Question 1

As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market, wages

Accepted Answer

A)  and employment will both be lower. 
B)  will be higher, but employment will be lower. 
C)  will be lower, but employment will be higher. 
D)  and employment will both be higher. 
A)  and employment will both be lower. 
B)  will be higher, but employment will be lower. 
C)  will be lower, but employment will be higher. 
D)  and employment will both be higher.

Question 2

Under an agency shop agreement, firms can hire

Accepted Answer

A)  only union workers. 
B)  nonunion workers, but these workers must join the union within a specified period, say, 30 days. 
C)  nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity. 
D)  only nonunion workers. 
A)  only union workers. 
B)  nonunion workers, but these workers must join the union within a specified period, say, 30 days. 
C)  nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity. 
D)  only nonunion workers.

Question 3

Since 1980, labor union membership in the United States has been

Accepted Answer

A)  increasing absolutely and as a percentage of the labor force. 
B)  increasing absolutely but declining as a percentage of the labor force. 
C)  decreasing absolutely and as a percentage of the labor force. 
D)  decreasing absolutely but increasing as a percentage of the labor force. 
A)  increasing absolutely and as a percentage of the labor force. 
B)  increasing absolutely but declining as a percentage of the labor force. 
C)  decreasing absolutely and as a percentage of the labor force. 
D)  decreasing absolutely but increasing as a percentage of the labor force.

Question 4

The long-run trend of real wages

Accepted Answer

A)  cannot be determined from available data on nominal wages and the price level. 
B)  has been downward because the price level has risen faster than nominal wages. 
C)  has been upward. 
D)  has been downward because labor's share of the domestic income has fallen. 
A)  cannot be determined from available data on nominal wages and the price level. 
B)  has been downward because the price level has risen faster than nominal wages. 
C)  has been upward. 
D)  has been downward because labor's share of the domestic income has fallen.

Question 5

If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit-maximizing quantities of labor and capital when

Accepted Answer

A) $\mathrm{MRP} _{L} / P_{L}=\mathrm{MRP} C / P C=1$ 
B) $\mathrm{MRP}_{L} / \mathrm{MRC} L=\mathrm{MRP}_{C} / \mathrm{MRC} _{C}=1 .$ 
C)  the MRP of labor equals the MRP of capital. 
D)  the MRC of labor equals the MRC of capital. 
A) $\mathrm{MRP} _{L} / P_{L}=\mathrm{MRP} C / P C=1$ 
B) $\mathrm{MRP}_{L} / \mathrm{MRC} L=\mathrm{MRP}_{C} / \mathrm{MRC} _{C}=1 .$ 
C)  the MRP of labor equals the MRP of capital. 
D)  the MRC of labor equals the MRC of capital.

Question 6

Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  transportation 
B)  mining 
C)  manufacturing 
D)  finance 
A)  transportation 
B)  mining 
C)  manufacturing 
D)  finance

Question 8

A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is

Accepted Answer

A)  $9. 
B)  $10. 
C)  $15. 
D)  $21. 
A)  $9. 
B)  $10. 
C)  $15. 
D)  $21.

Question 9

Paying an above-equilibrium wage rate might reduce unit labor costs by

Accepted Answer

A)  permitting the firm to attract lower-quality labor. 
B)  increasing the opportunity cost to workers of being fired for shirking. 
C)  increasing voluntary worker turnover. 
D)  increasing the supply of labor. 
A)  permitting the firm to attract lower-quality labor. 
B)  increasing the opportunity cost to workers of being fired for shirking. 
C)  increasing voluntary worker turnover. 
D)  increasing the supply of labor.

Question 10

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

Accepted Answer

A) True 
 B)False

Question 11

The reason that the supply curve for labor in a purely competitive market slopes upward is because

Accepted Answer

A)  the wage rate paid to workers falls as more are hired. 
B)  the marginal product of labor falls as output increases. 
C)  marginal resource cost rises as productivity increases. 
D)  higher wages must be paid to bid workers away from other opportunities. 
A)  the wage rate paid to workers falls as more are hired. 
B)  the marginal product of labor falls as output increases. 
C)  marginal resource cost rises as productivity increases. 
D)  higher wages must be paid to bid workers away from other opportunities.

Question 12

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

Accepted Answer

A)  increase unemployment in the labor market. 
B)  increase firms' demand for labor. 
C)  decrease the supply of labor. 
D)  cause firms to substitute labor for capital. 
A)  increase unemployment in the labor market. 
B)  increase firms' demand for labor. 
C)  decrease the supply of labor. 
D)  cause firms to substitute labor for capital.

Question 13

Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason for this is to

Accepted Answer

A)  restrict the supply of construction workers. 
B)  increase the elasticity of demand for construction workers. 
C)  increase the demand for construction workers. 
D)  increase the price of substitute inputs. 
A)  restrict the supply of construction workers. 
B)  increase the elasticity of demand for construction workers. 
C)  increase the demand for construction workers. 
D)  increase the price of substitute inputs.

Question 14

The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

Accepted Answer

A)  2 percent 
B)  4 percent 
C)  6 percent 
D)  8 percent 
A)  2 percent 
B)  4 percent 
C)  6 percent 
D)  8 percent

Question 15

According to proponents of human capital theory, education

Accepted Answer

A)  increases a worker's productivity. 
B)  identifies more productive workers for employers, but does not directly increase productivity. 
C)  should result in all workers with college degrees earning more than all workers who hold only high school diplomas. 
D)  is an investment with primarily higher returns and lower risks than those available through investments in physical or financial capital. 
A)  increases a worker's productivity. 
B)  identifies more productive workers for employers, but does not directly increase productivity. 
C)  should result in all workers with college degrees earning more than all workers who hold only high school diplomas. 
D)  is an investment with primarily higher returns and lower risks than those available through investments in physical or financial capital.

Question 16

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent. In this case, the percentage change in the real annual wage is about

Accepted Answer

A)  −1 percent. 
B)  −2 percent. 
C)  3 percent. 
D)  5 percent. 
A)  −1 percent. 
B)  −2 percent. 
C)  3 percent. 
D)  5 percent.

Question 17

The marginal cost of a productive resource is equal to the price of the resource if a firm is

Accepted Answer

A)  a price taker in the output market. 
B)  a price taker in the resource market. 
C)  able to influence the price of the product by producing more or less of it. 
D)  able to influence the price of the factor by buying more or less of it. 
A)  a price taker in the output market. 
B)  a price taker in the resource market. 
C)  able to influence the price of the product by producing more or less of it. 
D)  able to influence the price of the factor by buying more or less of it.

Question 18

The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by

Accepted Answer

A)  discrimination. 
B)  geographic immobility. 
C)  compensating differences. 
D)  noncompeting labor groups. 
A)  discrimination. 
B)  geographic immobility. 
C)  compensating differences. 
D)  noncompeting labor groups.

Question 19

Long-run real wages in the United States have

Accepted Answer

A)  risen because growth in the demand for labor has exceeded growth in the supply of labor. 
B)  risen because the supply of labor has fallen over time. 
C)  fallen because growth in the supply of labor has exceeded growth in the demand for labor. 
D)  fallen because the demand for labor has fallen over time. 
A)  risen because growth in the demand for labor has exceeded growth in the supply of labor. 
B)  risen because the supply of labor has fallen over time. 
C)  fallen because growth in the supply of labor has exceeded growth in the demand for labor. 
D)  fallen because the demand for labor has fallen over time.

Question 20

The monopsonistic power of a firm in a labor market tends to be enhanced by

Accepted Answer

A)  entry of new firms in that market. 
B)  higher transferability of workers' skills to other professions. 
C)  an increasing immobility of workers to other jobs or locations. 
D)  technological advances that make online services easier to provide. 
A)  entry of new firms in that market. 
B)  higher transferability of workers' skills to other professions. 
C)  an increasing immobility of workers to other jobs or locations. 
D)  technological advances that make online services easier to provide.

Exam 17: Wage Determination

As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market, wages

Under an agency shop agreement, firms can hire

Since 1980, labor union membership in the United States has been

The long-run trend of real wages

If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit-maximizing quantities of labor and capital when

Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

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

A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is

Paying an above-equilibrium wage rate might reduce unit labor costs by

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

The reason that the supply curve for labor in a purely competitive market slopes upward is because

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason for this is to

The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

According to proponents of human capital theory, education

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent. In this case, the percentage change in the real annual wage is about

The marginal cost of a productive resource is equal to the price of the resource if a firm is

The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by

Long-run real wages in the United States have

The monopsonistic power of a firm in a labor market tends to be enhanced by

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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