Question 1

Unions provide training programs in an attempt to increase the marginal physical product of union labor, thus shifting the union demand for labor curve rightward.

Accepted Answer

A) True 
 B)False  True

Question 2

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 the factor supply curve is

Accepted Answer

A) curve 2. 
B) curve 3. 
C) the curve that starts at W2, goes to point B, then down to point C, then moves up curve 2. 
D) the curve that starts at W2, goes to point D, and then moves up curve 2. 
E) the curve that starts at W2 and goes to point D. 
A) curve 2. 
B) curve 3. 
C) the curve that starts at W2, goes to point B, then down to point C, then moves up curve 2. 
D) the curve that starts at W2, goes to point D, and then moves up curve 2. 
E) the curve that starts at W2 and goes to point D. D

Question 3

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) support legislation that reduces trade restrictions and increases imports. 
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) support legislation that reduces trade restrictions and increases imports. A

Question 4

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 5

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 6

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) decrease the demand for the products workers produce. 
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) decrease the demand for the products workers produce.

Question 7

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 8

To decrease the supply of its labor, a union might argue against right-to-work laws.

Accepted Answer

A) True 
 B)False

Question 9

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. 
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.

Question 10

Some economists refer to a monopsony as a

Accepted Answer

A) factor price taker. 
B) factor buyer. 
C) buyer's monopoly. 
D) single-price monopolist. 
A) factor price taker. 
B) factor buyer. 
C) buyer's monopoly. 
D) single-price monopolist.

Question 11

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 12

The closed shop was prohibited by the

Accepted Answer

A) Norris-LaGuardia Act. 
B) Clayton Act. 
C) Wagner Act. 
D) Taft-Hartley Act. 
A) Norris-LaGuardia Act. 
B) Clayton Act. 
C) Wagner Act. 
D) Taft-Hartley Act.

Question 13

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) There is not enough information provided to answer this question. 
A) Q1 
B) Q2 
C) Q3 
D) There is not enough information provided to answer this question.

Question 14

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) There is not enough information provided to answer this question. 
A) (1) 
B) (2) 
C) (3) 
D) There is not enough information provided to answer this question.

Question 15

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

Accepted Answer

A) W1 
B) W2 
C) W3 
D) There is not enough information provided to answer this question. 
A) W1 
B) W2 
C) W3 
D) There is not enough information provided to answer this question.

Question 16

Unions often encourage the buying public to "look for the union label" primarily because

Accepted Answer

A) they feel that only U.S. and\or union-made goods are of high quality. 
B) they feel that it is un-American to buy goods from foreign producers. 
C) doing so may increase demand for the product they produce, which in turn may increase the wage rate paid to union employees. 
D) they realize that Americans are too busy to take time to gather all the important information about a product and these labels are a way of informing the buying public that union-made goods are well made. 
A) they feel that only U.S. and\or union-made goods are of high quality. 
B) they feel that it is un-American to buy goods from foreign producers. 
C) doing so may increase demand for the product they produce, which in turn may increase the wage rate paid to union employees. 
D) they realize that Americans are too busy to take time to gather all the important information about a product and these labels are a way of informing the buying public that union-made goods are well made.

Question 17

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

Accepted Answer

A) highest possible wage rate. 
B) wage rate at which all of its members are employed. 
C) wage rate that maximizes the firm's profits. 
D) wage rate at which the elasticity of demand for workers is 1. 
E) wage rate at which the elasticity of demand for workers is at its highest. 
A) highest possible wage rate. 
B) wage rate at which all of its members are employed. 
C) wage rate that maximizes the firm's profits. 
D) wage rate at which the elasticity of demand for workers is 1. 
E) wage rate at which the elasticity of demand for workers is at its highest.

Question 18

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 19

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 20

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). 
A) be less than column (2). 
B) exceed column (2). 
C) be less than column (3). 
D) exceed column (3).

Exam 14: Wages, Union, and Labor

Unions provide training programs in an attempt to increase the marginal physical product of union labor, thus shifting the union demand for labor curve rightward.

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

If a firm is a monopsony, then it

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?

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

To decrease the supply of its labor, a union might argue against right-to-work laws.

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

Some economists refer to a monopsony as a

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

The closed shop was prohibited by the

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?

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

Unions often encourage the buying public to "look for the union label" primarily because

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

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

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

What Economics Is About

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Supply and Demand: Theory

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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?

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

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?

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 27-3 Refer to Exhibit 27-3. Consider the monopsony setting. In the absence of collective bargaining, what wage rate does the profit-maximizing monopsonist pay?

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