Question 1

If a firm is a monopsony, then it

Accepted Answer

A) can pay any price it wants for the factors that it hires. 
B) will have to pay the same price to each factor owner that supplies its factor. 
C) will have to pay a higher price to purchase additional units of a factor. 
D) need not lower the price of its product to induce buyers to purchase additional quantities. 
A) can pay any price it wants for the factors that it hires. 
B) will have to pay the same price to each factor owner that supplies its factor. 
C) will have to pay a higher price to purchase additional units of a factor. 
D) need not lower the price of its product to induce buyers to purchase additional quantities.

Question 2

Exhibit 27-7
​
  
-Refer to Exhibit 27-7. For each quantity of labor hired (after the first worker), marginal factor cost (MFC) will

Accepted Answer

A) be less than column (2). 
B) exceed column (2). 
C) be less than column (3). 
D) exceed column (3). 
E) b and d 
A) be less than column (2). 
B) exceed column (2). 
C) be less than column (3). 
D) exceed column (3). 
E) b and d

Question 3

Which of the following statements is true?

Accepted Answer

A) The union-as-collective-voice view of the labor union holds that labor unions have a negative impact on productivity and efficiency. 
B) The traditional view of the labor union is that the union acts as a collective voice for workers and probably leads to lower quit rates (among employees). 
C) The union-as-collective-voice view of the labor union holds that labor unions often have unnecessary staffing requirements, which means that they insist that only certain persons be allowed to do certain jobs. 
D) b and c 
E) none of the above 
A) The union-as-collective-voice view of the labor union holds that labor unions have a negative impact on productivity and efficiency. 
B) The traditional view of the labor union is that the union acts as a collective voice for workers and probably leads to lower quit rates (among employees). 
C) The union-as-collective-voice view of the labor union holds that labor unions often have unnecessary staffing requirements, which means that they insist that only certain persons be allowed to do certain jobs. 
D) b and c 
E) none of the above

Question 4

It is unlikely that very many (pure) monopsony firms exist today, given that workers are increasingly mobile.

Accepted Answer

A) True 
 B)False

Question 5

The lower the elasticity of demand for labor,

Accepted Answer

A) the larger the cutback in labor for a given wage increase. 
B) the smaller the cutback in labor for a given wage increase. 
C) the higher the wage rate that a labor union receives for its membership. 
D) the lower the wage rate that a labor union receives for its membership. 
E) the more members of a given union. 
A) the larger the cutback in labor for a given wage increase. 
B) the smaller the cutback in labor for a given wage increase. 
C) the higher the wage rate that a labor union receives for its membership. 
D) the lower the wage rate that a labor union receives for its membership. 
E) the more members of a given union.

Question 6

Which of the following statements is true?

Accepted Answer

A) The traditional view of labor unions predicts that unionization of a firm will result in improvements in productivity and efficiency. 
B) The labor union as a collective voice view of labor unions predicts that unionization of a firm will result in decreases in productivity and efficiency. 
C) The traditional view of labor unions supports the formation of unions as a counterweight to firms' factor-hiring power. 
D) The labor union as a collective voice view of labor unions supports efforts to decrease the unions' role as a "monopolizer of labor." 
E) none of the above 
A) The traditional view of labor unions predicts that unionization of a firm will result in improvements in productivity and efficiency. 
B) The labor union as a collective voice view of labor unions predicts that unionization of a firm will result in decreases in productivity and efficiency. 
C) The traditional view of labor unions supports the formation of unions as a counterweight to firms' factor-hiring power. 
D) The labor union as a collective voice view of labor unions supports efforts to decrease the unions' role as a "monopolizer of labor." 
E) none of the above

Question 7

Exhibit 27-1
​
  
-Refer to Exhibit 27-l. Four demand curves for labor are displayed: D1, D2, D3, and D4. Which provides the least pronounced wage-employment tradeoff?

Accepted Answer

A) D1 
B) D2 
C) D3 
D) D4 
A) D1 
B) D2 
C) D3 
D) D4

Question 8

Exhibit 27-8
​
  
-Refer to Exhibit 27-8. Suppose that initially there is no collective bargaining and the monoposonist maximizes profit. Then the workers form a union and negotiate a wage of W3. What will happen to the total wage bill?

Accepted Answer

A) It will definitely rise. 
B) It will definitely fall. 
C) It will definitely stay the same. 
D) It may rise, fall, or remain the same. 
A) It will definitely rise. 
B) It will definitely fall. 
C) It will definitely stay the same. 
D) It may rise, fall, or remain the same.

Question 9

Exhibit 27-5
​
  
-Refer to Exhibit 27-5. In which of the following cases has the increase in the wage from W1 to W2 been brought about by a prolonged successful training program undertaken by the union for the benefit of its members?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) none of the above 
A) (1) 
B) (2) 
C) (3) 
D) none of the above

Question 10

Exhibit 27-10
​
  
-Refer to Exhibit 27-10. If the firm in the exhibit is a monopsony, then the difference between its marginal factor cost and the wage rate it pays is equal to

Accepted Answer

A) W4 - W2. 
B) W3 - W2. 
C) W4 - W1. 
D) W3 - W1. 
E) There is no difference between the marginal factor cost and the wage rate a monopsony pays. 
A) W4 - W2. 
B) W3 - W2. 
C) W4 - W1. 
D) W3 - W1. 
E) There is no difference between the marginal factor cost and the wage rate a monopsony pays.

Question 11

Sometimes labor unions try to increase the demand for the product they produce. They do so because the demand for labor is derived; and the __________ the demand for the product labor produces, the __________labor and the __________ wages will be, ceteris paribus.

Accepted Answer

A) higher; greater the supply of; lower 
B) higher; lower the demand for; higher 
C) higher; higher the demand for; higher 
D) lower; higher the demand for; higher 
A) higher; greater the supply of; lower 
B) higher; lower the demand for; higher 
C) higher; higher the demand for; higher 
D) lower; higher the demand for; higher

Question 12

If a labor union can affect __________, it can affect its wage-employment tradeoff.

Accepted Answer

A) the availability of substitutes for the product it produces 
B) availability of substitute factors 
C) the fixed costs of the firm it works for 
D) a and b 
E) a, b, and c 
A) the availability of substitutes for the product it produces 
B) availability of substitute factors 
C) the fixed costs of the firm it works for 
D) a and b 
E) a, b, and c

Question 13

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 amount of unemployment in this market will be equal to

Accepted Answer

A) Q4 - Q3. 
B) zero. 
C) Q3 - Q1. 
D) Q2 - Q3. 
E) Q4 - Q1. 
A) Q4 - Q3. 
B) zero. 
C) Q3 - Q1. 
D) Q2 - Q3. 
E) Q4 - Q1.

Question 14

The Taft-Hartley Act allowed the federal government laws regulating the formation of unions to take precedence over (override) union laws enacted by the individual states.

Accepted Answer

A) True 
 B)False

Question 15

A monopsony, as compared to a perfectly competitive firm, pays __________ wage and hires __________ labor.

Accepted Answer

A) a higher; less 
B) a higher; more 
C) a lower; less 
D) a lower; more 
E) the same; the same amount of 
A) a higher; less 
B) a higher; more 
C) a lower; less 
D) a lower; more 
E) the same; the same amount of

Question 16

Exhibit 27-7
​
  
-Refer to Exhibit 27-7. For technological reasons, this monopsonist can hire labor only in increments of 10 workers. The profit-maximizing number of workers is

Accepted Answer

A) 20. 
B) 30. 
C) 40. 
D) 50. 
E) 60. 
A) 20. 
B) 30. 
C) 40. 
D) 50. 
E) 60.

Question 17

The Taft-Hartley Act allowed states the right to

Accepted Answer

A) check into the past of prospective employees before they were hired. 
B) prosecute labor union bosses who did not obey the labor practices deemed reasonable by state authorities. 
C) pass right-to-work laws. 
D) b and c 
E) none of the above 
A) check into the past of prospective employees before they were hired. 
B) prosecute labor union bosses who did not obey the labor practices deemed reasonable by state authorities. 
C) pass right-to-work laws. 
D) b and c 
E) none of the above

Question 18

Exhibit 27-12
  
-Refer to Exhibit 27-12. As the firm increases employment from 2 to 3 workers, its marginal factor cost (MFC) is

Accepted Answer

A) $24. 
B) $11. 
C) $33. 
D) $8. 
A) $24. 
B) $11. 
C) $33. 
D) $8.

Exam 27: Wages Unions and Labor

If a firm is a monopsony, then it

Exhibit 27-7 ​ -Refer to Exhibit 27-7. For each quantity of labor hired (after the first worker), marginal factor cost (MFC) will

Which of the following statements is true?

It is unlikely that very many (pure) monopsony firms exist today, given that workers are increasingly mobile.

The lower the elasticity of demand for labor,

Which of the following statements is true?

Exhibit 27-1 ​ -Refer to Exhibit 27-l. Four demand curves for labor are displayed: D1, D2, D3, and D4. Which provides the least pronounced wage-employment tradeoff?

Exhibit 27-8 ​ -Refer to Exhibit 27-8. Suppose that initially there is no collective bargaining and the monoposonist maximizes profit. Then the workers form a union and negotiate a wage of W3. What will happen to the total wage bill?

Exhibit 27-5 ​ -Refer to Exhibit 27-5. In which of the following cases has the increase in the wage from W1 to W2 been brought about by a prolonged successful training program undertaken by the union for the benefit of its members?

Exhibit 27-10 ​ -Refer to Exhibit 27-10. If the firm in the exhibit is a monopsony, then the difference between its marginal factor cost and the wage rate it pays is equal to

Sometimes labor unions try to increase the demand for the product they produce. They do so because the demand for labor is derived; and the __________ the demand for the product labor produces, the __________labor and the __________ wages will be, ceteris paribus.

If a labor union can affect __________, it can affect its wage-employment tradeoff.

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 amount of unemployment in this market will be equal to

The Taft-Hartley Act allowed the federal government laws regulating the formation of unions to take precedence over (override) union laws enacted by the individual states.

A monopsony, as compared to a perfectly competitive firm, pays __________ wage and hires __________ labor.

Exhibit 27-7 ​ -Refer to Exhibit 27-7. For technological reasons, this monopsonist can hire labor only in increments of 10 workers. The profit-maximizing number of workers is

The Taft-Hartley Act allowed states the right to

Exhibit 27-12 -Refer to Exhibit 27-12. As the firm increases employment from 2 to 3 workers, its marginal factor cost (MFC) is

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Exhibit 27-7 -Refer to Exhibit 27-7. For each quantity of labor hired (after the first worker), marginal factor cost (MFC) will

Exhibit 27-1 -Refer to Exhibit 27-l. Four demand curves for labor are displayed: D₁, D₂, D₃, and D₄. Which provides the least pronounced wage-employment tradeoff?

Exhibit 27-8 -Refer to Exhibit 27-8. Suppose that initially there is no collective bargaining and the monoposonist maximizes profit. Then the workers form a union and negotiate a wage of W₃. What will happen to the total wage bill?

Exhibit 27-5 -Refer to Exhibit 27-5. In which of the following cases has the increase in the wage from W₁ to W₂ been brought about by a prolonged successful training program undertaken by the union for the benefit of its members?

Exhibit 27-10 -Refer to Exhibit 27-10. If the firm in the exhibit is a monopsony, then the difference between its marginal factor cost and the wage rate it pays is equal to

Sometimes labor unions try to increase the demand for the product they produce. They do so because the demand for labor is derived; and the the demand for the product labor produces, the labor and the __ wages will be, ceteris paribus.

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 amount of unemployment in this market will be equal to

A monopsony, as compared to a perfectly competitive firm, pays wage and hires labor.

Exhibit 27-7 -Refer to Exhibit 27-7. For technological reasons, this monopsonist can hire labor only in increments of 10 workers. The profit-maximizing number of workers is