Question 1

A craft union attempts to increase wage rates by

Accepted Answer

A)  equating the MRP and the MRC curves.
B)  shifting the labor supply curve to the left.
C)  shifting the labor supply curve to the right.
D)  shifting the MRP curve to the right.E) A) and D)
F) A) and C)

Question 2

For the firm, the major goal of profit sharing plans is to

Accepted Answer

A)  force workers to incur some of the business risk.
B)  overcome the monopsony problem of having to pay higher wages to attract additional workers.
C)  overcome the principal-agent problem by better aligning the workers' interests with those of the firm.
D)  reduce total compensation payments.E) A) and D)
F) A) and B)

Question 3

Which union status provides the weakest form of union security?

Accepted Answer

A)  open shop
B)  agency shop
C)  union shop
D)  closed shopE) B) and D)
F) None of the above

Question 4

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 growthE) All of the above
F) A) and B)

Question 5

A decrease in the supply curve of nurses could be accounted for by all of the following except a(n)

Accepted Answer

A)  increase in the rewards available in other comparable occupations.
B)  increase in the training requirements for nurses.
C)  reduction in the number of nursing schools.
D)  cut in the wages of nurses.E) All of the above
F) A) and B)

Question 6

The labor supply curve facing a purely competitive firm is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 7

Noncompeting groups of workers are the result of

Accepted Answer

A)  differences in the age-earnings profiles of workers.
B)  differences in the "job tastes" of workers.
C)  differences in the innate and acquired abilities of workers.
D)  geographic immobility.E) A) and B)
F) B) and C)

Question 8

Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.Topic: A Purely Competitive Labor Market
Topic: Monopsony Model

Accepted Answer

A) True 
 B)False

Question 9

The concept of "wages" includes the following items, except

Accepted Answer

A)  direct money payments like salaries and commissions.
B)  bonuses and royalties.
C)  amounts spent by workers.
D)  fringe benefits like health insurance and paid leave.E) A) and D)
F) None of the above

Question 10

"Player drafts" of professional athletes

Accepted Answer

A)  increase the competitiveness of the labor market for professional athletes.
B)  reduce the profitability of professional sports franchises.
C)  promote monopsony in the hiring of professional athletes.
D)  increase salaries of professional athletes.E) All of the above
F) B) and C)

Question 11

Inclusive unions restrict the number of jobs directly by shifting the labor supply curve to the left; exclusive unions restrict the number of jobs by imposing above-equilibrium wage rates on the employer.

Accepted Answer

A) True 
 B)False

Question 12

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 13

Which of the following economic effects of unions tends to improve efficiency?

Accepted Answer

A)  featherbedding
B)  strike or lockout
C)  union wage advantage
D)  voice mechanismE) A) and B)
F) None of the above

Question 14

State right-to-work laws

Accepted Answer

A)  permit employers to hire nonunion workers only if union labor is unavailable.
B)  prohibit employers from discriminating against minority groups in hiring workers.
C)  prohibit unions from discriminating against minority groups in recruiting members.
D)  make compulsory union membership (for example, a union shop)  illegal.E) C) and D)
F) A) and C)

Question 15

One reason for the high wage rates in the United States and other advanced economies is the high productivity of labor in these countries.

Accepted Answer

A) True 
 B)False

Question 16

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.E) None of the above
F) All of the above

Question 17

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

Accepted Answer

A)  geographical immobility of workers
B)  readily available information about job opportunities and pay
C)  principal-agent problems
D)  compensating wage differentialsE) A) and D)
F) A) and C)

Question 18

Assume that your nominal wage was fixed at $15 an hour, and the price index rose from 100 to 105.In this case, your real wage has

Accepted Answer

A)  decreased to $10.
B)  increased to $15.75.
C)  decreased to $14.29.
D)  increased to $20.E) A) and B)
F) A) and C)

Question 19

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 wageE) A) and B)
F) A) and C)

Question 20

Which of the following is correct?

Accepted Answer

A)  The federal government can delay any strike for 80 days.
B)  About 3 percent of total work time is lost in the United States because of strikes.
C)  Work time lost may overstate the cost of a strike if the work stoppage disrupts production in related industries.
D)  Work time lost may overstate the cost of a strike if nonstruck firms increase their production.E) None of the above
F) A) and B)

Exam 17: Wage Determination

One reason for the high wage rates in the United States and other advanced economies is the high productivity of labor in these countries.

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

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For the firm, the major goal of profit sharing plans is to

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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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"Player drafts" of professional athletes

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

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A decrease in the supply curve of nurses could be accounted for by all of the following except a(n)

Correct AnswerverifiedShow Answer

Inclusive unions restrict the number of jobs directly by shifting the labor supply curve to the left; exclusive unions restrict the number of jobs by imposing above-equilibrium wage rates on the employer.

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Assume that your nominal wage was fixed at $15 an hour, and the price index rose from 100 to 105.In this case, your real wage has

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Which of the following is correct?

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The labor supply curve facing a purely competitive firm is perfectly inelastic.

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Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.Topic: A Purely Competitive Labor Market Topic: Monopsony Model

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Noncompeting groups of workers are the result of

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Which of the following economic effects of unions tends to improve efficiency?

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State right-to-work laws

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A craft union attempts to increase wage rates by

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

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Which union status provides the weakest form of union security?

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

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The concept of "wages" includes the following items, except

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