Question 1

Union leaders often claim that they must establish the union as a monopoly provider of labor in order to offset the market power of employers. This claim essentially states that unionized firms are

Accepted Answer

The claim made by union leaders suggests that employers have market power and act as monopsonies, meaning they are the sole buyer of labor in a particular market. By establishing the union as a monopoly provider of labor, it offsets this market power of employers and allows workers to negotiate better wages and working conditions. Therefore, the best choice is B, monopsonies.

Question 2

Since 1950, the ratio of working women to the female population--the female labor participation rate--as increased steadily over time. How can you explain the fact that more and more women are working outside the home while paying others to babysit their children at home?

Accepted Answer

The answer of Since 1950, the ratio of working women...

Question 3

Under a bilateral monopoly situation, price is determined by

Accepted Answer

Under bilateral monopoly, there is only one buyer and one seller in the market, which gives them both bargaining power to negotiate the final price. Therefore, the price is determined through bargaining between the buyer and seller.

Question 4

Funny Farm is a 400-acre profit-maximizing farm that produces wheat. The wheat industry is competitive and the price of wheat is $5 per bushel. The relationship between the number of workers the farm hires and the production of wheat is shown in the table below.

Accepted Answer

The answer of Funny Farm is a 400-acre profit-maximizing farm...

Question 5

A monopsony is a single seller.

Accepted Answer

A monopsony is a type of market where there is only one buyer for a particular product or service. It is the opposite of a monopoly, which is a market where there is only one seller.

Question 6

Recently, there has been an increased demand for wind power as an alternative energy source. How will this affect the marginal product, marginal revenue product, and wages of workers in the wind power industry?

Accepted Answer

The answer of Recently, there has been an increased demand...

Question 7

The only explanation for union wages being higher than nonunion wages is that unions monopolize labor and restrict labor supply.

Accepted Answer

Union wages may be higher than nonunion wages due to collective bargaining power and the ability to negotiate better pay and benefits, as well as improved working conditions and job security. It is not simply a matter of labor supply and monopolization.

Question 8

The market in which there is only one buyer of an input and one seller of the input is called a

Accepted Answer

A bilateral monopoly occurs when there is only one buyer and one seller in the market, making both parties monopolists in their respective roles.

Question 9

Suppose the government is considering implementing a minimum wage of $10. With the aid of a graph, explain the consequences of the minimum wage law in the competitive labor market. Your explanation should include the gains or losses to firms, workers, and society as a whole.

Accepted Answer

The answer of Suppose the government is considering implementing a...

Question 10

A credit-card company is considering using telephone solicitation to increase its sales. Under what circumstances should it pay its solicitors a commission for every lead provided, and under what circumstances should it pay them an hourly wage?

Accepted Answer

The answer of A credit-card company is considering using telephone...

Question 11

Bilateral monopoly occurs when monopolies in two different industries try to enter each other's industries.

Accepted Answer

Bilateral monopoly occurs when a single buyer faces a single seller and both have market power. It does not involve two monopolies trying to enter each other's industries.

Question 12

Use the definition of the demand for labor as the marginal revenue product of labor to show how the two statements below can explain why there has been a decline in unskilled workers' real wages.

Accepted Answer

The answer of Use the definition of the demand for...

Question 13

People often complain that sanitation workers are overpaid based on their level of education. Use the idea of compensating differentials to explain why sanitation workers' wages are relatively high.

Accepted Answer

The answer of People often complain that sanitation workers are...

Question 14

Suppose a firm with some market power faces a downward-sloping demand curve for the product it produces. Given the following information on demand, complete the table and draw the resulting demand curve for labor. If the hourly wage rate is $4 per hour, how many workers will this firm hire?

Accepted Answer

The answer of Suppose a firm with some market power...

Question 15

Unionists often justify their seemingly monopolistic tactics by claiming that businesses are monopsonists.

Accepted Answer

Unionists argue that businesses have a monopsony power in the labor market, meaning they are the only buyers of labor in a particular market or industry, and therefore have the ability to depress wages and drive down working conditions. In response, unions may engage in monopolistic tactics to balance the bargaining power in favor of workers.

Question 16

Analyze the labor supply schedules for Mary and Anne based on the data given in the table below.

Accepted Answer

The answer of Analyze the labor supply schedules for Mary...

Question 17

Use a typical diagram of supply and demand for labor to represent the market for lawyers. Suppose the wage for lawyers employed by large law firms is above the equilibrium level. Depict this scenario in your diagram. Will there be a shortage or a surplus of lawyers at this wage rate? This is an inefficient situation based on the supply and demand model. Give one reason why it may persist over time.

Accepted Answer

The answer of Use a typical diagram of supply and...

Question 18

Briefly provide two explanations why union wages are higher than nonunion wages.

Accepted Answer

The answer of Briefly provide two explanations why union wages...

Question 19

A monopsony is a

Accepted Answer

A monopsony is a market situation in which there is only one buyer for a particular good or service. This buyer has a significant degree of market power, as they are able to influence the price of the good or service through their purchasing decisions. In contrast, a monopoly refers to a market situation in which there is only one seller.

Quiz 13: Labor Markets