Question 1

In a labor market characterized by bilateral monopoly, the wage rate will

Accepted Answer

A)   be logically indeterminate.
B)   be established at the level desired by the union.
C)   be established at the level desired by the employer.
D)   always be established at the competitive level.E) A) and B)
F) A) and C)

Question 2

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) B) and D)
F) None of the above

Question 3

A firm might choose to pay its employees a wage higher than that which would clear the market because

Accepted Answer

A)   the higher wage raises the opportunity cost of shirking.
B)   the higher wage may shift the labor demand curve to the left.
C)   the firm will have higher turnover, allowing "new blood" to invigorate older workers, who have a greater tendency to shirk.
D)   this policy reduces the proportion of experienced to inexperienced workers, resulting in a lower overall wage bill.E) A) and B)
F) A) and C)

Question 4

Which of the following is most likely to be an example of monopsony?

Accepted Answer

A)   the market for fast-food workers in a large summer resort town
B)   the market for card dealers in Las Vegas
C)   the market for Major League Baseball umpires
D)   the market for retail sales clerks in a major cityE) A) and B)
F) A) and C)

Question 5

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Accepted Answer

A) True 
 B)False

Question 6

If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent, then the real wages of carpenters

Accepted Answer

A)   decreased by 2 percent.
B)   increased by 2 percent.
C)   increased by 3 percent.
D)   increased by 8 percent.E) None of the above
F) B) and C)

Question 7

A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25 units of output an hour. If the firm adopts an efficiency-wage policy, then the wage rate for these workers would be expected to

Accepted Answer

A)   increase and productivity to decrease.
B)   decrease and productivity to increase.
C)   increase and productivity to increase.
D)   decrease and productivity to decrease.E) C) and D)
F) B) and D)

Question 8

Suppose the wage rate is $5, and the marginal revenue product (MRP)  of the seventh worker at a yo-yo factory is also equal to $5. The labor market was originally purely competitive, but is then monopsonized without changing the MRP of the seventh worker. That means

Accepted Answer

A)   more workers will be hired but they will be paid lower wages.
B)   more workers will be hired and they will be paid higher wages.
C)   fewer workers will be hired and they will be paid lower wages.
D)   fewer workers will be hired and they will be paid higher wages.E) None of the above
F) All of the above

Question 9

The principal-agent problem, as applied to the labor market, would have the

Accepted Answer

A)   employer as the agent and the worker as the principal.
B)   employer as the principal and the worker as the agent.
C)   employer and worker as the principals, and the customer as the agent.
D)   customer as the principal, and the employer and worker as the agents.E) A) and C)
F) A) and B)

Question 10

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 11

The principal-agent problem as it applies to labor employment refers to

Accepted Answer

A)   employer and workers wanting the firm to survive and thrive.
B)   firms having the profit motive, while workers may be shirking on the job.
C)   employers having a problem finding qualified workers.
D)   workers facing a problem finding employment.E) A) and D)
F) All of the above

Question 12

In 2015, food workers had a much higher unionization rate than teachers, according to U.S. Bureau of Labor Statistics data.

Accepted Answer

A) True 
 B)False

Question 13

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) B) and D)
F) All of the above

Question 14

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) None of the above
F) C) and D)

Question 15

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.E) A) and D)
F) A) and C)

Question 16

State right-to-work laws

Accepted Answer

A)   have been enacted by over one-half of the states in the nation.
B)   make yellow dog contracts illegal.
C)   allow for union shops while prohibiting closed shops.
D)   make union and agency shops illegal.E) None of the above
F) A) and B)

Question 17

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

Question 18

In recent years, total compensation to workers has risen faster than the take-home pay of average workers. This implies that

Accepted Answer

A)   something is wrong with the statistics on either compensation or take-home pay.
B)   fringe benefits have become a larger share of total worker compensation.
C)   direct payments have become a larger share of total worker compensation.
D)   workers' pay has been declining slightly in recent years.E) None of the above
F) A) and B)

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Accepted Answer

A)   be unaffected.
B)   rise by 4 percent.
C)   fall by 4 percent.
D)   rise by 8 percent.E) A) and B)
F) C) and D)

Exam 17: Wage Determination

In a labor market characterized by bilateral monopoly, the wage rate will

Correct AnswerverifiedShow Answer

Which of the following is most likely to be an example of monopsony?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Equilibrium price differentials for productive resources

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Noncompeting groups of workers are the result of

Correct AnswerverifiedShow Answer

If the nominal wage rises by 6 percent and the price level falls by 2 percent, the real wage will

Correct AnswerverifiedShow Answer

State right-to-work laws

Correct AnswerverifiedShow Answer

The principal-agent problem as it applies to labor employment refers to

Correct AnswerverifiedShow Answer

If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent, then the real wages of carpenters

Correct AnswerverifiedShow Answer

Suppose the wage rate is $5, and the marginal revenue product (MRP) of the seventh worker at a yo-yo factory is also equal to $5. The labor market was originally purely competitive, but is then monopsonized without changing the MRP of the seventh worker. That means

Correct AnswerverifiedShow Answer

The principal-agent problem, as applied to the labor market, would have the

Correct AnswerverifiedShow Answer

In 2015, food workers had a much higher unionization rate than teachers, according to U.S. Bureau of Labor Statistics data.

Correct AnswerverifiedShow Answer

A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25 units of output an hour. If the firm adopts an efficiency-wage policy, then the wage rate for these workers would be expected to

Correct AnswerverifiedShow Answer

In recent years, total compensation to workers has risen faster than the take-home pay of average workers. This implies that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A firm might choose to pay its employees a wage higher than that which would clear the market because

Correct AnswerverifiedShow Answer

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

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