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


A) Protective services.
B) Sales workers.
C) Managers.
D) Transportation workers.

E) A) and B)
F) C) and D)

Correct Answer

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Use the labor demand data on the left and the labor supply data on the right in answering the following question:  Labor Demand Data ‾ Labor Supply Data ‾Employment‾0123456MarginalProduct‾014129742 Product  Price ‾$3333333Employment‾0123456 Wage Rate ‾$11111111111111\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array} Refer to the given data.The labor supply curve facing firms is:


A) such that it does not intersect the labor demand curve.
B) upsloping.
C) perfectly inelastic.
D) perfectly elastic.

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

Correct Answer

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


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

Correct Answer

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Stock options as a form of payment are designed to:


A) evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law.
B) boost the overall earnings of minimum-wage workers.
C) offset monopsony.
D) address the principal-agent problem.

E) None of the above
F) B) and C)

Correct Answer

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The majority of union members in the United States belong to unions that are:


A) affiliated with the United Workers of America (UWA) .
B) affiliated with the AFL-CIO.
C) independent unions that are not affiliated with the AFL-CIO.
D) growing rapidly in membership.

E) C) and D)
F) All of the above

Correct Answer

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The rate of unionization is substantially higher for protective service workers than for sales workers.

A) True
B) False

Correct Answer

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Right-to-work laws prohibit the formation of labor unions.

A) True
B) False

Correct Answer

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In a labor dispute in which the existing contract has expired,a:


A) firm can legally lock up unruly workers.
B) firm can legally lock out union workers.
C) union can legally restrict customer access to the firm.
D) union can legally restrict physical access by management to the firm.

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

Correct Answer

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


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 C)
F) A) and B)

Correct Answer

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A

Labor unions are restrained in their wage demands because:


A) legislation limits annual increases in nominal wages to 6 percent.
B) the labor demand curve is downsloping.
C) marginal wage cost curves lie above labor supply curves in most labor markets.
D) most unions deal with monopsonists who have superior bargaining power.

E) A) and C)
F) B) and D)

Correct Answer

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Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?


A) A worker takes 20-minute coffee-breaks although the employer allots only 15 minutes for this purpose.
B) A worker is on the job 50 hours per week although only 40 hours are required for promotion.
C) A worker opts for early retirement in response to the firm's incentive plan.
D) A worker's productivity is independent of the wage paid.

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

Correct Answer

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


A) Transportation.
B) Mining.
C) Manufacturing.
D) Finance.

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

Correct Answer

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Which of the following factors is not relevant in explaining the persistence of wage differentials?


A) Labor immobility.
B) Compensating differences.
C) Free public education.
D) Noncompeting groups.

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

Correct Answer

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Unions prefer agency shops to open shops.

A) True
B) False

Correct Answer

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True

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


A) derived demand.
B) human capital.
C) opportunity cost.
D) occupational licensure.

E) A) and B)
F) None of the above

Correct Answer

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(Consider This) Which of the following best explains why total compensation for U.S.workers has increased significantly over the past several decades,but take-home pay by U.S.workers has increased by much less?


A) An increased share of total compensation has gone to provide health insurance to workers.
B) The share of total compensation going to retirement accounts has increased relative to all other components of compensation.
C) Total compensation is measured in current dollar terms;take-home pay is measured in inflation-adjusted dollars.
D) Workers are receiving a much larger share of total compensation in the form of goods and services produced by the firms that employ them.

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

Correct Answer

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Other things equal,the monopsonistic employer will pay a:


A) lower wage rate and hire fewer workers than will a purely competitive employer.
B) higher wage rate but hire fewer workers than will a purely competitive employer.
C) lower wage rate but hire a larger number of workers than will a purely competitive employer.
D) higher wage rate and hire a larger number of workers than will a purely competitive employer.

E) A) and C)
F) All of the above

Correct Answer

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A union might increase the demand for the labor services of its members by:


A) decreasing the demand for the product it is producing.
B) decreasing the prices of complementary inputs.
C) decreasing the prices of substitute inputs.
D) increasing the prices of complementary inputs.

E) A) and B)
F) B) and D)

Correct Answer

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B

Use the labor demand data on the left and the labor supply data on the right in answering the following question:  Labor Demand Data ‾ Labor Supply Data ‾Employment‾0123456MarginalProduct‾014129742 Product  Price ‾$3333333Employment‾0123456 Wage Rate ‾$11111111111111\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array} Refer to the given data.The firm will maximize profits (or minimize losses) by employing:


A) 5 workers.
B) 4 workers.
C) 3 workers.
D) 2 workers.

E) None of the above
F) A) and B)

Correct Answer

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Six of the 50 states account for approximately half of all union members in the United States.

A) True
B) False

Correct Answer

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