Question 1

A firm that is the sole buyer in a factor market is known as a

Accepted Answer

A) monopolist. 
B) public employee union. 
C) monopsonist. 
D) perfect competitor. 
A) monopolist. 
B) public employee union. 
C) monopsonist. 
D) perfect competitor.

Question 2

In collective bargaining, a labor union

Accepted Answer

A) discusses the job description of each member with the firm the member is employed by. 
B) bargains with management on behalf of all its members. 
C) usually tries to get each of its members to join a training program that can increase his or her productivity. 
D) b and c 
E) a, b, and c 
A) discusses the job description of each member with the firm the member is employed by. 
B) bargains with management on behalf of all its members. 
C) usually tries to get each of its members to join a training program that can increase his or her productivity. 
D) b and c 
E) a, b, and c

Question 3

If a labor union specifies that certain jobs can only be done by certain people (for example, only electricians can do electrical work), it is likely trying to

Accepted Answer

A) affect the elasticity of demand for its labor. 
B) reduce the availability of substitute factors for its labor. 
C) increase the marginal physical product of its members. 
D) a and b 
E) none of the above 
A) affect the elasticity of demand for its labor. 
B) reduce the availability of substitute factors for its labor. 
C) increase the marginal physical product of its members. 
D) a and b 
E) none of the above

Question 4

Labor unions tend to favor strictly enforced immigration laws with the intention of lowering the elasticity of demand for union labor.

Accepted Answer

A) True 
 B)False

Question 5

To increase the demand for union labor, a labor union might attempt to

Accepted Answer

A) increase the demand for the products produced by union labor. 
B) decrease substitute factor prices. 
C) decrease the marginal physical product productivity of union labor. 
D) a and b 
E) all of the above 
A) increase the demand for the products produced by union labor. 
B) decrease substitute factor prices. 
C) decrease the marginal physical product productivity of union labor. 
D) a and b 
E) all of the above

Question 6

Exhibit 27-4
​
  
-Refer to Exhibit 27-4. If a labor union successfully organizes the labor market and sets the wage rate at W4, the quantity of labor hired will be

Accepted Answer

A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
E) cannot be determined 
A) Q1. 
B) Q2. 
C) Q3. 
D) Q4. 
E) cannot be determined

Question 7

To lower the elasticity of demand for labor, a labor union might attempt to

Accepted Answer

A) decrease the availability of substitutes for the products union workers produce. 
B) increase the availability of substitutes for the products union workers produce. 
C) increase the availability of substitute factors for union labor. 
D) a and c 
E) b and c 
A) decrease the availability of substitutes for the products union workers produce. 
B) increase the availability of substitutes for the products union workers produce. 
C) increase the availability of substitute factors for union labor. 
D) a and c 
E) b and c

Question 8

Exhibit 27-12
  
-Refer to Exhibit 27-12. As the firm increases employment from 3 to 4 workers, its marginal factor cost (MFC) is

Accepted Answer

A) $7.50. 
B) $26. 
C) $48. 
D) $13. 
A) $7.50. 
B) $26. 
C) $48. 
D) $13.

Question 9

Exhibit 27-8
​
  
-Refer to Exhibit 27-8. If the profit-maximizing monopsonist were to pay its workers what the marginal worker's services are worth to it, the wage rate would be

Accepted Answer

A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) W5. 
A) W1. 
B) W2. 
C) W3. 
D) W4. 
E) W5.

Question 10

A labor union undertakes a training program for its members. The objective of the training program is to

Accepted Answer

A) increase substitute factor prices. 
B) increase the marginal physical product of its members and therefore increase the demand for their services. 
C) reduce the availability of substitutes for the product it produces. 
D) lower the supply of its labor. 
E) none of the above 
A) increase substitute factor prices. 
B) increase the marginal physical product of its members and therefore increase the demand for their services. 
C) reduce the availability of substitutes for the product it produces. 
D) lower the supply of its labor. 
E) none of the above

Question 11

Which of the following comes closest to being a monopsony?

Accepted Answer

A) a car manufacturer in Detroit 
B) a McDonald's in a big city 
C) a coal company who employees all of the workers in a given town 
D) a farmer who hires labor 
A) a car manufacturer in Detroit 
B) a McDonald's in a big city 
C) a coal company who employees all of the workers in a given town 
D) a farmer who hires labor

Question 12

Within the perfectly competitive market structure, consider a labor union that manages to obtain higher wages for its members. At the time the union obtains higher wages, the perfectly competitive firms are earning positive economic profits. It follows that

Accepted Answer

A) initially higher wages will reduce profits. 
B) in the long run product prices will be higher because of higher wages. 
C) in the long run the firms in the industry will earn below normal profits. 
D) in the short run the firms in the industry will necessarily earn below normal profits. 
E) a and b 
A) initially higher wages will reduce profits. 
B) in the long run product prices will be higher because of higher wages. 
C) in the long run the firms in the industry will earn below normal profits. 
D) in the short run the firms in the industry will necessarily earn below normal profits. 
E) a and b

Question 13

Which of the following is true for a monopsony?

Accepted Answer

A) It cannot buy additional units of a factor without increasing the price it pays for the factor. 
B) It can buy additional units of a factor without increasing the price it pays for the factor. 
C) The supply of labor it faces is the industry supply of labor. 
D) a and c 
E) b and c 
A) It cannot buy additional units of a factor without increasing the price it pays for the factor. 
B) It can buy additional units of a factor without increasing the price it pays for the factor. 
C) The supply of labor it faces is the industry supply of labor. 
D) a and c 
E) b and c

Question 14

In a monopsony model of the labor market, as more labor is hired, the marginal factor cost of labor

Accepted Answer

A) decreases. 
B) becomes zero. 
C) remains constant. 
D) increases. 
E) becomes identical to the wage rate. 
A) decreases. 
B) becomes zero. 
C) remains constant. 
D) increases. 
E) becomes identical to the wage rate.

Question 15

Unions generally call for __________ the barriers against foreign trade, as a way of __________ the elasticity of demand for union labor.

Accepted Answer

A) lowering; increasing 
B) lowering; decreasing 
C) raising; increasing 
D) raising; decreasing 
A) lowering; increasing 
B) lowering; decreasing 
C) raising; increasing 
D) raising; decreasing

Question 16

As long as there are advancements in technology, some workers will be temporarily displaced.

Accepted Answer

A) True 
 B)False

Question 17

Exhibit 27-2
​
  
-Refer to Exhibit 27-2. One of the things that the labor union probably can do to convince management that the supply curve is S'S instead of SS is

Accepted Answer

A) make a credible threat of a strike. 
B) ask workers to take a cut in fringe benefits. 
C) try to maximize the wage bill to the union. 
D) try to maximize membership in the union. 
A) make a credible threat of a strike. 
B) ask workers to take a cut in fringe benefits. 
C) try to maximize the wage bill to the union. 
D) try to maximize membership in the union.

Question 18

If a union seeks to maximize the total wage bill received by its members, then it

Accepted Answer

A) should seek to establish the highest possible wage rate. 
B) should seek to establish the lowest possible wage rate. 
C) will find that this cannot be done under any circumstances. 
D) none of the above 
A) should seek to establish the highest possible wage rate. 
B) should seek to establish the lowest possible wage rate. 
C) will find that this cannot be done under any circumstances. 
D) none of the above

Question 19

If workers can do the work in both the unionized sector and the nonunionized sector, then an increase in the wage rate paid in the unionized sector (relative to the wage rate paid in the nonunionized sector), which is brought about by a permanent leftward shift in the labor supply curve, will lead to

Accepted Answer

A) an increase in the supply of labor in the nonunionized sector and lower wages in that sector. 
B) an increase in the supply of labor in the unionized sector and lower wages in that sector. 
C) no change in the supply of labor in either of the sectors mentioned. 
D) an increase in the supply of labor in the unionized sector and even higher wages in that sector. 
E) There is not enough information to answer the question. 
A) an increase in the supply of labor in the nonunionized sector and lower wages in that sector. 
B) an increase in the supply of labor in the unionized sector and lower wages in that sector. 
C) no change in the supply of labor in either of the sectors mentioned. 
D) an increase in the supply of labor in the unionized sector and even higher wages in that sector. 
E) There is not enough information to answer the question.

Question 20

Exhibit 27-3
​
  
-Refer to Exhibit 27-3. Consider the monopsony setting. In the absence of collective bargaining, what quantity of labor does the profit-maximizing monopsonist hire?

Accepted Answer

A) Q1 
B) Q2 
C) Q3 
D) none of the above 
A) Q1 
B) Q2 
C) Q3 
D) none of the above

Exam 27: Wages Unions and Labor

A firm that is the sole buyer in a factor market is known as a

In collective bargaining, a labor union

If a labor union specifies that certain jobs can only be done by certain people (for example, only electricians can do electrical work), it is likely trying to

Labor unions tend to favor strictly enforced immigration laws with the intention of lowering the elasticity of demand for union labor.

To increase the demand for union labor, a labor union might attempt to

Exhibit 27-4 ​ -Refer to Exhibit 27-4. If a labor union successfully organizes the labor market and sets the wage rate at W4, the quantity of labor hired will be

To lower the elasticity of demand for labor, a labor union might attempt to

Exhibit 27-12 -Refer to Exhibit 27-12. As the firm increases employment from 3 to 4 workers, its marginal factor cost (MFC) is

Exhibit 27-8 ​ -Refer to Exhibit 27-8. If the profit-maximizing monopsonist were to pay its workers what the marginal worker's services are worth to it, the wage rate would be

A labor union undertakes a training program for its members. The objective of the training program is to

Which of the following comes closest to being a monopsony?

Within the perfectly competitive market structure, consider a labor union that manages to obtain higher wages for its members. At the time the union obtains higher wages, the perfectly competitive firms are earning positive economic profits. It follows that

Which of the following is true for a monopsony?

In a monopsony model of the labor market, as more labor is hired, the marginal factor cost of labor

Unions generally call for __________ the barriers against foreign trade, as a way of __________ the elasticity of demand for union labor.

As long as there are advancements in technology, some workers will be temporarily displaced.

Exhibit 27-2 ​ -Refer to Exhibit 27-2. One of the things that the labor union probably can do to convince management that the supply curve is S'S instead of SS is

If a union seeks to maximize the total wage bill received by its members, then it

Exhibit 27-3 ​ -Refer to Exhibit 27-3. Consider the monopsony setting. In the absence of collective bargaining, what quantity of labor does the profit-maximizing monopsonist hire?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

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Filters

Exhibit 27-4 -Refer to Exhibit 27-4. If a labor union successfully organizes the labor market and sets the wage rate at W₄, the quantity of labor hired will be

Exhibit 27-8 -Refer to Exhibit 27-8. If the profit-maximizing monopsonist were to pay its workers what the marginal worker's services are worth to it, the wage rate would be

Unions generally call for the barriers against foreign trade, as a way of the elasticity of demand for union labor.

Exhibit 27-2 -Refer to Exhibit 27-2. One of the things that the labor union probably can do to convince management that the supply curve is S'S instead of SS is

Exhibit 27-3 -Refer to Exhibit 27-3. Consider the monopsony setting. In the absence of collective bargaining, what quantity of labor does the profit-maximizing monopsonist hire?