Question 1

Some economists claim that unions reduce economic efficiency by

Accepted Answer

A)  providing a voice mechanism for workers.
B)  insisting that promotions be based on ability rather than seniority.
C)  imposing restrictions on the kinds of jobs workers may perform.
D)  increasing worker turnover.

Question 2

(Last Word)  Which of the following statements is true about occupational licensing in the United States?

Accepted Answer

A)  In the 1950s only about 5 percent of jobs required an occupational license; today about one-third of jobs require a license.
B)  The proportion of jobs requiring occupational licenses has remained relatively stable since the 1950s.
C)  Occupational licensing benefits consumers by reducing firms' costs and lowering output prices.
D)  Occupational licensing enhances employment opportunities for poorer workers.

Question 3

One clear effect of labor unions is an increase in the wage rates of their members.

Accepted Answer

A) True 
 B)False

Question 4

If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market,

Accepted Answer

A)  the resulting wage rate will always be above the competitive level.
B)  employment may either increase or decrease.
C)  employment will increase.
D)  employment will decrease.

Question 5

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Accepted Answer

A)  wage rate or price of labor.
B)  price of the product.
C)  marginal cost of one extra unit of output.
D)  average cost of each unit of output.

Question 6

Efficiency wages are established at below-equilibrium levels.

Accepted Answer

A) True 
 B)False

Question 7

Other things being equal, the wages of clerical workers would tend to decrease if there was an increase in

Accepted Answer

A)  the marginal revenue product of clerical workers.
B)  the minimum entry requirements for clerical work.
C)  the period of training required for clerical work.
D)  nonmonetary benefits available to clerical workers.

Question 8

Which statement is correct?

Accepted Answer

A)  The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage.
B)  The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage.
C)  The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage.
D)  The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

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.

Question 10

Human capital is best defined as

Accepted Answer

A)  the productive skills and knowledge that workers acquire from education and training.
B)  the substitution of labor for machinery in the production process.
C)  any piece of machinery that must be combined with labor to be productive.
D)  the exchange of money for real assets.

Question 11

The critical feature of a monopsonistic labor market is that the employer

Accepted Answer

A)  has a perfectly elastic demand curve for labor.
B)  can hire any number of workers it chooses at the going wage rate.
C)  faces an upsloping labor supply curve.
D)  faces a perfectly inelastic labor supply curve.

Question 12

African Americans have higher unionization rates than whites.

Accepted Answer

A) True 
 B)False

Question 13

Labor unions may attempt to raise wage rates by

Accepted Answer

A)  increasing the supply of labor.
B)  forcing employers, under the threat of a strike, to pay above-equilibrium wage rates.
C)  decreasing the demand for labor.
D)  increasing the price of complementary resources.

Question 14

Economists regard expenditures on education as investments because

Accepted Answer

A)  they are subject to tax deductions at the same rate as are expenditures on machinery and equipment.
B)  education is economically beneficial at the same time it is being acquired.
C)  such expenditures are current costs that are intended to enhance future earnings.
D)  they differ from expenditures on health and worker mobility.

Question 15

In monopsony,

Accepted Answer

A)  each firm employs a small portion of the total supply of labor.
B)  the workforce is highly mobile.
C)  the wage rate paid by the employer varies directly with the number of workers employed.
D)  the employer is a "wage taker."

Question 16

A bilateral monopoly is a situation where a firm is

Accepted Answer

A)  a monopoly in its product market and is a monopsony in its labor market.
B)  the only employer of a resource and is acquiring that resource from a single supplier.
C)  one of only two firms that produce a particular product.
D)  the only buyer of a resource and also the only seller of a product.

Question 17

In 2015, the U.S.unionization rate was

Accepted Answer

A)  5.5 percent, down by nearly one-half from the rate in the mid-1950s.
B)  16.4 percent, up by about one-fourth from the rate in the mid-1950s.
C)  11.1 percent, down by more than one-half from the rate in the mid-1950s.
D)  22 percent, down by 3 percentage points from the mid-1950s.

Question 18

Critics of minimum-wage legislation argue that it

Accepted Answer

A)  keeps inefficient producers in business.
B)  reduces employment.
C)  undermines incentives to work.
D)  is deflationary.

Question 19

According to the U.S.Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

Accepted Answer

A)  surgeons
B)  financial managers
C)  petroleum engineers
D)  law professors

Question 20

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Accepted Answer

A)  results in a less-experienced workforce.
B)  increases the incentive for firms to provide training to their workers.
C)  allows firms to employ a greater number of younger, more energetic workers.
D)  increases the incentive for firms to substitute labor for capital in the production process.

Exam 17: Wage Determination

A bilateral monopoly is a situation where a firm is

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By reducing labor turnover, unions may increase productivity because a lower turnover rate

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Economists regard expenditures on education as investments because

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Labor unions may attempt to raise wage rates by

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(Last Word) Which of the following statements is true about occupational licensing in the United States?

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Human capital is best defined as

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Efficiency wages are established at below-equilibrium levels.

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Other things being equal, the wages of clerical workers would tend to decrease if there was an increase in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Critics of minimum-wage legislation argue that it

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If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market,

Correct AnswerverifiedShow Answer

One clear effect of labor unions is an increase in the wage rates of their members.

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In 2015, the U.S.unionization rate was

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In monopsony,

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Some economists claim that unions reduce economic efficiency by

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According to the U.S.Bureau of Labor Statistics data on wage differentials, which of the following professions paid the highest average annual wage in 2014?

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The critical feature of a monopsonistic labor market is that the employer

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Which statement is correct?

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African Americans have higher unionization rates than whites.

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In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Correct AnswerverifiedShow Answer

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