Deck 7: Labor Markets

Question 1

Labor migration from Brazil to the United States results in a decrease in output and a decrease in wages in the United States, and an increase in output and an increase in wages in Brazil.

Answer 1

False

Question 2

In the United States, labor unions generally welcome cheap immigrant labor.

Answer 2

False

Question 3

Immigrant workers tend to flow to countries where there is an under-abundance of labor.

Answer 3

True

Question 4

Domestic labor unions often attempt to block the immigration of low-skilled foreign workers.

Question 5

The demand for apple pickers will shift to the right in a S&D graph if there is an increase in the consumer demand for apples.

Question 6

The marginal product of labor represents the total product of labor divided by the amount of labor employed.

Question 7

A profit-maximizing firm will continue to hire workers up to the point where the value of the marginal product of labor exceeds the wage rate by the maximum amount.

Question 8

Even if U.S. wages are higher than Chinese wages, if U.S. labor is more productive than Chinese labor, U.S. labor can still be competitive.

Question 9

Critics maintain that increases in the federal minimum wage tends to harm many workers, including teenagers, who seek jobs at the higher wage, but cannot find them.

Question 10

Minimum wages help many workers at the bottom while reducing potential jobs for teenagers

Question 11

Proponents contend that an increase in the minimum wage may inspire workers to become more productive, therefore increasing the demand curve for labor.

Question 12

Among the methods that labor unions use to increase the wages of their members are increasing the demand for labor, increasing the supply of labor, and imposing a below-equilibrium floor on the labor market.

Question 13

The imposition of tariffs or quotas on steel imports tends to result in U.S. consumers' demanding more steel produced by American workers. As a result, the demand curve for U.S. steel workers shifts to the right.

Question 14

To increase the wages of their members, professionally licesnsed fields like doctors and lawyers often adopt restrictive membership policies such as high initiation fees, or long residency programs (through years of schooling), and tough entrance and exit exams.

Question 15

Industrial unions, such as the United Auto Workers, attempt to increase the wages of their members primarily by restricting the supply of labor.

Question 16

Traditionally, domestic labor unions have lobbied for liberal immigration policies and against union shop provisions in labor contracts.

Question 17

With a union shop, workers do not have to belong to a union when they initially obtain employment but must join a union within a specified length of time after becoming employed.

Question 18

The experience of the U.S. auto industry illustrates how non-union workers can threaten the employment levels and wage structures of union workers.

Question 19

When employers substitute other factors of production for union workers as their wages are pushed upward, this action tends to threaten the employment levels and wage structure of union workers.

Question 20

To the extent that a higher wage causes labor to become less productive, the demand for labor decreases, thus offsetting the unemployment effects caused by the minimum wage.

Question 21

In a competitive market, a firm will maximize profits by hiring workers up to the point where the value of the marginal product of labor equals the wage rate.

Question 22

The value of the marginal product of labor constitutes the supply curve of labor.

Question 23

The point of intersection of the labor demand and labor supply curves determines the equilibrium wage and level of employment.

Question 24

If the demand for labor is relatively elastic, an increase in the minimum wage will increase the total wages paid to labor.

Question 25

In most labor negotiations, management of firms and union representatives start off far apart, but do not come closer, so that a strike takes place.

Question 26

The demand for apple pickers is considered to be a derived demand.

Question 27

The federal minimum wage law was first enacted in 1901.

Question 28

If a labor union and management cannot agree about wages, hours, or other conditions of employment, they may agree to mediation or arbitration.

Question 29

For unions, the preferred method of increasing wages is to restrict the supply of workers.

Question 30

All workers gain from increasing international trade.

Question 31

By federal law, all workers in the U.S. are entitled to receive at least $5.15 per hour for work they perform.

Question 32

Unions tend to support minimum wage laws because they increase the cost of hiring unskilled workers.

Question 33

The shock effect results when workers are motivated by a higher minimum wage to work harder.

Question 34

The ability of the United Auto Workers to increase the total wages paid to its members is best enhanced
By a

A) perfectly elastic (horizontal) demand curve for labor
B) relatively elastic demand curve for labor
C) unit elastic demand curve for labor
D) relatively inelastic demand curve for labor

Question 35

Assume that the United Steel Workers negotiate a contract resulting in a higher wage rate. The total wages earned by members of the union would increase if the elasticity of demand for labor equals

A) 1.8
B) 1.4
C) 1.0
D) 0.6

Question 36

Assume that the United Auto Workers negotiate a contract resulting in a higher wage rate. The total wages earned by members of the union would decrease if the elasticity of demand for labor equals

A) 1.6
B) 1.0
C) 0.7
D) 0.4

Question 37

The ability of the United Steel Workers union to increase the wages of its members is offset by

A) a decline in the demand for steel produced by union workers
B) an increase in tariffs on steel imported into the United States
C) the imposition of quotas on steel imported into the United States
D) a relatively inelastic demand curve for steel workers

Question 38

The migration of unskilled workers from Mexico to the United States tends to

A) increase the number of jobs for unskilled American workers in the short run
B) decrease the wage rates for unskilled American workers in the short run
C) increase the wage rates for skilled American workers in the long run
D) decrease the number of jobs for skilled American workers in the long run

Question 39

In a competitive labor market, the value of the marginal product of labor is the

A) supply curve of labor
B) total cost curve of labor
C) demand curve for labor
D) average total cost curve of labor

Question 40

A leftward shift in the demand curve for labor would be the result of

A) a decrease in the value of the marginal product of labor
B) an increase in the value of the marginal product of labor
C) improving tastes and preferences for the good produced by labor
D) an increase in the wages paid to labor

Question 41

A downward movement along the demand curve for labor is caused by a(n)

A) increase in the marginal product of labor
B) decrease in the marginal product of labor
C) increase in the wage rate paid to labor
D) decrease in the wage rate paid to labor

Question 42

An upward movement along the demand curve for labor is caused by a(n)

A) increase in the product of labor
B) decrease in the product of labor
C) increase in the wage rate paid to labor
D) decrease in the wage rate paid to labor

Question 43

A decrease in the supply curve of auto workers could be the result of

A) higher wages paid to workers in other industries
B) an increase in the value of the marginal product of auto workers
C) improving tastes and preferences for automobiles
D) an increase in the total physical product of auto workers

Question 44

A rightward shift in the supply curve of steel workers would be caused by

A) an increase in the value of the marginal product of steel workers
B) an increase in the total physical product of steel workers
C) higher wages paid to workers in other industries
D) lower wages paid to workers in other industries

Question 45

The Wisconsin Teachers Union would be most successful in increasing wages and employment for its members if it could

A) enact measures to reduce the supply of teachers
B) impose an above-equilibrium floor on wages
C) increase the demand for teachers
D) collect union dues from teachers not belonging to the union

Question 46

If the federal government increases the minimum wage, the total wages paid to labor will increase if the demand for labor is

A) perfectly elastic
B) highly elastic
C) unit elastic
D) highly inelastic

Question 47

If the federal government increases the minimum wage, the total wages paid to labor will decrease if the demand for labor is

A) relatively elastic
B) unit elastic
C) relatively inelastic
D) perfectly inelastic

Question 48

If the federal government imposes a minimum wage that exceeds the market equilibrium wage, there will necessarily occur a(n)

A) shortage of labor
B) surplus of labor
C) decrease in the total wages paid to workers
D) increase in the total wages paid to workers

Question 49

Given a competitive market for computer workers, an increase in the demand for computers will result in

A) lower employment and a lower wage for computer workers
B) lower employment and a higher wage for computer workers
C) higher employment and a lower wage for computer workers
D) higher employment and a higher wage for computer workers

Question 50

Given a competitive market for bakers, a decrease in the demand for muffins and bread will result in

A) lower employment and a lower wage for bakers
B) lower employment and a higher wage for bakers
C) higher employment and a lower wage for bakers
D) higher employment and a higher wage for bakers

Question 51

Advocates of a higher federal minimum wage contend that it will

A) cause the supply curve of unskilled labor to shift to the left
B) result in shortages of unskilled labor which results in higher wages
C) increase the mobility of unskilled workers into other occupations
D) inspire workers to be more productive, and so increase the demand for labor

Question 52

The supply curve of labor increases if

A) wages are increased
B) wages are reduced
C) work becomes more attractive than leisure
D) leisure becomes more attractive than work

Question 53

The supply curve of labor decreases if

A) wages are increased
B) wages are reduced
C) work becomes more attractive than leisure
D) leisure becomes more attractive than work

Question 54

The demand curve for labor is

A) upward sloping at high wages and downward sloping at low wages
B) downward sloping at high wages and upward sloping at low wages
C) derived from the good or service that labor helps produce
D) identical to the marginal product of labor

Question 55

Under the provisions of a(n) ______ shop, Ace Manufacturing can hire nonunion workers provided that they join a union within a specified period of time.

A) closed
B) open
C) integrated
D) union

Question 56

The value of the marginal product of labor is the

A) increase in revenue to a firm resulting from hiring an extra worker
B) additional output from hiring an additional worker
C) marginal product of labor divided by the price of the final output
D) price of the final output divided by the marginal product of labor

Question 57

A firm will maximize profits by hiring workers up to the point where the value of the marginal product of labor

A) is at a maximum
B) is at a minimum
C) exceeds the wage rate by the greatest amount
D) equals the wage rate

Question 58

Concerning the market for radio assemblers, assume that the wage rate is $12 per hour in the U.S. and $3 per hour in Mexico. Also suppose that the marginal product of a Mexican worker is 3 radios per hour. A U.S. worker will be less costly to employ than the Mexican worker if the marginal product of the U.S. worker is

A) 4 radios per hour
B) 8 radios per hour
C) 11 radios per hour
D) 16 radios per hour

Question 59

Concerning the market for radio assemblers, assume that the wage rate is $12 per hour in the U.S.and $3 per hour in Mexico. Also suppose that the marginal product of a Mexican worker is 3 radios per hour. A U.S. worker will be more costly to employ than the Mexican worker if the marginal product of the U.S. worker is

A) 16 radios per hour
B) 20 radios per hour
C) 8 radios per hour
D) 12 radios per hour

Question 60

If the wages of a U.S. worker are double the wages of a Korean worker, the U.S. worker will be less costly to employ if its marginal productivity is ______ that of the Korean worker.

A) double
B) more than double
C) less than double
D) exactly equal to

Question 61

To ______, unions have advocated the imposition of tariffs on imported products and increases in the federal minimum wage.

A) increase the demand for their members' labor
B) decrease the demand for their members' labor
C) increase the supply of their members' labor
D) decrease the supply of their members' labor

Question 62

Craft unions, such as bricklayers and electricians, have sometimes adopted high initiation fees and long apprenticeship programs in order to

A) increase the demand for their member's labor
B) decrease the demand for their member's labor
C) increase the supply of their member's labor
D) decrease the supply of their members' labor

Question 63

Professional associations, such as the American Medical Association, have attempted to restrict the supply of their labor

A) by increasing the marginal productivity of their members
B) by decreasing the marginal productivity of their members
C) through low initiation fees and short apprenticeship programs
D) through certification requirements and control over professional schools

Question 64

The imposition of tariffs and quotas on imported goods tends to cause the

A) demand curve for domestic labor to shift to the right
B) demand curve for domestic labor to shift to the left
C) supply curve of domestic labor to shift to the right
D) supply curve of domestic labor to shift to the left

Question 65

Skilled union workers may support increases in the federal minimum wage in order to

A) increase the cost of hiring less-skilled workers and thus increase the demand for skilled union workers
B) increase the cost of hiring less-skilled workers and thus decrease the demand for skilled union workers
C) decrease the cost of hiring skilled union workers and thus reduce the demand for less-skilled workers
D) decrease the cost of hiring skilled union workers and thus increase the demand for less-skilled workers

Question 66

Industrial unions, such as the United Postal Workers, have generally attempted to improve the wages of their members by

A) decreasing the demand for their members' labor through import tariffs
B) increasing the demand for their members' labor through work slowdowns
C) restricting the supply of their members' labor through certification requirements
D) imposing an above-equilibrium wage floor on the labor market

Question 67

During the 1980s, several Japanese companies established automobile assembly plants in the U.S. These were called

A) derived robotics
B) bi-national corporations
C) union shops
D) transplants

Question 68

Which of the following is not a strategy used by labor unions to increase the wages of their members?

A) make the demand curve for labor relatively elastic
B) decrease the supply curve of labor
C) increase the demand curve for labor
D) impose an above-equilibrium wage floor on the labor market

Question 69

Collective bargaining agreements usually pertain to all of the following except

A) working conditions
B) hours of employment
C) wages
D) prices of goods produced

Question 70

When unskilled labor migrates from Mexico to the U.S., output

A) increases and wages increase in the U.S.
B) increases and wages decrease in the U.S.
C) decreases and wages increase in the U.S.
D) decreases and wages decrease in the U.S.

Question 71

A primary argument made by management during the UPS strike in 1997 was that

A) most of its part-timers did not want to become full-timers
B) the economics of package delivery required workers put in 8-hour shifts
C) the Teamsters were not legally elected to represent UPS workers
D) its market share was too small for the strike to have any lasting effects on the company

Question 72

Figure 8.1 The Market for Horse Groomers


-Refer to Figure 8.1. Given the initial demand D₀ and the initial supply S₀, the equilibrium wage and quantity of horse groomers is

A) $300, 450
B) $300, 600
C) $200, 450
D) $200, 600

Question 73

Figure 8.1 The Market for Horse Groomers


-Refer to Figure 8.1. The change in labor demand from D₀ to D₁ could have been caused by

A) the price of grooming a horse to fall
B) falling wages of horse groomers
C) a decrease in the number of stables offering horse grooming services
D) more people owning horses

Question 74

Figure 8.1 The Market for Horse Groomers


-Refer to Figure 8.1. The change in labor demand from D₀ to D₁ indicates that the value of the marginal product of labor curve has

A) shifted to the left
B) shifted to the right
C) become vertical
D) remained the same

Question 75

The smallest amount of money per hour that an employer can legally pay a worker is the

A) minimum wage
B) marginal product of labor
C) value of the marginal product of labor
D) derived demand wage

Question 76

Unionized workers earn about how much more than nonunionized workers in the U.S.?

A) 5 percent
B) 15 percent
C) 25 percent
D) 40 percent

Question 77

Since 1970, the number of union employees in the U.S. has

A) gradually declined
B) increased dramatically
C) stayed about the same
D) increased and decreased sharply from year to year

Question 78

Unions favor advertising the products they produce because this

A) increases the derived demand for their own labor services
B) increases the profits of their employers
C) decreases the costs of health care benefits
D) decreases the supply of labor

Question 79

If a labor union and management cannot resolve their differences, it can sometimes receive outside help in the form of

A) the minimum wage
B) collective bargaining
C) mediation
D) strike

Question 80

With a competitive market for fast food workers, an increase in demand for fast food hamburgers will result in

A) lower employment and a lower wage
B) lower employment and a higher wage
C) higher employment and a lower wage
D) higher employment and a higher wage