Question 1

Suppose that a professional association strengthened the limits to entry into their profession and at the same time lengthened its required apprenticeship program. The likely effect would be that

Accepted Answer

Strengthening the limits to entry and lengthening the required apprenticeship program would increase the barriers to entering the profession, making it more difficult for people to become qualified to work in it. As a result, the supply of labor would decrease, shifting the supply curve to the left.

Question 2

Evidence suggests that some of the observed average female -male wage differential can be explained by

Accepted Answer

Studies have shown that a significant portion of the wage differential between men and women can be attributed to differences in the types of jobs held by men and women, as well as differences in the amount and type of human capital acquired by each.

Question 3

Suppose a labour union enters a competitive labour market and is successful in raising wages above the competitive equilibrium level. In this situation,

Accepted Answer

When a labour union raises wages above the competitive equilibrium level, each firm in the industry will face a horizontal supply curve for labour at the union wage, up to the maximum quantity of labour that is prepared to work at that wage. This means that firms will be able to hire as much labour as they want at the union wage, but they will not be able to hire any additional workers at a lower wage. The result is an increase in the wage rate for unionized workers, but a reduction in the number of jobs available.

Question 4

Certain professions limit the number of students who are eligible to enroll in their programs in university - engineering, architecture, dentistry, and law, for example. What is the predicted effect of such a policy in each of these professions?

Accepted Answer

Limiting enrollment in professions such as engineering, architecture, dentistry, and law would lead to a reduction in supply of workers in those professions. This reduction in supply would cause the wage to be higher than it would be otherwise. This is because with fewer workers available, employers would have to offer higher wages in order to attract and retain workers.

Question 5

Suppose an island economy has only two labour markets - fishing high skill) and farming low skill). There are 1000 males and 1000 females in the labour force. There is an equal distribution of skilled and non-skilled workers among each sex.
  FIGURE 14-1
-Refer to Figure 14-1. Suppose the employers in the fishers labour market begin to discriminate against male workers, and we move to a new equilibrium in each market. In the absence of any government intervention in these markets, what forces might we expect to see over time?
1) All female workers will migrate to the fishers labour market due to the higher wage.
2) The discriminatory wage differential will tend to be eliminated by the pursuit of profit.
3) Some firm owners in the fishing labour market will find it profitable to hire high-skill males, thus reducing the wage differential.

Accepted Answer

Option 1 is unlikely as there are equally skilled workers of both genders in the farming market and they may not all choose to migrate to the fishing market.

Option 2 is likely as discriminatory practices will create a profit-motivated opportunity for firms to hire male workers at a lower wage which will force market competition to bring the wages of male workers up.

Option 3 is also likely as some firms may choose to hire male workers with high skills and offer them a higher wage to fill the skill gap, which further pressures the discriminatory employers to eliminate the wage differential.

Therefore, the correct answer is option E.

Question 6

The following statements describe the adverse effects suffered by groups subject to labour -market discrimination. Which of the statements is false?

Accepted Answer

The statement "Their human capital will increase" is false. Discrimination in the labor market can prevent individuals from accessing education and training opportunities, limiting their ability to develop and improve their human capital.

Question 7

Suppose an island economy has only two labour markets - fishing high skill) and farming low skill). There are 1000 males and 1000 females in the labour force. There is an equal distribution of skilled and non-skilled workers among each sex.
  FIGURE 14-1
-Refer to Figure 14-1. Suppose the employers in the fishers labour market begin to discriminate against male workers. Which of the following can we expect to occur in the fishers labour market?

Accepted Answer

Discrimination against male workers in the fishing labor market would mean that male workers are not hired at the same wage rate as their female counterparts. As a result, male workers would shift to the farming sector where they can earn the same wage as female workers. This would lead to a decrease in the supply of male workers in the fishing market, causing the labor supply curve to shift to the left. This would result in a new equilibrium at point A where the wage rate increases to $120 per day. Therefore, the correct answer is C.

Question 8

In the 1950s and 1960s, Arvida, Quebec, was basically a one -company town where Alcan was the sole buyer of labour services. This is a good example of

Accepted Answer

Arvida, Quebec, being a town where Alcan was the sole buyer of labor services, is an example of monopsony where a single firm controls the demand for labor in a particular market.

Question 9

If there is only a single buyer in the labour market, that buyer is called

Accepted Answer

A monopsonist is a single buyer in a market with multiple sellers, including the labor market where there is only one buyer for labor. A monopolist is a single seller in a market with multiple buyers. Oligopolist refers to a market with a small number of competing sellers. Oligopsonist refers to a market with a small number of competing buyers. Single-product firm is a term used for a firm that produces and sells only one type of product.

Question 10

Suppose an island economy has only two labour markets - fishing high skill) and farming low skill). There are 1000 males and 1000 females in the labour force. There is an equal distribution of skilled and non-skilled workers among each sex.
  FIGURE 14-1
-Refer to Figure 14-1. Suppose the employers in the fishers labour market begin to discriminate against male workers. Which of the following can we expect to occur in the farmers labour market?

Accepted Answer

The answer of Suppose an island economy has only two...

Question 11

For a monopsonist in a labour market, the firmʹs MC curve for labour lies the competitive supply curve for labour; just as the marginal revenue curve for a monopolist lies the demand curve for its product.

Accepted Answer

A monopsonist has market power in the labour market and can set the wage rate below the competitive equilibrium wage rate. This means that the marginal cost of hiring an additional worker (MC) is higher than the wage rate (W) it pays to all workers. Therefore, the MC curve for labour lies above the competitive supply curve for labour. This is similar to a monopolist, where the marginal revenue curve lies below the demand curve for its product.

Question 12

As a seller of labour services, a labour union is a form of

Accepted Answer

The answer of As a seller of labour services, a...

Question 13

Some types of discrimination in the labour market will be limited by

Accepted Answer

Discrimination in the labour market can be limited by the desire of firms to maximize profits. This is because discrimination can result in firms overlooking more qualified candidates and limiting their pool of potential employees, which can ultimately harm their productivity and profitability. Therefore, firms that prioritize profit-maximization may be less likely to discriminate and more likely to hire based on merit.

Question 14

Suppose an island economy has only two labour markets - fishing high skill) and farming low skill). There are 1000 males and 1000 females in the labour force. There is an equal distribution of skilled and non-skilled workers among each sex.
  FIGURE 14-1
-Refer to Figure 14-1. The two labour markets are each in a equilibrium at point E. The wage differential between the industries is an) wage differential.

Accepted Answer

The wage differential between the fishing (high skill) and farming (low skill) industries is competitive and at equilibrium. This means that the wages in each industry are equal to the marginal productivity of labor in that industry. Therefore, there is no discrimination or non-competitiveness in the wage differential. Additionally, since the labor markets are in equilibrium, the wage differential is not temporary.

Question 15

A labour union can most easily raise the wages received by its members by

Accepted Answer

The answer of A labour union can most easily raise...

Question 16

For a monopsonist that faces an upward-sloping labour supply curve, the marginal cost of labour curve will be
The supply curve because .

Accepted Answer

A monopsonist that faces an upward-sloping labour supply curve must increase wages for everyone already employed in order to attract an additional worker. This means that the marginal cost of labour curve will be above the supply curve.

Question 17

If there is discrimination against some workers in market A but no discrimination in market B, then we can predict
1) a decrease in supply and higher wages in the A occupations.;
2) more employment in the A occupations.;
3) more unemployment in the B occupations if there is a binding minimum wage.

Accepted Answer

The answer of If there is discrimination against some workers...

Question 18

To a monopsonist in a labour market, the average cost curve of labour

Accepted Answer

In a monopsonistic labour market, the employer has market power and can influence the wage rate. The marginal cost of labour for the monopsonist is not equal to the wage rate as it would be in a competitive labour market. Instead, the marginal cost of labour is higher and can be represented by the upward-sloping supply curve of labour. The average cost curve of labour is higher than the supply curve because the employer has to pay a higher wage rate to all workers, not just the marginal worker. Therefore, the average cost curve lies above the supply curve, but both are below the marginal cost curve. The supply curve of labour coincides with the marginal cost curve only when it is perfectly elastic, which is not the case in a monopsonistic labour market.

Question 19

A profit-maximizing monopsonist in a labour market will continue to hire labour until the

Accepted Answer

The profit-maximizing monopsonist will hire labour until the marginal revenue product of labour (MRP) equals its marginal cost (MC). This is because the MRP represents the additional revenue generated by hiring an additional unit of labour and the MC represents the additional cost of hiring an additional unit of labour. At the point where MRP=MC, the monopsonist can no longer increase profits by hiring more labour because the additional cost of hiring one more unit of labour exceeds the additional revenue generated by that unit of labour. Therefore, the monopsonist will hire labour until this point is reached.

Question 20

Certain professions limit the number of students who are eligible to enroll in their programs in university - engineering, architecture, dentistry, and law, for example. Other things being equal, what is one predicted effect of such restrictions?

Accepted Answer

By restricting the number of students who can enroll in these programs, there will be a limited supply of professionals in these fields. This can lead to an increase in wages for those who do become professionals in these fields, but it can also have a ripple effect on wages in related fields, as employers may have to pay more to attract workers who have skills that overlap with those of the restricted professions. However, this effect is unlikely to be felt across all segments of the labor market, as wage levels are influenced by many factors beyond just the number of workers in a particular field.

Quiz 14: Labour Markets and Income Inequality