Answer

A)  efficiency wages. 
B)  compensating differences. 
C)  investment in human capital. 
D)  nonmonetary aspects of work. 
A)  efficiency wages. 
B)  compensating differences. 
C)  investment in human capital. 
D)  nonmonetary aspects of work.

Question 14

According to the U.S. Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

Accepted Answer

A)  surgeons 
B)  financial managers 
C)  petroleum engineers 
D)  law professors 
A)  surgeons 
B)  financial managers 
C)  petroleum engineers 
D)  law professors

Question 15

A firm's resource input, total output of labor, and product price schedules are given in the table. If labor is the only variable input, how much labor should the firm employ if the wage rate is $15 per day? $\begin{array} { | c | c | c| }

\hline\text { Urits of Lab or } &\text { Total } &\text { Price of Good }\
&\text { Output/Day }& ( \$ ) \
\hline 2 & 20 & \$ 10 \
\hline 3 & 30 & 9 \
\hline 4 & 38 & 8 \
\hline 5 & 46 & 7 \
\hline 6 & 54 & 6 \
\hline 7 & 62 & 5 \
\hline
\end{array}$

Accepted Answer

A)  3 units 
B)  4 units 
C)  6 units 
D)  5 units 
A)  3 units 
B)  4 units 
C)  6 units 
D)  5 units

Question 16

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Accepted Answer

A) True 
 B)False

Question 17

Authoritative estimates suggest that currently union workers on the average

Accepted Answer

A)  achieve no wage advantage over nonunion workers in the same occupation. 
B)  realize a 5 percent wage advantage over nonunion workers in the same occupation. 
C)  realize a 20-30 percent wage advantage over nonunion workers in the same occupation. 
D)  realize a 15 percent wage advantage over nonunion workers in the same occupation. 
A)  achieve no wage advantage over nonunion workers in the same occupation. 
B)  realize a 5 percent wage advantage over nonunion workers in the same occupation. 
C)  realize a 20-30 percent wage advantage over nonunion workers in the same occupation. 
D)  realize a 15 percent wage advantage over nonunion workers in the same occupation.

Question 18

The XYZ Corporation's collective bargaining agreement indicates that it may hire either union or nonunion workers and that the latter are under no obligation to join the union. This agreement embodies

Accepted Answer

A)  an open shop. 
B)  a closed shop. 
C)  a union shop. 
D)  an agency shop. 
A)  an open shop. 
B)  a closed shop. 
C)  a union shop. 
D)  an agency shop.

Question 19

Which of the following is a valid explanation for real wage growth?

Accepted Answer

A)  the rising cost of capital accumulation 
B)  a contraction of employment in manufacturing industries 
C)  an increase in the quantity of labor 
D)  a rising rate of labor productivity growth 
A)  the rising cost of capital accumulation 
B)  a contraction of employment in manufacturing industries 
C)  an increase in the quantity of labor 
D)  a rising rate of labor productivity growth

Question 20

The earnings of highly educated workers

Accepted Answer

A)  rise more slowly than those of less-educated workers. 
B)  rise more rapidly than those of less-educated workers. 
C)  rise at about the same rate as those of less-educated workers. 
D)  stagnate earlier than do those of less-educated workers. 
A)  rise more slowly than those of less-educated workers. 
B)  rise more rapidly than those of less-educated workers. 
C)  rise at about the same rate as those of less-educated workers. 
D)  stagnate earlier than do those of less-educated workers.

Exam 17: Wage Determination

Nominal monthly wages increase from $1,500 to $1,800, while the price level increases by 4 percent. The percentage change in real monthly wages is about

According to age-earnings data,

Collective bargaining occurs under a framework of rules established in the

In the United States,

Suppose in some economy there are 100 million workers; 10 million of those workers work in retail trade, and 1 million of the retail workers belong to unions. Total union membership in this economy is 40 million. The rate of unionization in retail trade is

For a monopsonist in the labor market, the marginal resource cost of labor is

A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

Stock options as a form of payment are designed to

Suppose that under its collective bargaining agreement, the ABC Corporation can hire nonunion workers, but such workers must join the union within 30 days. This agreement embodies

Which union status provides the weakest form of union security?

Empirical studies suggest that the efficiency loss associated with the misallocation of labor caused by the union wage advantage is

A college graduate who works at a firm is also working part-time on a master's degree in business and expects to be paid a higher wage after earning the degree. The basic reason for this wage differential is

According to the U.S. Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

Right-to-work laws in some states prohibit the closed-shop and agency-shop union setups.

Authoritative estimates suggest that currently union workers on the average

The XYZ Corporation's collective bargaining agreement indicates that it may hire either union or nonunion workers and that the latter are under no obligation to join the union. This agreement embodies

Which of the following is a valid explanation for real wage growth?

The earnings of highly educated workers

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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