Question 1

Mary Sue is the newly appointed CEO of a company that manufactures USB flash drives on an assembly line.Her staff has told her that the output the firm produces,given the number of workers employed,indicates that some workers may be shirking.According to efficiency wage theory,what should she do?

Accepted Answer

Efficiency wage theory states that paying workers more than the equilibrium wage rate can motivate them to work harder and reduce shirking. Therefore, Mary Sue should pay all workers more than the equilibrium wage rate to incentivize them to work harder and increase the firm's production output. Option B is not a viable solution as it would only increase the likelihood of shirking, while option C would not provide any motivation for workers to put in extra effort. Option D is also not a feasible solution as it would reduce the company's output and profits.

Question 2

Aaron is the owner of a firm that produces wind power in southern Alberta.There are many such firms in the area.Aaron decides that if he pays his workers a wage higher than the going market wage,his profits will increase.What is a likely explanation for his decision?

Accepted Answer

By paying his workers a higher wage, Aaron is likely hoping to increase their job satisfaction and reduce turnover. This can lead to cost savings associated with finding and training new workers, as well as potentially improve productivity and product quality.

Question 3

What is a possible effect of unions?

Accepted Answer

Unions negotiate higher wages and better working conditions for their members, which can lead to employers compensating for these increased costs by offering lower wages to nonunionized workers or reducing hiring, potentially causing wages in the nonunion sector to fall.

Question 4

What will an efficient wage most likely do?

Accepted Answer

Efficient wages are above-market wages paid by employers to increase worker productivity, which can lead to increased profitability through higher productivity, reduced turnover, and improved morale.

Question 5

Which country has the lowest percentage of unionized workers?

Accepted Answer

The United States has the lowest percentage of unionized workers among these options, with just 10.5% of workers belonging to a union as of 2020. Canada has a slightly higher unionization rate at 28.2%, while Sweden and Denmark have much higher rates at 69% and 67% respectively.

Question 6

Suppose that in some country neither textile workers nor shoemakers are unionized.If textile workers unionize and so are able to raise their wages,what will most likely happen to shoemakers?

Accepted Answer

When textile workers unionize and raise their wages, some workers might switch from textile to shoemaking due to the relative attractiveness of non-unionized sectors, increasing the supply of shoemakers and potentially lowering their wages.

Question 7

What industry in the Canadian economy has the highest percentage of unionized workers?

Accepted Answer

The public sector in Canada has the highest percentage of unionized workers, with over 70% of employees being union members. This includes workers in areas such as healthcare, education, and government services.

Question 8

Which province has the highest percentage of unionized workers?

Accepted Answer

According to Statistics Canada's 2020 unionization rates report, Quebec had the highest percentage of unionized workers among all provinces at 37.4%. Newfoundland and Labrador had the second highest rate at 36.1%, followed by Manitoba at 32.8%, and then British Columbia at 30.2%. Ontario had a unionization rate of 22.9%.

Question 9

What was the purpose of Canada's Public Service Staff Relations Act of 1967?

Accepted Answer

The purpose of Canada's Public Service Staff Relations Act of 1967 was to allow federal public service employees the right to representation and collective bargaining. This act established the Public Service Staff Relations Board, which is responsible for overseeing the collective bargaining process between federal government employees and their employer. It also provided for the formation of unions and the right to strike for federal government employees.

Question 10

Dawn is the CEO of a corporation that hires nonunion labour.According to the theory of efficiency wages,if she decides to pay her workers more than the competitive equilibrium wage,what is most likely to happen?

Accepted Answer

According to the theory of efficiency wages, paying workers more than the competitive equilibrium wage can result in improved worker motivation and productivity, reduce shirking and turnover, and lead to better quality workers. Therefore, it is likely that Dawn's firm will experience higher profits if she pays her workers more than the market wage.

Question 11

What do the laws governing the activity of labour unions achieve?

Accepted Answer

The answer of What do the laws governing the activity...

Question 12

Regarding the categories of unemployment,how does a minimum-wage law compare to firms paying higher-than-equilibrium wages?

Accepted Answer

The answer of Regarding the categories of unemployment,how does a...

Question 13

Where is the unemployment rate more likely higher?

Accepted Answer

Higher EI benefits may discourage people from aggressively seeking employment, leading to a higher unemployment rate.

Question 14

According to efficiency wage theory,what is a way to increase employees' work effort?

Accepted Answer

According to efficiency wage theory, increasing wages can lead to an increase in employees' work effort because it provides a higher incentive for them to work harder and perform better. This is due to the theory's belief that higher wages can create a sense of job security and motivation for workers, leading to a more productive workforce. Decreasing wages, on the other hand, can lead to decreased work effort as it may lower motivation and job satisfaction. Increasing or decreasing the number of supervisors is not directly related to the theory of efficiency wages and may not have a significant impact on work effort.

Question 15

What does the theory of efficiency wages explain?

Accepted Answer

The theory of efficiency wages explains why it may be in the best interest of firms to offer wages that are above the equilibrium level. This is because higher wages can attract more productive workers and lead to lower turnover rates, which ultimately increases productivity and profits.

Question 16

What is the effect of unions on wages and employment?

Accepted Answer

Unions raise wages above the competitive equilibrium level by negotiating with employers for higher wages and benefits for their members. However, this can also lead to reduced employment in unionized firms as higher labor costs may lead to reduced demand for labor.

Question 17

Regarding the categories of unemployment,which statement best describes how the effect of sectoral changes compares to the effect of firms paying higher-than-equilibrium wages?

Accepted Answer

Sectoral changes refer to changes in the composition of industries and occupations in the economy. This often leads to workers losing their jobs in declining industries and having to search for jobs in other industries, resulting in frictional unemployment.

Firms paying higher-than-equilibrium wages means that they are paying wages higher than the market clearing wage, which leads to a surplus of workers willing to work but unwilling to work at that wage. This results in firms having more job applicants than available jobs, causing structural unemployment.

Therefore, sectoral changes create frictional unemployment, while firms paying wages above equilibrium create structural unemployment. Option A correctly states this relationship.

Question 18

What is,approximately,the percentage of unionized public workers in Canada?

Accepted Answer

The percentage of unionized public workers in Canada is approximately 70 percent, reflecting a high level of unionization within the public sector compared to many other countries.

Question 19

Yohanna,the CEO of a corporation operating in Ethiopia,decides to raise the wages of her workers,even though she faces an excess supply of labour.Which of the following is an expected result from her decision?

Accepted Answer

According to the efficiency wage theory, higher wages can increase productivity as workers are motivated to work harder and be more efficient in their jobs. Therefore, raising wages may lead to increased productivity even in the face of an excess supply of labour. The other options are not necessarily expected results of raising wages in this scenario.

Question 20

What is the most likely result of efficiency wages?

Accepted Answer

Efficiency wages are higher than the market-clearing wage, given by employers to motivate workers to work harder and be more productive. This reduces the incentive for employees to shirk their responsibilities because they risk losing a job that pays above the market rate.

Quiz 9: Unemployment and Its Natural Rate