Question 1

Labor union A faces a greater cutback in labor for a given wage increase than does labor union B. It follows that the

Accepted Answer

A) demand for workers in labor union A is greater than the demand for workers in labor union B. 
B) elasticity of demand for workers in labor union B is greater than the elasticity of demand for workers in labor union A. 
C) demand for workers in labor union B is greater than the demand for workers in labor union A. 
D) elasticity of demand for workers in labor union A is greater than the elasticity of demand for workers in labor union B. 
E) a and d 
A) demand for workers in labor union A is greater than the demand for workers in labor union B. 
B) elasticity of demand for workers in labor union B is greater than the elasticity of demand for workers in labor union A. 
C) demand for workers in labor union B is greater than the demand for workers in labor union A. 
D) elasticity of demand for workers in labor union A is greater than the elasticity of demand for workers in labor union B. 
E) a and d

Question 2

All economists assert that the National Collegiate Athletic Association (NCAA) is a type of cartel that enforces the monopsony behavior of universities and colleges in the market for college athletes.

Accepted Answer

A) True 
 B)False

Question 3

Exhibit 27-8
​
  
-Refer to Exhibit 27-8. In the absence of collective bargaining, what quantity of labor would the profit-maximizing monoposonist hire?

Accepted Answer

A) Q1 
B) Q2 
C) Q3 
D) Q4 
E) Q5 
A) Q1 
B) Q2 
C) Q3 
D) Q4 
E) Q5

Question 4

Which of the following statements is true?

Accepted Answer

A) The lower the elasticity of demand for cars, the higher the elasticity of demand for the workers that produce cars. 
B) The higher the elasticity of demand for cars, the lower the elasticity of demand for the workers that produce cars. 
C) The lower the elasticity of demand for cars, the lower the elasticity of demand for the workers that produce cars. 
D) The fewer the substitute factors for union labor, the higher the elasticity of demand for union labor. 
E) c and d 
A) The lower the elasticity of demand for cars, the higher the elasticity of demand for the workers that produce cars. 
B) The higher the elasticity of demand for cars, the lower the elasticity of demand for the workers that produce cars. 
C) The lower the elasticity of demand for cars, the lower the elasticity of demand for the workers that produce cars. 
D) The fewer the substitute factors for union labor, the higher the elasticity of demand for union labor. 
E) c and d

Question 5

In a monopsony model of the labor market, the firm finds that (over a range) as more workers are hired, the wage rate

Accepted Answer

A) increases. 
B) decreases. 
C) remains constant. 
D) remains identical to the marginal factor cost per worker. 
E) b and d 
A) increases. 
B) decreases. 
C) remains constant. 
D) remains identical to the marginal factor cost per worker. 
E) b and d

Question 6

For a monopsony, when the firm purchases additional units of a factor, the marginal factor cost (MFC) rises.

Accepted Answer

A) True 
 B)False

Question 7

The general and likely purpose of a (labor) strike is to convince management that

Accepted Answer

A) the supply curve of labor is what the union says it is. 
B) the demand curve (for the product they sell) is what the union says it is. 
C) workers have a higher marginal physical product than the management think they (the workers) have. 
D) it is not in their best interest to raise the prices of the product they sell. 
E) none of the above 
A) the supply curve of labor is what the union says it is. 
B) the demand curve (for the product they sell) is what the union says it is. 
C) workers have a higher marginal physical product than the management think they (the workers) have. 
D) it is not in their best interest to raise the prices of the product they sell. 
E) none of the above

Question 8

Exhibit 27-7
​
  
-Refer to Exhibit 27-7. As the firm increases employment from 30 to 40 workers, its total labor cost

Accepted Answer

A) decreases by $190. 
B) increases by $190. 
C) increases by $60. 
D) increases by $170. 
A) decreases by $190. 
B) increases by $190. 
C) increases by $60. 
D) increases by $170.

Question 9

Exhibit 27-3
​
  
-Refer to Exhibit 27-3. In the absence of collective bargaining, if the profit-maximizing monopsonist were to pay workers what their services were worth to it, it would pay

Accepted Answer

A) W1. 
B) W2. 
C) W3. 
D) some wage rate between W2 and W3. 
A) W1. 
B) W2. 
C) W3. 
D) some wage rate between W2 and W3.

Question 10

Exhibit 27-11
​
  
-Refer to Exhibit 27-11. The firm in the exhibit is a monopsony. We have deliberately not identified the three curves in the exhibit. They are simply curves 1, 2, and 3. If (union) collective bargaining with the monopsony guarantees the wage rate that workers will be paid is W2, then how many more workers will the monopsony hire than it would hire if it could pay its chosen (or preferred) wage?

Accepted Answer

A) Q4 - Q1 more workers 
B) Q3 - Q2 more workers 
C) Q2 - Q1 more workers 
D) Q3 - Q1 more workers 
E) Q4 - Q3 more workers 
A) Q4 - Q1 more workers 
B) Q3 - Q2 more workers 
C) Q2 - Q1 more workers 
D) Q3 - Q1 more workers 
E) Q4 - Q3 more workers

Question 11

Research by H. Gregg Lewis shows that over the period 1929-1979,

Accepted Answer

A) the average wage of union members was 10 to 15 percent higher than that of comparable nonunion labor. 
B) the average wage of union members was 10 to 15 percent lower than that of comparable nonunion labor. 
C) labor unions increased productivity. 
D) labor unions decreased productivity. 
E) none of the above 
A) the average wage of union members was 10 to 15 percent higher than that of comparable nonunion labor. 
B) the average wage of union members was 10 to 15 percent lower than that of comparable nonunion labor. 
C) labor unions increased productivity. 
D) labor unions decreased productivity. 
E) none of the above

Question 12

"Collective bargaining" refers to

Accepted Answer

A) negotiations between labor unions and management about wage rates and other issues. 
B) negotiations among labor unions over jurisdictional control. 
C) negotiations between labor, management, and government over the drafting of labor laws. 
D) b and c 
E) none of the above 
A) negotiations between labor unions and management about wage rates and other issues. 
B) negotiations among labor unions over jurisdictional control. 
C) negotiations between labor, management, and government over the drafting of labor laws. 
D) b and c 
E) none of the above

Question 13

Exhibit 27-5
​
  
-Refer to Exhibit 27-5. In case (3), with a rise in the wage rate from W1 to W2, the wage bill will rise if

Accepted Answer

A) Q1 x W3 > Q2 x W1. 
B) (Q3 - Q2) x W3 > Q1 x W1. 
C) (W2-W1) x Q2 > (Q1 - Q2) x W1. 
D) (W2 - W3) x Q2 > (W2 - W3) x (Q3 - Q2). 
A) Q1 x W3 > Q2 x W1. 
B) (Q3 - Q2) x W3 > Q1 x W1. 
C) (W2-W1) x Q2 > (Q1 - Q2) x W1. 
D) (W2 - W3) x Q2 > (W2 - W3) x (Q3 - Q2).

Question 14

The traditional view of labor unions is that they enhance worker productivity because the workers feel more secure in their jobs and because there is a low turnover rate in union firms.

Accepted Answer

A) True 
 B)False

Question 15

A single buyer in a factor market is known as a

Accepted Answer

A) monopoly. 
B) monopsony. 
C) oligopsony. 
D) pure buyer. 
A) monopoly. 
B) monopsony. 
C) oligopsony. 
D) pure buyer.

Question 16

Exhibit 27-9
​
  
-Refer to Exhibit 27-9. Let DA and DB represent demand for labor curves facing unions A and B, respectively. As a result of their efforts, both unions succeed in increasing the wage rate from W1 to W2. In terms of the wage-employment trade-off, the wage increase

Accepted Answer

A) had a larger impact on employment for union A than for union B. 
B) had a larger impact on employment for union B than for union A. 
C) had the same impact on employment in both unions. 
D) cannot be determined without further information. 
A) had a larger impact on employment for union A than for union B. 
B) had a larger impact on employment for union B than for union A. 
C) had the same impact on employment in both unions. 
D) cannot be determined without further information.

Question 17

Labor unions generally favor

Accepted Answer

A) import restrictions. 
B) strict immigration laws. 
C) increasing the minimum wage. 
D) a and c 
E) a, b, and c 
A) import restrictions. 
B) strict immigration laws. 
C) increasing the minimum wage. 
D) a and c 
E) a, b, and c

Question 18

The right-to-work law specifies that

Accepted Answer

A) everyone in the country has a right to work at a decent wage. 
B) every worker has a right to a two-week paid vacation. 
C) everyone in the country has a right to work, although it does not specify at any particular wage. 
D) every worker has a right to require his employer to give him 30 days notice before terminating employment. 
E) it is illegal to require union membership for purposes of employment. 
A) everyone in the country has a right to work at a decent wage. 
B) every worker has a right to a two-week paid vacation. 
C) everyone in the country has a right to work, although it does not specify at any particular wage. 
D) every worker has a right to require his employer to give him 30 days notice before terminating employment. 
E) it is illegal to require union membership for purposes of employment.

Question 19

The closed shop was prohibited by the

Accepted Answer

A) Norris-LaGuardia Act. 
B) Clayton Act. 
C) Wagner Act. 
D) Taft-Hartley Act. 
E) none of the above 
A) Norris-LaGuardia Act. 
B) Clayton Act. 
C) Wagner Act. 
D) Taft-Hartley Act. 
E) none of the above

Question 20

A "closed shop" is

Accepted Answer

A) an organization in which a worker is not required to be a member of the union to be hired, but must become a member within a certain period of time after being employed. 
B) an organization in which an employee must belong to the union before he or she can be hired. 
C) an organization of domestic firms that is closed to foreign firms. 
D) a political organization that seeks to raise tariffs on foreign-produced goods imported into the United States. 
E) none of the above 
A) an organization in which a worker is not required to be a member of the union to be hired, but must become a member within a certain period of time after being employed. 
B) an organization in which an employee must belong to the union before he or she can be hired. 
C) an organization of domestic firms that is closed to foreign firms. 
D) a political organization that seeks to raise tariffs on foreign-produced goods imported into the United States. 
E) none of the above

Exam 27: Wages Unions and Labor

Labor union A faces a greater cutback in labor for a given wage increase than does labor union B. It follows that the

All economists assert that the National Collegiate Athletic Association (NCAA) is a type of cartel that enforces the monopsony behavior of universities and colleges in the market for college athletes.

Exhibit 27-8 ​ -Refer to Exhibit 27-8. In the absence of collective bargaining, what quantity of labor would the profit-maximizing monoposonist hire?

Which of the following statements is true?

In a monopsony model of the labor market, the firm finds that (over a range) as more workers are hired, the wage rate

For a monopsony, when the firm purchases additional units of a factor, the marginal factor cost (MFC) rises.

The general and likely purpose of a (labor) strike is to convince management that

Exhibit 27-7 ​ -Refer to Exhibit 27-7. As the firm increases employment from 30 to 40 workers, its total labor cost

Exhibit 27-3 ​ -Refer to Exhibit 27-3. In the absence of collective bargaining, if the profit-maximizing monopsonist were to pay workers what their services were worth to it, it would pay

Research by H. Gregg Lewis shows that over the period 1929-1979,

"Collective bargaining" refers to

Exhibit 27-5 ​ -Refer to Exhibit 27-5. In case (3), with a rise in the wage rate from W1 to W2, the wage bill will rise if

The traditional view of labor unions is that they enhance worker productivity because the workers feel more secure in their jobs and because there is a low turnover rate in union firms.

A single buyer in a factor market is known as a

Exhibit 27-9 ​ -Refer to Exhibit 27-9. Let DA and DB represent demand for labor curves facing unions A and B, respectively. As a result of their efforts, both unions succeed in increasing the wage rate from W1 to W2. In terms of the wage-employment trade-off, the wage increase

Labor unions generally favor

The right-to-work law specifies that

The closed shop was prohibited by the

A "closed shop" is

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Exhibit 27-8 -Refer to Exhibit 27-8. In the absence of collective bargaining, what quantity of labor would the profit-maximizing monoposonist hire?

Exhibit 27-7 -Refer to Exhibit 27-7. As the firm increases employment from 30 to 40 workers, its total labor cost

Exhibit 27-3 -Refer to Exhibit 27-3. In the absence of collective bargaining, if the profit-maximizing monopsonist were to pay workers what their services were worth to it, it would pay

Exhibit 27-5 -Refer to Exhibit 27-5. In case (3), with a rise in the wage rate from W₁ to W₂, the wage bill will rise if

Exhibit 27-9 -Refer to Exhibit 27-9. Let D_A and D_B represent demand for labor curves facing unions A and B, respectively. As a result of their efforts, both unions succeed in increasing the wage rate from W₁ to W₂. In terms of the wage-employment trade-off, the wage increase