Deck 8: Wages and Employment

Question 1

In a perfectly competitive labour market an increase in the wage rate will result in:

A) a decrease in the quantity demanded of labour
B) an increase in the demand for labour
C) an increase in the quantity of labour demanded
D) a decrease in the demand for labour

Answer 1

A

Question 2

In a perfectly competitive market for labour the marginal cost of labour:

A) is equal to the wage rate
B) increases as more units of labour are employed
C) initially decreases and then increases as more units of labour are employed
D) decreases as more units of labour are employed

Answer 2

A

Question 3

Compared to a perfectly competitive labour market, firms in a monopsonist labour market employ labour and pay a wage.

A) more; lower
B) less; lower
C) more; higher
D) less; higher

Answer 3

B

Question 4

A 'wage taker' refers:

A) only to an employer who must accept the market determined wage
B) to both employers and employees who must accept the market determined wage rate
C) only to an employee who must accept the market determined wage
D) to the wage rates that must be accepted by employees in imperfect markets

Question 5

In a competitive labour market the cost to a firm of employing more workers:

A) falls as the number of workers employed rises
B) remains constant
C) at first falls and then rises
D) rises as the number of workers employed rises

Question 6

A firm which is a 'wage- setter' rather than a 'wage- taker' is said to be:

A) a monopsonist
B) a monopoly
C) a trade union
D) none of the above

Question 7

Under perfect competition wage- rates are NOT affected by:

A) how unpleasant a particular job is
B) workers' willingness to sacrifice leisure for money
C) how hard people work
D) agreements between employers and trade unions

Question 8

The supply curve for labour in the waste collection industry would increase (shift to the right) if:

A) wages in alternative jobs increased
B) the status of waste collectors increased
C) the wage rate for waste collectors increased
D) the number of qualified waste collectors decreased

Question 9

If the productivity of workers suddenly rises this will result in:

A) a fall in the MRP, increase in labour demand and a fall in the wage rate
B) a rise in the MRP, decrease in labour demand and a rise in the wage rate
C) a rise in the MRP, increase in labour demand and a rise in the wage rate
D) a fall in the MRP, increase in labour demand and a rise in the wage rate

Question 10

New technology in the form of computer spreadsheets has increased the productivity of accountants. This will cause:

A) firms to move up their demand curves for accountants
B) the demand curve for accountants to shift to the left, since it requires fewer accountants than it did before to do the same amount of work
C) the demand curve for accountants to shift to the right since the productivity of accountants has increased
D) firms to move down their demand curves for accountants

Question 11

The market demand curve for labour is:

A) horizontal
B) downward sloping
C) vertical
D) perfectly inelastic

Question 12

When a monopsonist enters a perfectly competitive labour market, it will pay a wage and employ workers than under a perfect labour market.

A) lower, more
B) higher, more
C) lower, fewer
D) higher, fewer

Question 13

When a trade union comes up against a monopsonist, we refer to it as:

A) an oligopsonist
B) a 2- way monopoly
C) a duopsonist
D) a bilateral monopoly

Question 14

Which of the following is most likely to be a monopsonist?

A) a firm in a perfectly competitive market in Melbourne
B) an ice- cream parlour on the Sunshine Coast
C) a sugar cane refinery in a Queensland country town
D) a firm in a monopolistically competitive market in Sydney

Question 15

In a bi- lateral monopoly, the equilibrium wage rate is:

A) determined by the interaction of demand and supply in the market
B) found where the marginal revenue product of labour is equal to the wage rate
C) determined by negotiation between employers and employees or their representatives
D) found where the marginal revenue product of labour is equal to the marginal cost

Question 16

Which of the following is NOT a reason why labour productivity may increase in response to higher wages?

A) Higher wages allow workers to take more leisure time.
B) Higher wages result in reduced labour mobility.
C) Higher wages result in higher staff morale.
D) Higher wages increase the opportunity cost of dismissal.

Question 17

The position of the market supply curve of labour does NOT depend on:

A) the pleasantness of the work environment
B) the non- wage benefits available in alternative jobs
C) the proportion of people in the labour force who are qualified
D) the wages offered in that market

Question 18

Marginal productivity theory states that to maximise profits an employer will employ workers up to the point where the worker's _ equals _ .

A) AC, MRP
B) MC, MRP
C) MC, MPP
D) MC, TPP

Question 19

Unions may be less successful in achieving wage rises for their members if:

A) the demand for labour is strong
B) the industry is characterised by a high level of competition
C) the industry is characterised by a low level of competition
D) the supply of labour is limited

Question 20

The fact that the demand for car workers stems from the demand for cars is referred to as:

A) indirect demand
B) output demand
C) derived demand
D) the value of the marginal product of car workers

Question 21

Changes in the MPP of labour affects the firm's labour demand curve.

Question 22

Choose the answer that best completes each sentence.
Statement
a() The extra revenue that a firm gains from employing one more unit of a variable factor is known as the:
b() The cost of producing one additional unit of output is known as:
c() The extra output that a firm gains from employing one more unit of a variable factor is known as the:
Answer

Question 23

Outline the factors that will shift a labour supply curve.

Question 24

How do firms in perfectly competitive labour markets determine how much labour to employ?

Question 25

Which of the following is the main reason women in Australia earn less than men?

A) Wages for men are higher than those for women performing the same jobs.
B) The human capital of women deteriorates when they take time out of the workforce to have children.
C) There is discrimination against women in the Australian workforce.
D) Women tend to be less well skilled and less well educated than men.

Question 26

A monopsonist is a trade union which has a single union agreement with an employer.

Question 27

The formula for the marginal revenue product (MRP) of labour (L) for product X is:

A) MPPL/Pricex
B) MPPL/marginal revenue
C) MPP_L × marginal revenue
D) MPP_L × wage rate

Question 28

A trade union's size and strength can influence its ability to succeed in the wage bargaining process. Name two other influences.

Question 29

Which of the following is NOT a source of imperfection in input markets?

A) imperfect information
B) unequal ownership of capital
C) market power
D) trade unions

Question 30

If a union monopoly faces a monopsony employer, explain whether the union's bargaining position will be strengthened or weakened?

Question 31

The marginal revenue product of labour is:

A) the additional revenue a firm earns by employing one additional unit of labour
B) the additional profit a firm earns by employing one additional unit of labour
C) the additional revenue a firm earns by selling one unit of labour
D) the marginal product of capital times the price of labour

Question 32

For firms in perfectly competitive labour markets the profit- maximising quantity of labour to employ is the level where:

A) marginal benefit is equal to marginal cost
B) marginal revenue is slightly higher than marginal cost
C) the marginal revenue product of labour is slightly higher than marginal cost
D) the marginal revenue product of labour is equal to the wage rate

Question 33

A union may be in a stronger negotiating position when it is dealing with a powerful employer.

Question 34

The elasticity of demand for labour with respect to wages will be higher:

A) the lower the price elasticity of demand for the product it produces
B) the lower the price elasticity of supply for capital
C) the fewer the choices of production technology available
D) the more labour intensive the product it produces

Question 35

The demand for labour is less elastic with respect to changes in wages, the smaller the wage cost is as a proportion of total costs.

Question 36

The elasticity of demand for labour with respect to wages will be lower:

A) the longer the time period under consideration
B) the more inelastic the demand for the good being produced
C) the more readily capital can be substituted for labour
D) the higher the cost of wages as a proportion of total production costs

Question 37

By a labour market monopsonist we mean:

A) a trade union
B) a sole employer of a particular type of labour
C) a monopolistic firm
D) an aggressive employer

Question 38

Where the mobility of labour is high, the supply of labour will be inelastic.

Question 39

What will determine whether a firm hires an additional worker?

Question 40

The cost of a university degree in Australia is now very high. Does it still make sense for Australian students to undertake a university degree?

Question 41

If the marginal cost of labour exceeds the marginal revenue product of labour, then profit maximisation implies that the firm should employ more workers.

Question 42

If unions raise wages in a monopolistically competitive industry, employment levels will probably fall.

Question 43

The average rate of return on an investment in a university degree for Australian students is 25 percent.

Question 44

Efficiency wage rates take into account how wages affect motivation, turnover and recruitment.

Question 45

A monopsonist, in the absence of trade unions, will always pay labour a wage rate below labour's marginal revenue product.

Question 46

A firm's demand curve for labour is the same as its marginal revenue product curve.

Question 47

Explain what is meant by the term the 'glass ceiling' and how this relates to discrimination against women in the Australian workforce.

Question 48

Outline the factors that determine the elasticity of labour supply and the elasticity of labour demand.

Question 49

Explain the reasons why an employer may pay workers a wage above the market clearing rate.

Question 50

The elasticity of demand for labour will be greater the shorter the time period.

Question 51

Human capital theory explains that some workers have higher incomes because they have personal savings and investments.

Question 52

If the marginal product of labour increases, what will happen to the quantity of labour employed in a perfectly competitive labour market?

Question 53

According to the efficiency wage hypothesis, it is inefficient to pay workers wages above the market clearing wage rate.

Question 54

The main source of discrimination against women in the Australian workforce is that women face more difficulties than men in receiving promotions.

Question 55

A firm's marginal revenue product curve shifts to the left if the market demand curve for the final product shifts to the right.

Question 56

A bilateral monopoly is where there are two employers of labour in a given labour market.

Question 57

The elasticity of demand for labour by an employer will increase if wage costs rise as a proportion of total costs.