Deck 10: Labor Unions

Question 1

Union organizing drives will be more successful in firms that have relatively ___________ labor demand curves.

A)inelastic
B)elastic
C)flat
D)linear
E)increasing

Answer 1

A

Question 2

The wage-employment outcomes described by the contract curve

A)fail to exhaust all bargaining opportunities between the employer and the union, except for the single point on the contract curve that is associated with maximum wages.
B)are associated with the firm hiring more workers at a higher wage than they would under a monopoly union outcome.
C)are Pareto optimal and result in an efficient contract.
D)must be located below and to the left of the outcome that would result in the absence of a union.
E)must be located above and to the left of the outcome that results when there is a monopoly union.

Answer 2

C

Question 3

The National Labor Relations Act of 1935 (also known as the Wagner Act) was significant because it

A)curtailed union power by permitting states to pass right-to-work laws.
B)granted firms the right to break unions.
C)outlawed yellow-dog contracts.
D)created the National Labor Relations Board.
E)granted union rank and file the right to decertify its leadership via election.

Answer 3

D

Question 4

Labor unions in the United States today

A)are as influential as they were in the 1950s.
B)cover the same percent of workers as they did in years past.
C)are much more popular among immigrant workers than among native workers.
D)look to protect the interests of the employers of labor.
E)tend to be less influential compared to labor unions in other developed countries.

Question 5

Which of the following is least associated with union jobs and contracts?

A)High-skilled workers.
B)A large population of black workers.
C)A large population of immigrant workers.
D)Both private and public sectors jobs.
E)Jobs in industries that are controlled by just a few firms.

Question 6

Right- to-work laws

A)give workers the right to be represented by a union.
B)give workers the right to not join a union.
C)give a non-union worker the right to enjoy union benefits without paying union dues.
D)give firms the right to hire replacement labor when the union strikes.
E)give the firm the right to permanently fire anyone who strikes.

Question 7

The labor demand curve is

A)the same as the marginal cost curve.
B)composed of the peaks of isoprofit curves.
C)upward sloping.
D)derived solely from the price of the firm's good.
E)determined completely by the firm's technology.

Question 8

Which statement best describes international comparisons of unionization rates?

A)Private sector unionization is about the same (around 20 percent) in all developed countries.
B)Private sector unionization is greater in less-developed countries than in developed countries.
C)Private sector unionization rates have fallen significantly in all developed countries over the last 40 years.
D)Private sector unionization rates vary greatly by country.
E)Private sector unionization rates exceed public sector unionization rates in all developed countries.

Question 9

Which of the following do unions usually advertise to their members and potential members?

A)High wages.
B)Steady employment.
C)An exit voice.
D)A powerful political lobby.
E)All of these are used for advertising to members and potential members.

Question 10

Featherbedding refers to

A)negotiating better fringe benefits than non-union workers.
B)one union using a previously negotiated contract as a starting point for its own negotiations.
C)firing high-wage workers when the union goes on strike.
D)the union requiring the firm to hire more workers than are actually needed to perform a particular task.
E)the union using its members' dues to fund political activities.

Question 11

Consider a labor market with two sectors-a union sector and a non-union sector-with perfectly inelastic labor supply. The presence of the union sector causes all of the following results except:

A)the union wage is greater than the competitive wage when there is no union sector.
B)the non-union wage is less than the competitive wage when there is no union sector.
C)fewer workers are hired in the union sector than those same firms would hire if there was no union sector.
D)more workers are hired in the non-union sector than those same firms would hire if there was no union sector.
E)total surplus added between the union sector and the non-union sector is the same as total surplus when there is no union sector.

Question 12

A union will be more successful at forming when the firm's labor demand curve is inelastic, because under these conditions the union organizers can "promise"

A)low union dues.
B)small wage losses but large employment gains.
C)small wage gains and minimal employment losses.
D)large wage gains and large employment gains.
E)large wage gains with minimal employment losses.

Question 13

In the standard model of a monopoly union bargaining with the firm, it is typically assumed that

A)the union's sole objective is to increase the wage.
B)union leadership disregards the preferences of the rank and file.
C)unions never lead to an efficiency loss.
D)unions are willing to tradeoff some amount of higher earnings for greater employment.
E)unions and management secretly negotiate on the behalf of stockholders.

Question 14

The Labor-Management Relations Act of 1947 (also known as the Taft-Hartley Act) was significant because it

A)curtailed union power by permitting states to pass right-to-work laws.
B)granted firms the right to break unions.
C)outlawed yellow-dog contracts.
D)created the National Labor Relations Board.
E)granted union rank and file the right to decertify its leadership via election.

Question 15

In the case of a vertical contract curve, union negotiations will result in the firm hiring

A)more workers and at a higher wage than it would in the absence of the union.
B)the same number of workers but at a higher wage than it would in the absence of the union.
C)fewer workers but at a lower wage than it would in the absence of the union.
D)fewer workers but at a higher wage than it would in the absence of the union.
E)the same number of workers but at a lower wage than it would in the absence of the union.

Question 16

In a basic model of wage and employment determination with a monopoly union, the monopoly union stipulates the wage. The firm then responds by choosing an employment level that

A)maximizes profit.
B)minimizes labor costs.
C)minimizes the wage.
D)maximizes strike duration.
E)maximizes output.

Question 17

When the possibility for strongly efficient contracts occurs, what will happen?

A)The union and firm negotiate over the employment level but not over the wage.
B)The union and firm negotiate over the wage level but not over the employment level.
C)The labor demand curve must be vertical.
D)Isoprofit lines must be horizontal.
E)Isoprofit lines are parabolas that open upward.

Question 18

Prior to the New Deal legislation of the 1930s that expanded the rights of unions, firms were successful in suppressing union pressures by arguing in court that unions would

A)restrict interstate commerce, which was prohibited by the Sherman Act.
B)use coercive tactics to force workers to join the union.
C)illegally spend dues on political activities.
D)reduce the United State's competitive advantage it had over Germany.
E)fail to protect the rights of children who could not legally join a union.

Question 19

Which of the following is not associated with strikes?

A)Strikes are costly to the firm.
B)Strikes are costly to the union.
C)The probability of striking is generally pro-cyclical.
D)Strike duration is generally pro-cyclical.
E)If the union makes wage offers, it will likely do so according to a downward-sloping resistance curve.

Question 20

Yellow-dog contracts

A)give workers the right to be represented by a union.
B)give a non-union worker the right to enjoy union benefits without paying union dues.
C)give firms the right to hire replacement labor when the union strikes.
D)give firms the right to require a worker to not join a union as a condition of employment.
E)give the firm the right to permanently fire anyone who strikes.

Question 21

The Hicks Paradox concerns the irrationality of

A)unions.
B)union dues.
C)strikes.
D)substituting low-skill labor for high-skill labor.
E)negotiating additional fringe benefits for union workers at the cost of receiving lower wages.

Question 22

An implication of the exit-voice hypothesis is that

A)union workers who earn lower wages will circumvent union leadership to ask management for pay raises.
B)labor turnover (voluntary quits) will be lower at union firms than at non-union firms as workers can bring issues to management through their union leadership.
C)the union wage gap will be higher for more experienced union members.
D)dues paid by rank and file union members must increase prior to wage negotiations.
E)dues paid by rank and file union members should be saved during stretches of labor peace in order to fund worker benefits during strikes.

Question 23

What is the union wage gap if the average union salary is $92,000 while the average non-union salary is $80,000?

A)10%
B)13%
C)15%
D)87%
E)125%

Question 24

The union wage gap for private sector unions in the United States is presently on the order of

A)2%.
B)8%.
C)15%.
D)28%.
E)39%.

Question 25

Which one of the following statements is true?

A)Firms try to attract unions to their plants and factories.
B)Unions are beneficial to all workers.
C)Unions tend to negotiate better fringe benefits for their members than what non-union workers receive.
D)Many workers are likely to lose their jobs when firms become unionized.
E)A union is legally allowed to undertake any bargaining tactics that it wishes.

Question 26

A strike

A)can be a rational response during the union-firm negotiation process.
B)is a Pareto optimal outcome.
C)hurts the firm's management and share holders but not the union members.
D)is never in the best interest of the rank and file.
E)is always in the firm's best interest.

Question 27

Which of the following best defines final-offer arbitration?

A)After a short strike, the union offers a final contract to the firm which the firm must accept.
B)An arbitrator produces a contract that the union and firm are both encouraged to accept.
C)Final-offer arbitration occurs when the firm threatens to shut-down unless the union accepts the firm's final offer.
D)An arbitrator chooses the firm's last offer or the union's last offer, and both sides must abide by whichever contract is chosen.
E)An arbitrator facilitates a discussion between the union and firm after the cool-down period has expired.

Question 28

Which of the following is a reason why the union wage gap might under-estimate the actual effect unions have on wages?

A)Unions typically attract the most productive workers to the application pool.
B)Non-union firms may pay higher wages in order to prevent its workers from unionizing.
C)Non-union jobs will have excess labor available to them because firms will restrict entry into union jobs, and competition for this excess labor competes down the observed non-union wage.
D)Unions target high-paying firms.
E)The union wage gap can be over-estimated, but never underestimated.

Question 29

Which of the following is the best theoretical explanation for why strikes occur?

A)The firm has a downward sloped resistance curve.
B)The union and firm know that it is impossible to eventually negotiate an outcome on the contract curve.
C)The union's leadership wants to please management.
D)The union doesn't know how valuable labor is to the firm.
E)The firm wants to minimize labor costs.

Question 30

Which of the following does not describe the historical patterns of unionization and strike activity in the United States?

A)The percent of workers involved in a strike has steadily decreased over the last 40 years.
B)The percent of public sector employees who are in a union remained relatively constant from 1950 to 2010.
C)The percent of time lost to a strike has steadily decreased over the last 40 years.
D)The percent of private sector employees who are in a union has steadily decreased over the last 40 years.
E)Union membership did not change very much from 1900 to 1935.