Question 1

Which of the following is characteristic of a labor market that is a monopsony?

Accepted Answer

A)  The type of labor available is relatively mobile from one industry to another.
B)  The supply curve for labor lies above the marginal resource cost curve of the firm.
C)  The wage rate the firm must pay varies directly with the number of workers it employs.
D)  The firm's employment is a small portion of the total employment of that type of labor.E) A) and B)
F) A) and C)

Question 2

Jack and Jill have identical skills and training, but Jill earns higher wages in her job.Which of the following reasons would best explain why Jill earns more than Jack?

Accepted Answer

A)  Jack has a chronic illness and would lose health care coverage if he changed jobs.
B)  Jill suffers from gender discrimination in the workplace.
C)  Jack has better access to information about available jobs in his field.
D)  Jill is reluctant to move to a new city because she wants to live near family.E) B) and C)
F) A) and C)

Question 3

(Last Word)  Despite the fact that occupational licensing in many industries is unnecessary for the protection of consumers, these licensing requirements are implemented or increased because of

Accepted Answer

A)  the principal-agent problem.
B)  inclusive unions.
C)  the special-interest effect.
D)  efficiency wages.E) C) and D)
F) B) and C)

Question 4

What concept is associated with the notion that employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage?

Accepted Answer

A)  profit sharing
B)  efficiency wages
C)  piece-rate wages
D)  bonus or commissionsE) A) and B)
F) None of the above

Question 5

An example of a monopsonist is a labor union whose members include all the workers in a particular industry.

Accepted Answer

A) True 
 B)False

Question 6

(Consider This)  The story about artist Pablo Picasso illustrates the point that

Accepted Answer

A)  the demand for labor is a derived demand.
B)  geographical immobility impedes an efficient allocation of labor resources.
C)  principal-agent problems can occur in unusual settings.
D)  present skills reflect past accumulations of human capital.E) B) and D)
F) B) and C)

Question 7

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 12 major work stoppages in the United States in 2015.E) All of the above
F) A) and B)

Question 8

Compared to a purely competitive firm, a monopsonist will pay

Accepted Answer

A)  a higher wage rate to its workers.
B)  lower wages but hire more workers than the purely competitive firm.
C)  lower wage rates and hire fewer workers than the purely competitive firm.
D)  lower wages, while hiring the same quantity of workers as the purely competitive firm.E) None of the above
F) B) and C)

Question 9

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 strikebreakersE) A) and D)
F) A) and C)

Question 10

(Consider This)  The main idea highlighted in the story about artist Pablo Picasso is

Accepted Answer

A)  derived demand.
B)  human capital.
C)  opportunity cost.
D)  occupational licensure.E) A) and B)
F) All of the above

Question 11

Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

Accepted Answer

A) True 
 B)False

Question 12

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.E) A) and B)
F) A) and C)

Question 13

The profit-maximizing rule for a firm hiring both labor (L)  and capital (C)  under conditions of imperfect competition is

Accepted Answer

A)  MPL / PL = MPC / PC.
B)  MPL / MPC = MRCC / MRPL.
C)  MRPL / MRCL = MRPC / MRCC = 1.
D)  MRCL / MPL = MRCC / MPC = 1.E) None of the above
F) C) and D)

Question 14

Equilibrium price differentials for productive resources

Accepted Answer

A)  tend to be self-eliminating.
B)  may be caused by differences in the quality of those resources.
C)  are eliminated when the allocation of resources is in a state of equilibrium.
D)  are unrelated to differences in nonmonetary benefits.E) A) and C)
F) C) and D)

Question 15

A firm finds that it must increase wages to attract extra workers.The firm will hire labor up to the point where the marginal

Accepted Answer

A)  product of labor equals the wage rate.
B)  revenue product of labor is greater than the wage rate.
C)  revenue product of labor starts to decline.
D)  revenue product equals the additional cost of hiring an extra worker.E) B) and C)
F) A) and D)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The equilibrium wage rate in a bilateral monopoly labor market is

Accepted Answer

A)  determined by the monopoly supplier of labor.
B)  determined solely by employers.
C)  logically indeterminate within a certain range.
D)  largely set by government regulators.E) B) and D)
F) A) and B)

Question 18

Minimum-wage legislation is less likely to have adverse effects on employment when the

Accepted Answer

A)  affected labor market is monopsonistic.
B)  economy has high unemployment.
C)  derived demand for labor is shifting to the left.
D)  demand for labor is relatively elastic.E) A) and B)
F) None of the above

Question 19

Which of the following is correct?

Accepted Answer

A)  The nominal wage may fall, but the real wage can never decline.
B)  The real wage may fall, but the nominal wage can never decline.
C)  Both the nominal and the real wage must always rise.
D)  The nominal and the real wage may both fall.E) A) and D)
F) B) and C)

Question 20

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.E) A) and B)
F) A) and C)

Exam 17: Wage Determination

The equilibrium wage rate in a bilateral monopoly labor market is

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A firm finds that it must increase wages to attract extra workers.The firm will hire labor up to the point where the marginal

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Compared to a purely competitive firm, a monopsonist will pay

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Which of the following bargaining tactics is illegal?

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Which of the following statements is correct?

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An example of a monopsonist is a labor union whose members include all the workers in a particular industry.

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Jack and Jill have identical skills and training, but Jill earns higher wages in her job.Which of the following reasons would best explain why Jill earns more than Jack?

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(Consider This) The story about artist Pablo Picasso illustrates the point that

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

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Which of the following is characteristic of a labor market that is a monopsony?

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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

Correct AnswerverifiedShow Answer

(Last Word) Despite the fact that occupational licensing in many industries is unnecessary for the protection of consumers, these licensing requirements are implemented or increased because of

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

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Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

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Which of the following is correct?

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The profit-maximizing rule for a firm hiring both labor (L) and capital (C) under conditions of imperfect competition is

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Equilibrium price differentials for productive resources

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What concept is associated with the notion that employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage?

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(Consider This) The main idea highlighted in the story about artist Pablo Picasso is

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Minimum-wage legislation is less likely to have adverse effects on employment when the

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