Question 1

The concept of investment in human capital indicates that:

Accepted Answer

A)  union workers are better educated and more productive than nonunion workers. 
B)  expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment. 
C)  worker productivity correlates negatively with annual earnings. 
D)  the level of education is unrelated to the level of one's income. 
A)  union workers are better educated and more productive than nonunion workers. 
B)  expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment. 
C)  worker productivity correlates negatively with annual earnings. 
D)  the level of education is unrelated to the level of one's income.

Question 2

Wage differentials may result from all the following except:

Accepted Answer

A)  differences in the nonmonetary aspects of various occupations. 
B)  differences in the education and skills of workers. 
C)  geographic and sociological immobilities of workers. 
D)  the tendency of qualified workers to move from lower pay jobs to higher pay jobs. 
A)  differences in the nonmonetary aspects of various occupations. 
B)  differences in the education and skills of workers. 
C)  geographic and sociological immobilities of workers. 
D)  the tendency of qualified workers to move from lower pay jobs to higher pay jobs.

Question 3

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Accepted Answer

A) True 
 B)False

Question 4

The principal-agent problem arises primarily because:

Accepted Answer

A)  principals and agents share a common interest,leading to free-rider problems. 
B)  principals and agents are in an adversarial role,sharing no common interests. 
C)  principals pursue some of their own objectives,which may conflict with the objectives of the agents. 
D)  agents pursue some of their own objectives,which may conflict with the objectives of the principals. 
A)  principals and agents share a common interest,leading to free-rider problems. 
B)  principals and agents are in an adversarial role,sharing no common interests. 
C)  principals pursue some of their own objectives,which may conflict with the objectives of the agents. 
D)  agents pursue some of their own objectives,which may conflict with the objectives of the principals.

Question 5

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

Accepted Answer

A)  marginal revenue product is zero. 
B)  marginal revenue product exceeds marginal resource (labor)cost by the greatest amount. 
C)  marginal resource cost is zero. 
D)  marginal revenue product equals marginal resource (labor)cost. 
A)  marginal revenue product is zero. 
B)  marginal revenue product exceeds marginal resource (labor)cost by the greatest amount. 
C)  marginal resource cost is zero. 
D)  marginal revenue product equals marginal resource (labor)cost.

Question 6

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 7

AFL-CIO stands for:

Accepted Answer

A)  American Federation of Labor-Congress of Industrial Organizations. 
B)  American Federation of Labor-Committee for Industrial Opportunity. 
C)  Assembly of Factory Laborers-Congress of Industrial Organizations. 
D)  Assembly of Factory Laborers-Committee for Industrial Opportunity. 
A)  American Federation of Labor-Congress of Industrial Organizations. 
B)  American Federation of Labor-Committee for Industrial Opportunity. 
C)  Assembly of Factory Laborers-Congress of Industrial Organizations. 
D)  Assembly of Factory Laborers-Committee for Industrial Opportunity.

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

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

Accepted Answer

A) True 
 B)False

Question 10

Data on education and earnings reveal:

Accepted Answer

A)  negative age-earnings profiles for male workers. 
B)  no relationship between the two. 
C)  a positive relationship between the two. 
D)  a negative relationship between the two. 
A)  negative age-earnings profiles for male workers. 
B)  no relationship between the two. 
C)  a positive relationship between the two. 
D)  a negative relationship between the two.

Question 11

In the United States,the rate of unionization is:

Accepted Answer

A)  higher in mining than in government. 
B)  lower in transportation than in agriculture. 
C)  higher in transportation than in retail trade. 
D)  lower in government than in finance,insurance,and real estate. 
A)  higher in mining than in government. 
B)  lower in transportation than in agriculture. 
C)  higher in transportation than in retail trade. 
D)  lower in government than in finance,insurance,and real estate.

Question 12

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 13

Real wages in the United States in the long run:

Accepted Answer

A)  show no discernible relationship to output per worker. 
B)  have increased at about the same rate as increases in output per worker. 
C)  have increased slower than increases in output per worker. 
D)  have increased faster than increases in output per worker. 
A)  show no discernible relationship to output per worker. 
B)  have increased at about the same rate as increases in output per worker. 
C)  have increased slower than increases in output per worker. 
D)  have increased faster than increases in output per worker.

Question 14

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 19 major work stoppages in the United States in 2011. 
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 19 major work stoppages in the United States in 2011.

Question 15

If all workers are homogeneous,all jobs are equally attractive to workers,and labor markets are perfectly competitive:

Accepted Answer

A)  compensating differences would cause wage differentials. 
B)  noncompeting groups of workers would result in wage differentials. 
C)  all workers would receive the same wage rate. 
D)  worker mobility would occur such that wage differentials would widen. 
A)  compensating differences would cause wage differentials. 
B)  noncompeting groups of workers would result in wage differentials. 
C)  all workers would receive the same wage rate. 
D)  worker mobility would occur such that wage differentials would widen.

Question 16

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 17

Inclusive unionism is practiced mostly by:

Accepted Answer

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

Question 18

The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it.

Accepted Answer

A) True 
 B)False

Question 19

Marginal resource (labor)cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 16: Wage Determination

The concept of investment in human capital indicates that:

Wage differentials may result from all the following except:

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

The principal-agent problem arises primarily because:

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

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

AFL-CIO stands for:

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:

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

Data on education and earnings reveal:

In the United States,the rate of unionization is:

Authoritative estimates suggest that currently union workers on the average:

Real wages in the United States in the long run:

Which of the following statements is correct?

If all workers are homogeneous,all jobs are equally attractive to workers,and labor markets are perfectly competitive:

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

Inclusive unionism is practiced mostly by:

The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it.

Marginal resource (labor)cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.

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

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 Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

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