Question 1

The monopoly union model will equate the marginal revenue from the sale of member services to which of the following?&#10;A) the marginal value product of output&#10;B) marginal utility&#10;C) the supply price of member services&#10;D) the unit cost of output

Accepted Answer

The monopoly union model sets the price of member services at the point where the supply price equals the marginal revenue from the sale of those services. This means that the union will charge the highest possible price for its services without reducing the demand for those services. Therefore, the correct answer is C, the supply price of member services.

Question 2

The wage-employment outcome under the situation of bi-lateral monopoly is which of the following?&#10;A) indeterminate&#10;B) always Pareto efficient&#10;C) utility-maximising for unions&#10;D) undesirable for firms

Accepted Answer

The wage-employment outcome under the situation of bi-lateral monopoly is indeterminate because both the employer and the union have bargaining power and can strategically negotiate wages and employment levels. The outcome will depend on the relative bargaining power, information, and outside options of both parties, making it impossible to predict the final outcome with certainty.

Question 3

In the monopoly union model, unions are able to raise wages above competitive levels but only at the expense of which of the following?&#10;A) reduced employee turnover&#10;B) reduced employment&#10;C) increased employee turnover&#10;D) increased employment

Accepted Answer

The monopoly union model suggests that unions can negotiate higher wages than what they would have been in a perfectly competitive market. However, this comes at the cost of reduced employment, as firms would have to hire fewer workers or reduce their hours to afford the higher wages. So, option B is the correct answer. Option A is incorrect because reduced employee turnover is a benefit of higher wages and job security provided by unions. Similarly, option C is incorrect because increased employee turnover is a consequence of lower wages, which is not the case in monopoly union model. Finally, option D is incorrect because higher wages resulting from the monopoly power of unions discourage firms from hiring more workers.

Question 4

The situation where all mutually advantageous bargains have been exhausted is described by which of the following models?&#10;A) monopoly union model&#10;B) Rees model&#10;C) right-to-manage model&#10;D) efficient bargaining model

Accepted Answer

The efficient bargaining model describes a situation where all mutually advantageous bargains between parties, such as employers and employees, have been exhausted, leading to an outcome that is efficient within the context of the bargaining process.

Question 5

The competitive status seniority model predicts which of the following?&#10;A) that older workers are more productive&#10;B) that Pareto efficient outcomes can lie on the labour demand schedule&#10;C) that all points along the labour demand schedule are Pareto inefficient&#10;D) that older workers will be the first to lose their jobs in a downturn

Accepted Answer

The competitive status seniority model suggests that Pareto efficient outcomes can indeed lie on the labour demand schedule, indicating that the allocation of resources can be efficient in a way that no one can be made better off without making someone else worse off, within the context of labor demand and employment.

Question 6

The non-union wage is not the same as the wage which would prevail in the absence of unions because of which of the following?&#10;A) displaced union workers will force down wages in the non-unionised sector&#10;B) union workers are more productive than their non-unionised counterparts&#10;C) firms will substitute labour for capital in the non-unionised sector&#10;D) non-union wages are determined by competitive forces and unionised wages are not

Accepted Answer

Displaced union workers entering the non-union sector increase the labor supply, which can drive down wages in that sector.

Question 7

Typically, empirical studies using individual-level data find that union wage mark-ups are largest for which group of workers?&#10;A) union-covered manual workers&#10;B) manual union members&#10;C) union-covered non-manual workers&#10;D) non-manual union members

Accepted Answer

Empirical studies often find that union wage mark-ups, which refer to the premium in wages that union members receive over non-union members, are largest for manual union members. This is because unions are typically more effective in negotiating higher wages for manual workers, who often work in industries with more collective bargaining power.

Question 8

The collective voice approach implies that unions raise productivity through which of the following mechanisms?&#10;A) reducing the costs of bargaining&#10;B) reducing the likelihood of bargaining&#10;C) reducing employee morale&#10;D) reducing labour turnover

Accepted Answer

The collective voice approach suggests that unions can improve productivity by reducing labour turnover. This is because unions can negotiate better working conditions and job security for their members, which can lead to higher job satisfaction and reduced turnover rates. Option A is incorrect because the collective voice approach does not focus on reducing the costs of bargaining. Option B is incorrect because the collective voice approach emphasizes the importance of bargaining between employers and employees. Option C is incorrect because the collective voice approach suggests that unions can improve employee morale by giving them a greater say in the workplace.

Deck 6: Trade Unions