Deck 16: Wage Determination

Question 1

Since 1960,real hourly compensation in the United States has approximately:

A) remained the same.
B) risen by 40 percent.
C) doubled.
D) tripled.

Answer 1

doubled.

Question 2

According to international comparisons,which nation had the highest hourly pay in U.S.dollar terms in 2011?

A) United States.
B) Germany.
C) Denmark.
D) Sweden.

Answer 2

Sweden.

Question 3

Over the long run,real earnings per worker can increase only at about the same rate as the economy's rate of growth of:

A) total output.
B) stock of capital.
C) output per worker.
D) international trade.

Answer 3

output per worker.

Question 4

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

A) marginal revenue product is zero.
B) marginal revenue product exceeds marginal resource (labor)cost by the greatest amount.
C) marginal resource cost is zero.
D) marginal revenue product equals marginal resource (labor)cost.

Question 5

Long-run real wages in the United States have:

A) risen because growth in the demand for labor has exceeded growth in the supply of labor.
B) risen because the supply of labor has fallen over time.
C) fallen because growth in the supply of labor has exceeded growth in the demand for labor.
D) fallen because the demand for labor has fallen over time.

Question 6

If the nominal wage rises by 4 percent,and the price level rises by 7 percent,the real wage will:

A) be unaffected.
B) rise by 3 percent.
C) fall by 3 percent.
D) rise by 11 percent.

Question 7

Marginal revenue product (MRP)of labor refers to the:

A) increase in total revenue resulting from the sale of an additional unit of output.
B) amount by which a firm's total resource cost increases when it employs one more unit of labor.
C) increase in total revenue resulting from the hire of one more unit of labor.
D) price at which additional units of labor can be employed in a monopsonized labor market.

Question 8

A firm operating in a purely competitive resource market faces a resource supply curve that is:

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

Question 9

If the nominal wage rises by 6 percent,and the price level falls by 2 percent,the real wage will:

A) be unaffected.
B) rise by 4 percent.
C) fall by 4 percent.
D) rise by 8 percent.

Question 10

Marginal resource cost refers to the:

A) increase in total revenue resulting from the sale of the extra output of one more worker.
B) price at which additional units of a resource can be hired in an imperfectly competitive resource market.
C) increase in total cost resulting from the production of one more unit of output.
D) amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.

Question 11

Real wages in the United States are:

A) the highest in the world.
B) relatively high,but not as high as in some other industrially advanced nations.
C) much higher than output per worker.
D) higher than nominal wages.

Question 12

The long-run trend of real wages:

A) cannot be determined from available data on nominal wages and the price level.
B) has been downward because the price level has risen faster than nominal wages.
C) has been upward.
D) has been downward because labor's share of the domestic income has fallen.

Question 13

The real wage will rise if the nominal wage:

A) falls more rapidly than the general price level.
B) increases at the same rate as labor productivity.
C) increases more rapidly than the general price level.
D) falls at the same rate as the general price level.

Question 14

Real wages in the United States in the long run:

A) show no discernible relationship to output per worker.
B) have increased at about the same rate as increases in output per worker.
C) have increased slower than increases in output per worker.
D) have increased faster than increases in output per worker.

Question 15

The market supply curve for labor is upsloping because:

A) of diminishing returns.
B) employers as a group must pay higher wage rates to obtain more workers.
C) of declining MRC.
D) each employer is a "wage taker."

Question 16

Increases in the productivity of labor result partly from:

A) the law of diminishing returns.
B) improvements in technology.
C) reductions in wage rates.
D) increases in the quantity of labor.

Question 17

The productivity and real wages of workers in industrially advanced economies have risen historically partly because:

A) workers have acquired less education and training over time.
B) workers have been able to use larger quantities of capital equipment.
C) over time the capital equipment used by workers has deteriorated in quality.
D) the supply of labor has increased.

Question 18

If the nominal wages of carpenters rose by 5 percent in 2013 and the price level increased by 3 percent,then the real wages of carpenters:

A) decreased by 2 percent.
B) increased by 2 percent.
C) increased by 3 percent.
D) increased by 8 percent.

Question 19

If a firm is hiring a certain type of labor under purely competitive conditions:

A) its labor demand curve will be perfectly elastic at the market-determined wage rate.
B) the labor supply curve will lie above the marginal labor cost curve.
C) the labor supply and marginal labor (resource)cost curves will coincide and be upsloping.
D) the labor supply and marginal labor (resource)cost curves will coincide and be perfectly elastic.

Question 20

Which of the following is correct?

A) The nominal wage may fall,but the real wage can never decline.
B) The real wage may fall,but the nominal wage can never decline.
C) Both the nominal and the real wage must always rise.
D) The nominal and the real wage may both fall.

Question 21

A firm hiring labor in a perfectly competitive labor market faces a:

A) downsloping labor supply curve and upsloping labor demand curve.
B) upsloping labor supply curve and downsloping labor demand curve.
C) upsloping labor supply curve and horizontal labor demand curve.
D) horizontal competitive wage curve and downsloping labor demand curve.

Question 22

Use the resource demand data shown on the left and the resource supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\15\\28\\39\\48\\55\\60\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 2.20 \\2.00 \\1.80 \\1.60 \\1.40 \\1.20 \\1.00 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\-- \\\$1.00 \\2.00\\3.00 \\4.00 \\5.00 \\6.00\end{array}\end{array}$
Refer to the given data.What will be the profit-maximizing selling price of the product?

A) $1.40.
B) $1.60.
C) $1.80.
D) $2.00.

Question 23

A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker.The marginal wage cost of the seventh worker is:

A) $9.
B) $10.
C) $15.
D) $21.

Question 24

In a monopsonistic labor market,the employer will maximize profits by employing workers up to that point at which:

A) the difference between the wage rate and marginal resource (labor)cost is at a maximum.
B) marginal revenue product equals marginal resource (labor)cost.
C) the wage rate equals marginal revenue product.
D) the wage rate equals marginal resource (labor)cost.

Question 25

The economic term for a firm that is the sole buyer in a market is:

A) monopsonist.
B) monopolist.
C) bilateral competitor.
D) bilateral monopolist.

Question 26

A profit-maximizing firm will:

A) expand employment if marginal revenue product exceeds marginal resource cost.
B) reduce employment if marginal revenue product exceeds marginal resource cost.
C) expand employment if marginal revenue product equals marginal resource cost.
D) reduce employment if marginal revenue product equals marginal resource cost.

Question 27

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array}$

Refer to the given data.The firm is hiring labor:

A) at a wage rate that exceeds labor's MRP.
B) under purely competitive conditions.
C) in an imperfectly competitive market.
D) as a monopsonist.

Question 28

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array}$
Refer to the given data.The labor supply curve facing firms is:

A) such that it does not intersect the labor demand curve.
B) upsloping.
C) perfectly inelastic.
D) perfectly elastic.

Question 29

The individual firm in a purely competitive labor market faces:

A) a perfectly elastic labor supply curve and a downsloping labor demand curve.
B) a perfectly elastic labor demand curve and an upsloping labor supply curve.
C) labor demand and labor supply curves both of which are perfectly elastic.
D) a downsloping labor demand curve and an upsloping labor supply curve.

Question 30

A profit-maximizing firm will:

A) expand employment if marginal revenue product equals marginal resource cost.
B) reduce employment if marginal revenue product equals marginal resource cost.
C) reduce employment if marginal revenue product is less than marginal resource cost.
D) expand employment if marginal revenue product is less than marginal resource cost.

Question 31

Use the resource demand data shown on the left and the resource supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\15\\28\\39\\48\\55\\60\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 2.20 \\2.00 \\1.80 \\1.60 \\1.40 \\1.20 \\1.00 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\-- \\\$1.00 \\2.00\\3.00 \\4.00 \\5.00 \\6.00\end{array}\end{array}$
Refer to the given data.What will be the profit-maximizing wage rate?

A) $6.
B) $5.
C) $4.
D) $3.

Question 32

In monopsony:

A) each firm employs a small portion of the total supply of labor.
B) the workforce is highly mobile.
C) the wage rate paid by the employer varies directly with the number of workers employed.
D) the employer is a "wage taker."

Question 33

The labor supply curve facing a purely competitive employer is __________,whereas the labor supply curve facing a monopsonist is ___________.

A) upsloping;horizontal
B) downsloping;vertical
C) vertical;upsloping
D) horizontal;upsloping

Question 34

Suppose the MRP of a firm's 12^th worker is $22 and the worker's marginal wage cost is $16.We can say with certainty that the firm:

A) is hiring labor in a competitive labor market at a wage rate of $16.
B) is hiring labor in a monopsonistic labor market.
C) will find it profitable to hire fewer workers.
D) will find it profitable to hire more workers.

Question 35

Use the resource demand data shown on the left and the resource supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\15\\28\\39\\48\\55\\60\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 2.20 \\2.00 \\1.80 \\1.60 \\1.40 \\1.20 \\1.00 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\-- \\\$1.00 \\2.00\\3.00 \\4.00 \\5.00 \\6.00\end{array}\end{array}$
Refer to the given data.How many units of output will this profit-maximizing firm produce?

A) 39.
B) 48.
C) 55.
D) 60.

Question 36

Use the resource demand data shown on the left and the resource supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\15\\28\\39\\48\\55\\60\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 2.20 \\2.00 \\1.80 \\1.60 \\1.40 \\1.20 \\1.00 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\-- \\\$1.00 \\2.00\\3.00 \\4.00 \\5.00 \\6.00\end{array}\end{array}$
Refer to the given data.How many workers will this profit-maximizing firm choose to employ?

A) 6.
B) 5.
C) 4.
D) 3.

Question 37

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array}$
On the basis of the given information,we:

A) can say that the labor supply curve facing the firm is nonexistent.
B) cannot say whether the firm's product market is purely or imperfectly competitive.
C) can say that the firm is selling its product in a purely competitive market.
D) can say that the firm is selling its product in an imperfectly competitive market.

Question 38

Which of the following is most likely to be an example of monopsony?

A) The market for fast-food workers in a large summer resort town.
B) The market for card dealers in Las Vegas.
C) The market for Major League Baseball umpires.
D) The market for retail sales clerks in a major city.

Question 39

Use the resource demand data shown on the left and the resource supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\15\\28\\39\\48\\55\\60\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 2.20 \\2.00 \\1.80 \\1.60 \\1.40 \\1.20 \\1.00 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\-- \\\$1.00 \\2.00\\3.00 \\4.00 \\5.00 \\6.00\end{array}\end{array}$
Refer to the given data.We can conclude that:

A) both the product and resource markets are imperfectly competitive.
B) the resource market is imperfectly competitive,but the product market is purely competitive.
C) both the resource and product markets are purely competitive.
D) the resource market is purely competitive,but the product market is imperfectly competitive.

Question 40

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\\\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6\end{array}\begin{array}{c}\text {Marginal}\\\underline{\text {Product}}\\0\\14\\12\\9\\7\\4\\2\end{array}\begin{array}{c}\text { Product }\\\underline{\text { Price } }\\\$ 3 \\3 \\3 \\3 \\3 \\3 \\3 \end{array}\begin{array}{c}\\\underline{\text {Employment}}\\0\\1\\2\\3\\4\\5\\6 \end{array}\begin{array}{c}\text { Wage}\\\underline{\text { Rate }} \\ \$ 11 \\11 \\11 \\11 \\11 \\11 \\11\end{array}\end{array}$
Refer to the given data.The firm will maximize profits (or minimize losses)by employing:

A) 5 workers.
B) 4 workers.
C) 3 workers.
D) 2 workers.

Question 41

Assume the Ajax Mining Company hires 80 percent of the nonunion labor force of Mother Lode,New Mexico.Also,suppose that this labor force is highly immobile.Economists would describe this employer as a:

A) monopolist.
B) oligopolist.
C) monopsonist.
D) monopolistic competitor.

Question 42

If a firm is a monopsonist in the hiring of both labor and capital,it will obtain the profit-maximizing quantities of labor and capital when:

A) MRP_L/P_L = MRP_C/P_C = 1.
B) MRP_L/MRC_L = MRP_C/MRC_C = 1.
C) the MRP of labor equals the MRP of capital.
D) the MRC of labor equals the MRC of capital.

Question 43

Occupational licensing has much the same effect as:

A) inclusive unionism.
B) exclusive unionism.
C) bilateral monopoly.
D) monopsony.

Question 44

If a firm is hiring variable resources D and F in imperfectly competitive input markets,it will maximize profits by employing D and F in such quantifies that:

A) MRP_D/MRC_D = MRP_F/MRC_F = 1.
B) MRP_D/MRC_D = MRP_F/MRC_F.
C) MRP_D/P_D = MRP_F/P_F = 1.
D) MRP_D/P_D = MRP_F/P_F.

Question 45

A craft union attempts to increase wage rates by:

A) equating the MRP and the MRC curves.
B) shifting the labor supply curve to the left.
C) shifting the labor supply curve to the right.
D) shifting the MRP curve to the right.

Question 46

Inclusive unionism is practiced mostly by:

A) professional and semiprofessional employees.
B) small unions comprised of skilled workers,such as the bricklayers.
C) industrial unions.
D) craft unions.

Question 47

Which of the following is not correct?

A) Other things equal,a monopsonist will pay a lower wage rate than will a firm hiring labor competitively.
B) A monopsonistic employer will pay workers a wage rate equal to their MRP.
C) A purely competitive seller will pay workers a wage rate equal to their MRP.
D) An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC.

Question 48

A monopsonistic employer in an unorganized (nonunion)labor market will:

A) pay a wage rate less than labor's MRP.
B) pay the same wage rate but hire fewer workers than if the market was purely competitive.
C) hire the number of workers indicated by the intersection of the MRC and the labor supply curves.
D) pay a wage rate in excess of labor's MRP.

Question 49

Answer the question on the basis of the following supply information facing a single firm in a particular labor market: $$\begin{array}{l}\text { Wage }\quad\quad{Quantity }\\\begin{array} { c c c } \text { Rate } && \text { Supplied } \\\hline\$ 5 & & 1 \\10 & & 2 \\15 & & 3 \\20 & & 4 \\25 & & 5\end{array}\end{array}$$ Refer to the given information.This labor supply curve demonstrates that:

A) the firm is selling its output under imperfectly competitive conditions.
B) the firm is selling its output under purely competitive conditions.
C) higher wage rates must be paid to successive workers to overcome their higher opportunity costs.
D) the firm is hiring labor under purely competitive conditions.

Question 50

Other things equal,the monopsonistic employer will pay a:

A) lower wage rate and hire fewer workers than will a purely competitive employer.
B) higher wage rate but hire fewer workers than will a purely competitive employer.
C) lower wage rate but hire a larger number of workers than will a purely competitive employer.
D) higher wage rate and hire a larger number of workers than will a purely competitive employer.

Question 51

Which of the following tactics is most associated with the demand-enhancement union model?

A) Reducing the price of inputs that are substitutes for union workers.
B) Lobbying for increases in public expenditures on the product it is producing.
C) Restricting the number of workers allowed to work in the industry.
D) Increasing the price of products that are complements for the one it is producing.

Question 52

Empirical studies suggest that,other things equal,the smaller the number of hospitals in a city,the lower are nurses' wages.This is evidence that:

A) the labor markets of nurses are purely competitive.
B) hospitals may possess some degree of monopsony power.
C) the minimum wage does not apply to nurses.
D) labor unions have been ineffective in increasing the wages of nurses.

Question 53

Answer the question on the basis of the following supply information facing a single firm in a particular labor market: $$\begin{array}{l}\text { Wage} \quad\quad{Quantity }\\\begin{array} { c c c } \text { Rate } && \text { Supplied } \\\hline\$ 5 & & 1 \\10 & & 2 \\15 & & 3 \\20 & & 4 \\25 & & 5\end{array}\end{array}$$ Refer to the given information.The marginal resource (labor)cost of the third worker is:

A) $15.
B) $25.
C) $35.
D) $45.

Question 54

As compared to a purely competitive labor market,in a nonunionized monopsonistic labor market,wages:

A) and employment will both be lower.
B) will be higher,but employment will be lower.
C) will be lower,but employment will be higher.
D) and employment will both be higher.

Question 55

A monopsonistic employer's marginal resource (labor)cost curve:

A) is always more elastic than the labor supply curve.
B) coincides with the labor supply curve.
C) lies below the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers.
D) lies above the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers.

Question 56

The critical feature of a monopsonistic labor market is that the employer:

A) has a perfectly elastic demand curve for labor.
B) can hire any number of workers it chooses at the going wage rate.
C) faces an upsloping labor supply curve.
D) faces a perfectly inelastic labor supply curve.

Question 57

"Player drafts" of professional athletes:

A) increase the competitiveness of the labor market for professional athletes.
B) reduce the profitability of professional sports franchises.
C) promote monopsony in the hire of professional athletes.
D) increase salaries of professional athletes.

Question 58

A monopsonistic employer:

A) has a perfectly elastic labor supply curve.
B) is necessarily a monopolist in the product market.
C) confronts a marginal resource (labor)cost that is greater than the wage rate.
D) confronts a marginal resource (labor)cost that is less than the wage rate.

Question 59

If a firm faces an upsloping labor supply curve (and there is no union or minimum wage),its:

A) MRC curve is also upsloping.
B) MRC curve is perfectly elastic.
C) MRP curve is perfectly inelastic.
D) MRP curve is also upsloping.

Question 60

A monopsonist's wage cost in hiring an additional worker is the:

A) worker's wage rate.
B) worker's wage rate plus the wage increases paid to all workers already employed.
C) worker's wage rate adjusted for the lower price that must be charged for the extra output.
D) marginal wage cost less the wage rate.

Question 61

The electricians' union is a good example of:

A) exclusive unionism.
B) an industrial union.
C) how unions can simultaneously increase wage rates and employment by increasing the demand for labor.
D) inclusive unionism.

Question 62

Many economists are critical of the minimum wage because they believe that it:

A) hurts the efforts of labor unions.
B) reduces the number of available job opportunities.
C) conflicts with policies designed to equalize the distribution of income.
D) causes labor shortages in affected markets.

Question 63

Labor unions may attempt to raise wage rates by:

A) increasing the supply of labor.
B) forcing employers,under the threat of a strike,to pay above-equilibrium wage rates.
C) decreasing the demand for labor.
D) increasing the price of complementary resources.

Question 64

If an exclusive union is successful in restricting the supply of labor,the:

A) wage rate will rise.
B) quantity of labor demanded will rise.
C) number of job opportunities in the firm or industry will increase.
D) demand for labor curve will shift leftward.

Question 65

If the minimum wage is set too high,in some labor markets we can expect to see:

A) a shortage of labor.
B) an increase in on-the-job training.
C) a surplus of labor.
D) a decline in wage costs.

Question 66

Authoritative estimates suggest that currently union workers on the average:

A) achieve no wage advantage over nonunion workers in the same occupation.
B) realize a 5 percent wage advantage over nonunion workers in the same occupation.
C) realize a 20-30 percent wage advantage over nonunion workers in the same occupation.
D) realize a 15 percent wage advantage over nonunion workers in the same occupation.

Question 67

Unions might support a higher minimum wage because:

A) their constitutions obligate them to do so.
B) they feel a higher minimum wage will lower labor's tax payments for welfare programs.
C) a higher minimum wage makes less-skilled workers less substitutable for union workers.
D) the minimum wage is better targeted than are alternative income-maintenance programs.

Question 68

Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings.One reason for this is to:

A) restrict the supply of construction workers.
B) increase the elasticity of demand for construction workers.
C) increase the demand for construction workers.
D) increase the price of substitute inputs.

Question 69

Labor unions are restrained in their wage demands because:

A) legislation limits annual increases in nominal wages to 6 percent.
B) the labor demand curve is downsloping.
C) marginal wage cost curves lie above labor supply curves in most labor markets.
D) most unions deal with monopsonists who have superior bargaining power.

Question 70

Craft unions:

A) attempt to organize workers at all skill levels in a firm or industry.
B) have been declared illegal by federal legislation.
C) only organize workers who have a particular skill.
D) attempt to increase the supply of their particular type of labor.

Question 71

A union might increase the demand for the labor services of its members by:

A) decreasing the demand for the product it is producing.
B) decreasing the prices of complementary inputs.
C) decreasing the prices of substitute inputs.
D) increasing the prices of complementary inputs.

Question 72

Critics of the minimum wage argue that as an antipoverty device it is "poorly targeted." By this they mean that:

A) the minimum wage only applies to a small percentage of the labor force.
B) many who benefit from the minimum wage are teenagers or not poor.
C) the government has been unable to enforce the minimum wage.
D) the average level of wages in the economy is considerably higher than the minimum wage.

Question 73

Occupational licensing:

A) functions essentially the same as inclusive unionism.
B) attracts large numbers of workers and therefore depresses wages.
C) often restricts occupational entry and raises the incomes of license holders.
D) has been declared illegal in the majority of states.

Question 74

Minimum-wage legislation is less likely to have adverse effects on employment when the:

A) affected labor market is monopsonistic.
B) economy has high unemployment.
C) derived demand for labor is shifting to the left.
D) affected labor market is perfectly competitive.

Question 75

If an industrial union is formed to bargain with a monopsonistic employer,then in this labor market:

A) the resulting wage rate will always be above the competitive level.
B) employment may either increase or decrease.
C) employment will increase.
D) employment will decrease.

Question 76

In a labor market characterized by bilateral monopoly,the wage rate will:

A) be logically indeterminate.
B) be established at the level desired by the union.
C) be established at the level desired by the employer.
D) always be established at the competitive level.

Question 77

Unions often oppose increases in the prices of complementary inputs (for example,truck drivers may oppose increases in taxes on diesel fuel).They do this because increases in the prices of complementary inputs might:

A) increase the supply of competing labor through the output effect.
B) increase the supply of competing labor through the substitution effect.
C) decrease the demand for union labor through the output effect.
D) decrease the demand for union labor through the substitution effect.

Question 78

Bilateral monopoly occurs where:

A) a monopsonistic employer bargains with an inclusive union.
B) a monopsonistic employer bargains with an exclusive union.
C) a craft union bargains with a purely competitive employer.
D) an industrial union bargains with a purely competitive employer.

Question 79

Critics of minimum-wage legislation argue that it:

A) keeps inefficient producers in business.
B) reduces employment.
C) undermines incentives to work.
D) is deflationary.

Question 80

If a single large employer bargains with an inclusive union,the resulting labor market model can best be described as:

A) a cartel.
B) countervailing power.
C) a bilateral monopoly.
D) an internal labor market.