Question 1

The long-run trend of real wages

Accepted Answer

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.E) A) and B)
F) All of the above

Question 2

Unions might support a higher minimum wage because

Accepted Answer

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

Question 3

The lack of job information for workers would be an example of which explanation for wage differentials among workers?

Accepted Answer

A)  noncompeting groups
B)  compensating differences
C)  market imperfections
D)  principal-agent problemsE) B) and D)
F) B) and C)

Question 4

The idea of efficiency wages is that

Accepted Answer

A)  the wages of each type of labor must be proportionate to their marginal products.
B)  the wages of each type of labor must be equal to their marginal products.
C)  firms might get greater work effort by paying above-equilibrium wage rates.
D)  workers are more diligent when paid below-equilibrium wages.E) All of the above
F) A) and D)

Question 5

A major function of the National Labor Relations Board is to

Accepted Answer

A)  monitor potentially inflationary increases in wages.
B)  provide compulsory arbitration so that strikes and lockouts do not occur.
C)  set annual wage increases on an industry-by-industry basis.
D)  investigate and rule on charges of unfair labor practices by either management or unions.E) A) and D)
F) C) and D)

Question 6

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 B)
F) A) and C)

Question 7

When the monopsony model is combined with the inclusive union model, the result is a case of

Accepted Answer

A)  occupational licensing.
B)  noncompeting groups.
C)  bilateral monopoly.
D)  institutional immobility.E) C) and D)
F) A) and B)

Question 8

Real wages would rise if the

Accepted Answer

A)  prices of goods and services rose more rapidly than nominal-wage rates.
B)  prices of goods and services rose less rapidly than nominal-wage rates.
C)  prices of goods and services and wage rates both rose.
D)  prices of goods and services and wage rates both fell.E) None of the above
F) C) and D)

Question 9

Which of the following is not correct?

Accepted Answer

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

Question 10

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) A) and D)
F) B) and D)

Question 11

Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

Accepted Answer

A) True 
 B)False

Question 12

Stock options as a form of payment are designed to

Accepted Answer

A)  evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law.
B)  boost the overall earnings of minimum-wage workers.
C)  offset monopsony.
D)  address the principal-agent problem.E) B) and C)
F) All of the above

Question 13

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

Accepted Answer

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

Question 14

A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25 units of output an hour.If the firm adopts an efficiency-wage policy, then the wage rate for these workers would be expected to

Accepted Answer

A)  increase and productivity to decrease.
B)  decrease and productivity to increase.
C)  increase and productivity to increase.
D)  decrease and productivity to decrease.E) A) and B)
F) A) and C)

Question 15

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

Accepted Answer

A)  MRPL / PL = MRPC /PC = 1.
B)  MRPL / MRCL = MRPC / MRCC = 1.
C)  the MRP of labor equals the MRP of capital.
D)  the MRC of labor equals the MRC of capital.E) A) and B)
F) B) and D)

Question 16

A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

Accepted Answer

A) True 
 B)False

Question 17

Increases in the productivity of labor result partly from

Accepted Answer

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

Question 18

In the United States,

Accepted Answer

A)  African Americans have higher unionization rates than whites.
B)  women have higher unionization rates than men.
C)  managers have higher unionization rates than transportation workers.
D)  workers in mining have higher unionization rates than workers in government.E) A) and B)
F) A) and C)

Question 19

In the context of labor markets, shirking refers to

Accepted Answer

A)  the nonmonetary disadvantages of certain jobs.
B)  the neglecting or evading of work.
C)  the elimination of monitoring costs.
D)  any scheme where pay is directly related to worker output.E) B) and C)
F) A) and B)

Question 20

Under an agency shop agreement, firms can hire

Accepted Answer

A)  only union workers.
B)  nonunion workers, but these workers must join the union within a specified period, say, 30 days.
C)  nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity.
D)  only nonunion workers.E) B) and C)
F) A) and D)

Exam 17: Wage Determination

A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25 units of output an hour.If the firm adopts an efficiency-wage policy, then the wage rate for these workers would be expected to

Correct AnswerverifiedShow Answer

When the monopsony model is combined with the inclusive union model, the result is a case of

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

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In the context of labor markets, shirking refers to

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Unions might support a higher minimum wage because

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Stock options as a form of payment are designed to

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A major function of the National Labor Relations Board is to

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Real wages would rise if the

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The long-run trend of real wages

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Increases in the productivity of labor result partly from

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A monopsonist in the labor market tends to hire more workers than would be hired if the labor market were purely competitive.

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The idea of efficiency wages is that

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

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Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

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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

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In the United States,

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

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Under an agency shop agreement, firms can hire

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The lack of job information for workers would be an example of which explanation for wage differentials among workers?

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Which of the following is not correct?

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