Question 1

What concept is associated with the notion that employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage?

Accepted Answer

A)   profit sharing
B)   efficiency wages
C)   piece-rate wages
D)   bonus or commissionsE) C) and D)
F) A) and B)

Question 2

A monopsonistic employer

Accepted Answer

A)   has a perfectly elastic labor supply curve.
B)   is necessarily a monopolist in the product market.
C)   faces a marginal resource (labor)  cost that is greater than the wage rate.
D)   faces a marginal resource (labor)  cost that is less than the wage rate.E) None of the above
F) All of the above

Question 3

The principal-agent problem arises in labor markets because

Accepted Answer

A)   a firm may realize excessively large profits.
B)   workers may provide less-than-expected work effort.
C)   compensating wage differences do not pay for differences in the nonmonetary aspects of jobs.
D)   human capital investments vary among workers.E) B) and D)
F) A) and B)

Question 4

Nominal wage measures the purchasing power of a given amount of real wage.

Accepted Answer

A) True 
 B)False

Question 5

Available research suggests that the union wage advantage diminishes the national output by

Accepted Answer

A)   15 percent.
B)   8 percent.
C)   3 percent.
D)   less than 1 percent.E) None of the above
F) C) and D)

Question 6

Which of the following factors is not relevant in explaining the persistence of wage differentials?

Accepted Answer

A)   labor immobility
B)   compensating differences
C)   free public education
D)   noncompeting groupsE) All of the above
F) A) and D)

Question 7

Suppose in some economy there are 100 million workers; 8 million of those workers work in retail trade, and 2 million of the retail workers belong to unions. Total union membership in this economy is 30 million. The rate of unionization in the economy is

Accepted Answer

A)   30 percent, and the rate of unionization in retail trade in 20 percent.
B)   8 percent, and the rate of unionization in retail trade is 2 percent.
C)   30 percent, and the rate of unionization in retail trade is 25 percent.
D)   20 percent, and the rate of unionization in retail trade is 25 percent.E) B) and C)
F) A) and C)

Question 8

Which of the following is an explanation for the high labor-productivity in the United States?

Accepted Answer

A)   plentiful capital resources
B)   high total output in industries
C)   high price of labor
D)   plentiful labor resourcesE) A) and D)
F) None of the above

Question 9

Which one of the following research findings is most consistent with the hypothesis that unions increase productivity?

Accepted Answer

A)   Other things equal, firm profits are lower where unions are present.
B)   Union workers receive, on average, higher fringe benefits relative to wages than nonunion workers.
C)   The average amount of work time lost annually to strikes is surprisingly small.
D)   Labor turnover is less in unionized firms than in nonunionized firms.E) B) and D)
F) A) and D)

Question 10

In which of the following U.S. occupations is the rate of unionization the highest?

Accepted Answer

A)   protective services
B)   sales workers
C)   managers
D)   transportation workersE) A) and D)
F) A) and C)

Question 11

Incentive pay plans that seek to tie worker compensation more closely to worker performance include the following, except

Accepted Answer

A)   commissions or royalties.
B)   a seniority-based pay scale.
C)   stock options and profit-sharing.
D)   efficiency wages.E) C) and D)
F) None of the above

Question 12

An industry would be likely to lay off workers following

Accepted Answer

A)   an increase in the price of the firm's product.
B)   an increase in the marginal revenue product of labor.
C)   the imposition of a new minimum wage below the current equilibrium wage.
D)   an industrial union's push of wages above the MRP of labor.E) All of the above
F) A) and C)

Question 13

A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal demand curve for its product in the output market.

Accepted Answer

A) True 
 B)False

Question 14

Compared to a purely competitive firm, a monopsonist will pay

Accepted Answer

A)   a higher wage rate to its workers.
B)   lower wages but hire more workers than the purely competitive firm.
C)   lower wage rates and hire fewer workers than the purely competitive firm.
D)   lower wages, while hiring the same quantity of workers as the purely competitive firm.E) None of the above
F) A) and C)

Question 15

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

Accepted Answer

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.E) B) and D)
F) None of the above

Question 16

Unions prefer agency shops to open shops.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

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.E) B) and C)
F) C) and D)

Question 18

Marginal resource cost refers to the

Accepted Answer

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 producing 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.E) A) and B)
F) A) and C)

Question 19

The idea of compensating differences is used

Accepted Answer

A)   by inclusive unions as an argument in bargaining for wage rate increases.
B)   to justify the application of minimum wages to low-wage labor markets.
C)   to explain the divergence between wage rates and marginal resource cost.
D)   to explain wage rate differences based on differing nonmonetary aspects of jobs.E) B) and C)
F) C) and D)

Question 20

African Americans have higher unionization rates than whites.

Accepted Answer

A) True 
 B)False

Exam 17: Wage Determination

African Americans have higher unionization rates than whites.

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A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal demand curve for its product in the output market.

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Suppose in some economy there are 100 million workers; 8 million of those workers work in retail trade, and 2 million of the retail workers belong to unions. Total union membership in this economy is 30 million. The rate of unionization in the economy is

Correct AnswerverifiedShow Answer

The idea of compensating differences is used

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Which of the following is an explanation for the high labor-productivity in the United States?

Correct AnswerverifiedShow Answer

Available research suggests that the union wage advantage diminishes the national output by

Correct AnswerverifiedShow Answer

Compared to a purely competitive firm, a monopsonist will pay

Correct AnswerverifiedShow Answer

Unions prefer agency shops to open shops.

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A monopsonistic employer

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Incentive pay plans that seek to tie worker compensation more closely to worker performance include the following, except

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The principal-agent problem arises in labor markets because

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Nominal wage measures the purchasing power of a given amount of real wage.

Correct AnswerverifiedShow Answer

What concept is associated with the notion that employers can get greater effort from workers by paying them a relatively high, above-equilibrium wage?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Marginal resource cost refers to the

Correct AnswerverifiedShow Answer

Which of the following factors is not relevant in explaining the persistence of wage differentials?

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An industry would be likely to lay off workers following

Correct AnswerverifiedShow Answer

In which of the following U.S. occupations is the rate of unionization the highest?

Correct AnswerverifiedShow Answer

Which one of the following research findings is most consistent with the hypothesis that unions increase productivity?

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

Correct AnswerverifiedShow Answer

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