Question 1

Unions often oppose increases in the prices of complementary inputs (for example,truck drivers may oppose increases in taxes on diesel fuel) .They do this because increases in the prices of complementary inputs might:

Accepted Answer

A)   increase the supply of competing labor through the output effect.
B)   increase the supply of competing labor through the substitution effect.
C)   decrease the demand for union labor through the output effect.
D)   decrease the demand for union labor through the substitution effect.

Question 2

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.

Question 3

The principal-agent problem in labor markets arises because of the possibility of shirking by workers.

Accepted Answer

A) True 
 B)False

Question 4

Bilateral monopoly occurs where:

Accepted Answer

A)   a monopsonistic employer bargains with an inclusive union.
B)   a monopsonistic employer bargains with an exclusive union.
C)   a craft union bargains with a purely competitive employer.
D)   an industrial union bargains with a purely competitive employer.

Question 5

The idea of efficiency wages is that:

Accepted Answer

A)   the wages of each type of labor must be proportionate to their marginal products.
B)   the wages of each type of labor must be equal to their marginal products.
C)   firms might get greater work effort by paying above-equilibrium wage rates.
D)   workers are more diligent when paid below-equilibrium wages.

Question 6

Which of the following bargaining tactics is illegal?

Accepted Answer

A)   A lockout.
B)   A strike.
C)   Refusal to meet with union representatives.
D)   Hiring strikebreakers.

Question 7

According to some supporters of the minimum wage,it has very small or even nonexistent negative employment effects because:

Accepted Answer

A)   the demand for minimum wage labor is highly elastic.
B)   it reduces turnover among minimum wage workers,prompts employers to use them more efficiently,and thus raises their average productivity.
C)   it encourages teenagers to stay in school.
D)   employers substitute lower fringe benefits for higher pay,keeping their compensation costs the same.

Question 8

Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?

Accepted Answer

A)   Movement of labor from lower-wage to higher-wage jobs.
B)   Readily available information about job opportunities and pay.
C)   Principal-agent problems.
D)   Discrimination.

Question 9

African Americans have higher unionization rates than whites.

Accepted Answer

A) True 
 B)False

Question 10

One of the potential negative side-effects of pay in the form of sales commissions is:

Accepted Answer

A)   a greater incentive for salespeople to engage in unethical or fraudulent sales practices that may eventually cause legal problems for the firm.
B)   increased volatility of sales revenue for the firm.
C)   the potential that pay levels may get so high that they will increase a firm's marginal wage cost more than its marginal revenue product.
D)   an increased likelihood of shirking by workers.

Question 11

Independent unions:

Accepted Answer

A)   have greater combined membership than the AFL-CIO.
B)   are not affiliated with the AFL-CIO or Change to Win.
C)   include the United Autoworkers and United Steelworkers.
D)   have about the same combined membership as the AFL-CIO.

Question 12

Over the long run,real earnings per worker can increase only at about the same rate as the economy's rate of growth of:

Accepted Answer

A)   total output.
B)   stock of capital.
C)   output per worker.
D)   international trade.

Question 13

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)   MRPL/PL = MRPC/PC = 1.
B)   MRPL/MRCL = MRPC/MRCC = 1.
C)   the MRP of labor equals the MRP of capital.
D)   the MRC of labor equals the MRC of capital.

Question 14

The presence of an agency shop requires all workers to join the union within the first 30 days of employment.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not correct?

Accepted Answer

A)   Other things equal,a monopsonist will pay a lower wage rate than will a firm hiring labor competitively.
B)   A monopsonistic employer will pay workers a wage rate equal to their MRP.
C)   A purely competitive seller will pay workers a wage rate equal to their MRP.
D)   An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC.

Question 16

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."

Question 17

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.

Question 18

Critics of the minimum wage contend that higher minimums cause employers to move up their labor demand curves,reducing employment of low-wage workers.

Accepted Answer

A) True 
 B)False

Question 19

In a monopsonistic labor market,the employer will maximize profits by employing workers up to that point at which:

Accepted Answer

A)   the difference between the wage rate and marginal resource (labor) cost is at a maximum.
B)   marginal revenue product equals marginal resource (labor) cost.
C)   the wage rate equals marginal revenue product.
D)   the wage rate equals marginal resource (labor) cost.

Question 20

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.

Exam 16: Wage Determination

The presence of an agency shop requires all workers to join the union within the first 30 days of employment.

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The idea of efficiency wages is that:

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Which of the following bargaining tactics is illegal?

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One of the potential negative side-effects of pay in the form of sales commissions is:

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The principal-agent problem in labor markets arises because of the possibility of shirking by workers.

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Over the long run,real earnings per worker can increase only at about the same rate as the economy's rate of growth of:

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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:

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Critics of the minimum wage contend that higher minimums cause employers to move up their labor demand curves,reducing employment of low-wage workers.

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Independent unions:

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In a monopsonistic labor market,the employer will maximize profits by employing workers up to that point at which:

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Unions often oppose increases in the prices of complementary inputs (for example,truck drivers may oppose increases in taxes on diesel fuel) .They do this because increases in the prices of complementary inputs might:

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Bilateral monopoly occurs where:

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In the context of labor markets,shirking refers to:

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

Correct AnswerverifiedShow Answer

According to some supporters of the minimum wage,it has very small or even nonexistent negative employment effects because:

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Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?

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African Americans have higher unionization rates than whites.

Correct AnswerverifiedShow Answer

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

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The market supply curve for labor is upsloping because:

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Which of the following is not correct?

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