Question 1

Which of the following occupations is thought to be affected by monopsonistic conditions in the real world?

Accepted Answer

A)  Fast-Food Workers 
B)  Professional Athletics 
C)  Nurses 
D)  Physicians 
E)  Cleaners and Housekeepers 
A)  Fast-Food Workers 
B)  Professional Athletics 
C)  Nurses 
D)  Physicians 
E)  Cleaners and Housekeepers C

Question 2

Both the utility levels of workers and the profit levels of firms are maximized when:

Accepted Answer

A)  the labour market is in a state of equilibrium. 
B)  there is effective government intervention. 
C)  the labour market is competitive. 
D)  the firm has monopsony power. 
E)  the workers are unionized. 
A)  the labour market is in a state of equilibrium. 
B)  there is effective government intervention. 
C)  the labour market is competitive. 
D)  the firm has monopsony power. 
E)  the workers are unionized. A

Question 3

The supply of labour to an industry is generally upward sloping because:

Accepted Answer

A)  The substitution effect and the scale effect of a wage change work in the same direction. 
B)  The wage elasticity of labour supply is elastic. 
C)  There are many workers working for an industry. 
D)  It is more profitable for firms to hire more workers when labour is cheap. 
E)  Workers are more willing to work when there are added incentives in the form of higher wages. 
A)  The substitution effect and the scale effect of a wage change work in the same direction. 
B)  The wage elasticity of labour supply is elastic. 
C)  There are many workers working for an industry. 
D)  It is more profitable for firms to hire more workers when labour is cheap. 
E)  Workers are more willing to work when there are added incentives in the form of higher wages. E

Question 4

Under what conditions might one expect wages to be above the prevailing competitive levels?

Accepted Answer

A)  in cases in which the employer is a monopolist, an oligopolist, or a monopolistic competitor in the output market 
B)  only in cases in which the employer has market power in the labour market 
C)  only in cases in which the employer has market power in the product market 
D)  only in the case where a union exists 
E)  only in the case where the employer is a monopolist in the product market 
A)  in cases in which the employer is a monopolist, an oligopolist, or a monopolistic competitor in the output market 
B)  only in cases in which the employer has market power in the labour market 
C)  only in cases in which the employer has market power in the product market 
D)  only in the case where a union exists 
E)  only in the case where the employer is a monopolist in the product market

Question 5

Congratulations! You have just been appointed the special advisor to the prime minister for employment-related issues. Fortunately, your portfolio does not involve analyzing all of the facets of labour markets, but rather two specific policy measures: the payroll tax and the minimum wage regulation.
• Payroll taxes have risen rapidly in Canada over the past decade, and some analysts claim that this has a detrimental effect on employment. The payroll tax has been labelled by some as a "job killer." Explain how you would go about analyzing this proposition. Because you are a trained economist, you can go beyond the scope of the rhetorical anecdotes and unsubstantiated, ideological accusations, and apply supply-and-demand analysis to this issue. Your response should include a graph with an explanation, and an identification of the variables that determine the extent of the alleged disemployment effect.
• It is alleged by some that minimum wage laws have a potentially adverse effect on employment. I valid, this assertion would definitely weaken the ability of minimum wage laws to help the disadvantaged. It is time to play point-counterpoint. First, put on your neo-classical economist hat and argue a case against the minimum wage. What are the economic effects? Is it an effective policy measure? Because you are a trained economist, you can apply substantive economic analysis using labour demand theory. Next, put on your more interventionist hat, and argue that the minimum wage does not have significant disemployment effects. In particular, you might mention the case of implementing a minimum wage in a monopsony, or the case of an employer with a high degree of market power. Finally, put on your empirical researcher hat. We know that there are theoretical reasons to expect at least some disemployment effect, but how important are these effects in the real world? Without discussing the technical details, discuss the essence of the findings of the empirical research. You should provide a bit more depth than a simple yes/no answer.

Accepted Answer

The textbook has very good and detailed

Question 6

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. At market equilibrium, we can determine the market wage rate as:

Accepted Answer

A)  (a + c)/(d + b). 
B)  (a - c)/(d - b). 
C)  (a + c)/(d - b). 
D)  (a - c)/(d + b). 
E)  (d + b)/(a + c). 
A)  (a + c)/(d + b). 
B)  (a - c)/(d - b). 
C)  (a + c)/(d - b). 
D)  (a - c)/(d + b). 
E)  (d + b)/(a + c).

Question 7

Which of the following statements regarding the demand for labour is false?

Accepted Answer

A)  If the firm is an monopolist in the product market, the firm's demand curve is flatter than it would be if the firm were operating in a perfectly competitive product market. 
B)  If a firm is a monopolist in the product market, the firm's demand curve is more elastic than it would be if the firm were operating in a perfectly competitive product market. 
C)  If a firm is a monopolist in the product market, it may still behave as a wage taker in the labour market. 
D)  If a firm is a monopolist in the product market, the firm's demand for labour is the same as the industry's demand for labour. 
E)  If a firm is a monopolist in the product market, it may or may not pay wages which are higher than the case in which the firm operates in a competitive output market. 
A)  If the firm is an monopolist in the product market, the firm's demand curve is flatter than it would be if the firm were operating in a perfectly competitive product market. 
B)  If a firm is a monopolist in the product market, the firm's demand curve is more elastic than it would be if the firm were operating in a perfectly competitive product market. 
C)  If a firm is a monopolist in the product market, it may still behave as a wage taker in the labour market. 
D)  If a firm is a monopolist in the product market, the firm's demand for labour is the same as the industry's demand for labour. 
E)  If a firm is a monopolist in the product market, it may or may not pay wages which are higher than the case in which the firm operates in a competitive output market.

Question 8

In the real world, what are some of the signs that are indicative that the labour market might be characterized by a monopsony?

Accepted Answer

A)  underemployed workers 
B)  high unemployment 
C)  unfilled vacancies and recurrent labour shortages 
D)  low wages 
E)  labour markets in which the employers are diffused 
A)  underemployed workers 
B)  high unemployment 
C)  unfilled vacancies and recurrent labour shortages 
D)  low wages 
E)  labour markets in which the employers are diffused

Question 9

Which of the following statements about a payroll tax is true?

Accepted Answer

A)  It reduces the quantity demanded of workers if the supply of labour is perfectly inelastic. 
B)  It generally reduces the quantity demanded of workers. 
C)  It is borne entirely by employers if demand is perfectly inelastic. 
D)  It is borne entirely by workers if the supply of labour is perfectly elastic. 
E)  It is shared equally between workers and employers. 
A)  It reduces the quantity demanded of workers if the supply of labour is perfectly inelastic. 
B)  It generally reduces the quantity demanded of workers. 
C)  It is borne entirely by employers if demand is perfectly inelastic. 
D)  It is borne entirely by workers if the supply of labour is perfectly elastic. 
E)  It is shared equally between workers and employers.

Question 10

Which of the following statements is true if a firm is operating in a competitive labour market?

Accepted Answer

A)  The supply of labour is horizontal at the market wage. 
B)  The marginal cost of labour curve lies above the supply curve. 
C)  The marginal cost of labour curve lies below the supply curve. 
D)  It must also be operating in a competitive output market. 
E)  The demand for labour is the marginal product of labour curve. 
A)  The supply of labour is horizontal at the market wage. 
B)  The marginal cost of labour curve lies above the supply curve. 
C)  The marginal cost of labour curve lies below the supply curve. 
D)  It must also be operating in a competitive output market. 
E)  The demand for labour is the marginal product of labour curve.

Question 11

Which of the following statements is false?

Accepted Answer

A)  If a firm is an imperfect competitor in the labour market, then the labour supply curve is less than perfectly elastic. 
B)  If a firm is a perfect competitor in the labour market, then there is no marginal labour cost curve. 
C)  If a firm is an imperfect competitor in the labour market, then the employees receive less economic rent than they would if the market were perfectly competitive. 
D)  If a firm is an imperfect competitor in the labour market, the labour supply curve that it faces is upward sloping. 
E)  If a firm is an imperfect competitor in the labour market, the marginal labour cost curve lies above the labour supply curve. 
A)  If a firm is an imperfect competitor in the labour market, then the labour supply curve is less than perfectly elastic. 
B)  If a firm is a perfect competitor in the labour market, then there is no marginal labour cost curve. 
C)  If a firm is an imperfect competitor in the labour market, then the employees receive less economic rent than they would if the market were perfectly competitive. 
D)  If a firm is an imperfect competitor in the labour market, the labour supply curve that it faces is upward sloping. 
E)  If a firm is an imperfect competitor in the labour market, the marginal labour cost curve lies above the labour supply curve.

Question 12

Competitive labour markets lead to all of the following conditions except:

Accepted Answer

A)  The marginal workers not receiving economic rents. 
B)  Market wage rate is determined when labour demand equals to the labour supply. 
C)  Labour market leads an efficient allocation of labour resources. 
D)  Wages equalizing across all labour markets. 
E)  The additional benefit that a worker receives equals to the additional cost of foregone leisure for the the worker. 
A)  The marginal workers not receiving economic rents. 
B)  Market wage rate is determined when labour demand equals to the labour supply. 
C)  Labour market leads an efficient allocation of labour resources. 
D)  Wages equalizing across all labour markets. 
E)  The additional benefit that a worker receives equals to the additional cost of foregone leisure for the the worker.

Question 13

Empirical evidence on the practical importance of minimum wage laws suggests:

Accepted Answer

A)  that their impact on the employment level is nil. 
B)  that their impact on employment is actually favourable because they put more money in the hands of poorly paid workers, stimulating consumer spending, thus promoting economic growth. 
C)  that they do reduce the employment levels of younger and unskilled workers to a minor extent - a weak disemployment effect. 
D)  that they succeed in raising the incomes of poor households. 
E)  that they do reduce the employment levels of younger and unskilled workers to a major extent - a strong disemployment effect. 
A)  that their impact on the employment level is nil. 
B)  that their impact on employment is actually favourable because they put more money in the hands of poorly paid workers, stimulating consumer spending, thus promoting economic growth. 
C)  that they do reduce the employment levels of younger and unskilled workers to a minor extent - a weak disemployment effect. 
D)  that they succeed in raising the incomes of poor households. 
E)  that they do reduce the employment levels of younger and unskilled workers to a major extent - a strong disemployment effect.

Question 14

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be:

Accepted Answer

A)  higher than before the tax, and the firm pays b/(b - d) share of the tax. 
B)  lower than before the tax, and workers pay b/(b - d) share of the tax. 
C)  higher than before the tax, and workers pay b/(b - d) share of the tax. 
D)  lower than before the tax, and the firm pays b/(b - d) share of the tax. 
E)  equal to before the tax. 
A)  higher than before the tax, and the firm pays b/(b - d) share of the tax. 
B)  lower than before the tax, and workers pay b/(b - d) share of the tax. 
C)  higher than before the tax, and workers pay b/(b - d) share of the tax. 
D)  lower than before the tax, and the firm pays b/(b - d) share of the tax. 
E)  equal to before the tax.

Question 15

One way to evaluate empirically the impact of the minimum wage on employment is to:

Accepted Answer

A)  appeal to the theory of labour demand, which says that all other factors held constant, an increase in the minimum wage unambiguously reduces employment. 
B)  observe and record what happens to the employment of low-wage workers every time there is an increase in the minimum wage. 
C)  survey employers in order to ask them whether they laid off employees as a result of the increase in the minimum wage. 
D)  compare what happens to the employment of low-wage workers in one sample consisting of firms that were subjected to an increase in the minimum wage to a comparable group of firms that were not. 
E)  estimate an equation for aggregate employment that has the aggregate wage as the independent variable. 
A)  appeal to the theory of labour demand, which says that all other factors held constant, an increase in the minimum wage unambiguously reduces employment. 
B)  observe and record what happens to the employment of low-wage workers every time there is an increase in the minimum wage. 
C)  survey employers in order to ask them whether they laid off employees as a result of the increase in the minimum wage. 
D)  compare what happens to the employment of low-wage workers in one sample consisting of firms that were subjected to an increase in the minimum wage to a comparable group of firms that were not. 
E)  estimate an equation for aggregate employment that has the aggregate wage as the independent variable.

Question 16

Which of the following statements regarding monopsony is false?

Accepted Answer

A)  A monopsonist faces no constraints as it sets wages. 
B)  Monopsony is more likely in situations of unskilled labour. 
C)  A monopsonist is likely to lose some of its market power in the long run. 
D)  A monopsonist is likely to face a fairly inelastic supply of labour. 
E)  Monopsony is more likely in situations of immobile labour. 
A)  A monopsonist faces no constraints as it sets wages. 
B)  Monopsony is more likely in situations of unskilled labour. 
C)  A monopsonist is likely to lose some of its market power in the long run. 
D)  A monopsonist is likely to face a fairly inelastic supply of labour. 
E)  Monopsony is more likely in situations of immobile labour.

Question 17

Which of the following statements is true in regarding to the marginal cost of labour?

Accepted Answer

A)  shows the increase in revenue received by the firm if it hires one more worker. 
B)  is derived from the marginal revenue product curve. 
C)  is the same as the supply curve of labour for a monopsonist. 
D)  is horizontal for a perfectly competitive firm but is downward sloping for a monopsonist. 
E)  is equal to the wage paid if the firm is a monopsonist. 
A)  shows the increase in revenue received by the firm if it hires one more worker. 
B)  is derived from the marginal revenue product curve. 
C)  is the same as the supply curve of labour for a monopsonist. 
D)  is horizontal for a perfectly competitive firm but is downward sloping for a monopsonist. 
E)  is equal to the wage paid if the firm is a monopsonist.

Question 18

Within the framework of competitive labour markets, what is the expected effect of the minimum wage?

Accepted Answer

A)  to make the workers who are retained less productive than what would otherwise be the case 
B)  to reduce employment below the level that would otherwise exist 
C)  to make the workers better off 
D)  to cause a shortage of workers at the going transactions wage 
E)  to shift the demand for low-skilled workers to the left (a fall) 
A)  to make the workers who are retained less productive than what would otherwise be the case 
B)  to reduce employment below the level that would otherwise exist 
C)  to make the workers better off 
D)  to cause a shortage of workers at the going transactions wage 
E)  to shift the demand for low-skilled workers to the left (a fall)

Question 19

If an employer is competitive in the labour market:

Accepted Answer

A)  It can pay at most the going wage. 
B)  It can pay lower than the market equilibrium wage. 
C)  The wage level is independent of the structure of the product market. 
D)  It can affect the going market wage by either hiring many workers or laying off many workers. 
E)  It has to pay at least the going wage. 
A)  It can pay at most the going wage. 
B)  It can pay lower than the market equilibrium wage. 
C)  The wage level is independent of the structure of the product market. 
D)  It can affect the going market wage by either hiring many workers or laying off many workers. 
E)  It has to pay at least the going wage.

Question 20

After the imposition of minimum wage, monopsonist's profits will:

Accepted Answer

A)  equal to zero 
B)  Rising as fast as the marginal cost 
C)  increase 
D)  decrease 
E)  remain the same 
A)  equal to zero 
B)  Rising as fast as the marginal cost 
C)  increase 
D)  decrease 
E)  remain the same

Which of the following occupations is thought to be affected by monopsonistic conditions in the real world?

Both the utility levels of workers and the profit levels of firms are maximized when:

The supply of labour to an industry is generally upward sloping because:

Under what conditions might one expect wages to be above the prevailing competitive levels?

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. At market equilibrium, we can determine the market wage rate as:

Which of the following statements regarding the demand for labour is false?

In the real world, what are some of the signs that are indicative that the labour market might be characterized by a monopsony?

Which of the following statements about a payroll tax is true?

Which of the following statements is true if a firm is operating in a competitive labour market?

Which of the following statements is false?

Competitive labour markets lead to all of the following conditions except:

Empirical evidence on the practical importance of minimum wage laws suggests:

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be:

One way to evaluate empirically the impact of the minimum wage on employment is to:

Which of the following statements regarding monopsony is false?

Which of the following statements is true in regarding to the marginal cost of labour?

Within the framework of competitive labour markets, what is the expected effect of the minimum wage?

If an employer is competitive in the labour market:

After the imposition of minimum wage, monopsonist's profits will:

Labour Supply: Individual Attachment to the Labour Market

Labour Supply and Public Policy: Work Incentive Effects of Alternative Income Maintenance Schemes

Labour Supply Over the Life Cycle

Demand for Labour in Competitive Labour Markets

Labour Demand, Non-Wage Benefits, and Quasi-Fixed Costs

Compensating Wage Differentials

Human Capital Theory: Applications to Education and Training

Wage Structures Across Markets

The Economics of Immigration

Discrimination and Male-Female Earnings Differentials

Optimal Compensation Systems, Deferred Compensation, and Mandatory Retirement

Unions and Collective Bargaining

Union Impact on Wage and Non-Wage Outcomes

Unemployment: Meaning, Measurement, and Canadas Experience

Unemployment: Causes and Consequences

Filters

Exam 7: Wages and Employment in a Single Labour Market

Which of the following occupations is thought to be affected by monopsonistic conditions in the real world?

Both the utility levels of workers and the profit levels of firms are maximized when:

The supply of labour to an industry is generally upward sloping because:

Under what conditions might one expect wages to be above the prevailing competitive levels?

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. At market equilibrium, we can determine the market wage rate as:

Which of the following statements regarding the demand for labour is false?

In the real world, what are some of the signs that are indicative that the labour market might be characterized by a monopsony?

Which of the following statements about a payroll tax is true?

Which of the following statements is true if a firm is operating in a competitive labour market?

Which of the following statements is false?

Competitive labour markets lead to all of the following conditions except:

Empirical evidence on the practical importance of minimum wage laws suggests:

If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be:

One way to evaluate empirically the impact of the minimum wage on employment is to:

Which of the following statements regarding monopsony is false?

Which of the following statements is true in regarding to the marginal cost of labour?

Within the framework of competitive labour markets, what is the expected effect of the minimum wage?

If an employer is competitive in the labour market:

After the imposition of minimum wage, monopsonist's profits will:

Labour Supply: Individual Attachment to the Labour Market

Labour Supply and Public Policy: Work Incentive Effects of Alternative Income Maintenance Schemes

Labour Supply Over the Life Cycle

Demand for Labour in Competitive Labour Markets

Labour Demand, Non-Wage Benefits, and Quasi-Fixed Costs

Compensating Wage Differentials

Human Capital Theory: Applications to Education and Training

Wage Structures Across Markets

The Economics of Immigration

Discrimination and Male-Female Earnings Differentials

Optimal Compensation Systems, Deferred Compensation, and Mandatory Retirement

Unions and Collective Bargaining

Union Impact on Wage and Non-Wage Outcomes

Unemployment: Meaning, Measurement, and Canadas Experience

Unemployment: Causes and Consequences

Filters