Question 1

Efficiency wages create a labor

Accepted Answer

A) surplus and so increase unemployment. 
B) surplus and so decrease unemployment. 
C) shortage and so increase unemployment. 
D) shortage and so decrease unemployment. 
A) surplus and so increase unemployment. 
B) surplus and so decrease unemployment. 
C) shortage and so increase unemployment. 
D) shortage and so decrease unemployment. A

Question 2

Efficiency wages,minimum-wage laws,and unions all keep wages

Accepted Answer

A) below the equilibrium level,causing a shortage of labor. 
B) below the equilibrium level,causing a surplus of labor. 
C) above the equilibrium level,causing a shortage of labor. 
D) above the equilibrium level,causing a surplus of labor. 
A) below the equilibrium level,causing a shortage of labor. 
B) below the equilibrium level,causing a surplus of labor. 
C) above the equilibrium level,causing a shortage of labor. 
D) above the equilibrium level,causing a surplus of labor. D

Question 3

Efficiency wages

Accepted Answer

A) may increase productivity. 
B) will increase unemployment. 
C) may improve worker health. 
D) All of the above are correct. 
A) may increase productivity. 
B) will increase unemployment. 
C) may improve worker health. 
D) All of the above are correct. D

Question 4

Caroline is the owner of a hair-styling salon and spa.She decides to raise the wages of her workers even though she faces an excess supply of labor.Her decision

Accepted Answer

A) might increase profits if it attracts a better pool of workers to apply for jobs at her salon. 
B) will increase the excess supply of labor. 
C) may increase the quality of her work force. 
D) All of the above are correct. 
A) might increase profits if it attracts a better pool of workers to apply for jobs at her salon. 
B) will increase the excess supply of labor. 
C) may increase the quality of her work force. 
D) All of the above are correct.

Question 5

Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions

Accepted Answer

A) cause unemployment,but efficiency wages do not. 
B) cause the quantity of labor supplied to exceed the quantity of labor demanded,but efficiency wages do not. 
C) cause wages to be above the equilibrium level. 
D) prevent firms from lowering wages in the presence of a surplus of workers. 
A) cause unemployment,but efficiency wages do not. 
B) cause the quantity of labor supplied to exceed the quantity of labor demanded,but efficiency wages do not. 
C) cause wages to be above the equilibrium level. 
D) prevent firms from lowering wages in the presence of a surplus of workers.

Question 6

Job search

Accepted Answer

A) and firms paying wages above equilibrium to improve worker health both create frictional unemployment. 
B) creates frictional unemployment,while firms paying wages above equilibrium to improve worker health creates structural unemployment. 
C) creates structural unemployment,while firms paying wages above equilibrium to improve worker health creates frictional unemployment. 
D) and firms paying wages above equilibrium to improve worker health both create structural unemployment. 
A) and firms paying wages above equilibrium to improve worker health both create frictional unemployment. 
B) creates frictional unemployment,while firms paying wages above equilibrium to improve worker health creates structural unemployment. 
C) creates structural unemployment,while firms paying wages above equilibrium to improve worker health creates frictional unemployment. 
D) and firms paying wages above equilibrium to improve worker health both create structural unemployment.

Question 7

Efficiency wages create a

Accepted Answer

A) shortage of labor and so reduce unemployment. 
B) shortage of labor and so raise unemployment. 
C) surplus of labor and so reduce unemployment. 
D) surplus of labor and so raise unemployment. 
A) shortage of labor and so reduce unemployment. 
B) shortage of labor and so raise unemployment. 
C) surplus of labor and so reduce unemployment. 
D) surplus of labor and so raise unemployment.

Question 8

A firm may pay efficiency wages in an attempt to

Accepted Answer

A) entice workers to work the night shift rather than the day shift. 
B) improve productivity by reducing turnover. 
C) reduce costs by attracting the least-skilled workers to apply for job vacancies. 
D) All of the above are correct. 
A) entice workers to work the night shift rather than the day shift. 
B) improve productivity by reducing turnover. 
C) reduce costs by attracting the least-skilled workers to apply for job vacancies. 
D) All of the above are correct.

Question 9

In which of the following situations should a firm pay efficiency wages?

Accepted Answer

A) A hiring manager can easily judge the quality of applicants,and after workers have worked for the firm a while,they tend not to look for other jobs. 
B) A hiring manager can easily judge the quality of applicants,and after workers have worked for the firm a while,they tend to look for other jobs. 
C) A hiring manager cannot easily judge the quality of applicants,and after workers have worked for the firm a while,they tend to look for other jobs. 
D) A hiring manager cannot easily judge the quality of applicants,and after workers have worked for the firm a while,they tend not to look for other jobs. 
A) A hiring manager can easily judge the quality of applicants,and after workers have worked for the firm a while,they tend not to look for other jobs. 
B) A hiring manager can easily judge the quality of applicants,and after workers have worked for the firm a while,they tend to look for other jobs. 
C) A hiring manager cannot easily judge the quality of applicants,and after workers have worked for the firm a while,they tend to look for other jobs. 
D) A hiring manager cannot easily judge the quality of applicants,and after workers have worked for the firm a while,they tend not to look for other jobs.

Question 10

Efficiency wages

Accepted Answer

A) increase productivity and reduce unemployment. 
B) increase productivity but increase unemployment. 
C) decrease productivity but reduce unemployment. 
D) decrease productivity and increase unemployment. 
A) increase productivity and reduce unemployment. 
B) increase productivity but increase unemployment. 
C) decrease productivity but reduce unemployment. 
D) decrease productivity and increase unemployment.

Question 11

Paying efficiency wages means that wages are

Accepted Answer

A) above equilibrium,and profits are higher than otherwise. 
B) above equilibrium,and profits are lower than otherwise. 
C) below equilibrium,and profits are higher than otherwise. 
D) below equilibrium,and profits are lower than otherwise. 
A) above equilibrium,and profits are higher than otherwise. 
B) above equilibrium,and profits are lower than otherwise. 
C) below equilibrium,and profits are higher than otherwise. 
D) below equilibrium,and profits are lower than otherwise.

Question 12

Which of the following is an example of an efficiency wage?

Accepted Answer

A) a higher wage paid to a more experienced worker 
B) a below-equilibrium wage paid by a small business exempt from minimum-wage laws 
C) an above-equilibrium wage paid by a firm to reduce turnover costs 
D) a wage tied to participation in a government-sponsored job training program 
A) a higher wage paid to a more experienced worker 
B) a below-equilibrium wage paid by a small business exempt from minimum-wage laws 
C) an above-equilibrium wage paid by a firm to reduce turnover costs 
D) a wage tied to participation in a government-sponsored job training program

Question 13

Rafael is the newly-appointed plant manager for a company that manufactures head phones.Rafael's senior supervisors told him that the output the firm produces,given the number of workers employed,indicates that some workers may be shirking.According to efficiency wage theory,what should he do?

Accepted Answer

A) pay all workers more than the equilibrium wage rate 
B) pay all workers below the equilibrium wage rate to make up for the loss from shirking 
C) make sure that workers are getting paid exactly the equilibrium wage rate 
D) fire the workers with the most seniority 
A) pay all workers more than the equilibrium wage rate 
B) pay all workers below the equilibrium wage rate to make up for the loss from shirking 
C) make sure that workers are getting paid exactly the equilibrium wage rate 
D) fire the workers with the most seniority

Question 14

A firm may pay efficiency wages in an attempt to

Accepted Answer

A) reduce incentives to shirk. 
B) reduce turnover. 
C) attract a well-qualified pool of applicants. 
D) All of the above are correct. 
A) reduce incentives to shirk. 
B) reduce turnover. 
C) attract a well-qualified pool of applicants. 
D) All of the above are correct.

Question 15

Efficiency wages contribute to

Accepted Answer

A) frictional unemployment and the natural rate of unemployment. 
B) frictional unemployment but not the natural rate of unemployment. 
C) structural unemployment and the natural rate of unemployment. 
D) structural unemployment but not the natural rate of unemployment. 
A) frictional unemployment and the natural rate of unemployment. 
B) frictional unemployment but not the natural rate of unemployment. 
C) structural unemployment and the natural rate of unemployment. 
D) structural unemployment but not the natural rate of unemployment.

Question 16

Which of the following is not a reason that paying efficiency wages may increase a firm's profit?

Accepted Answer

A) Efficiency wages increase worker health and therefore increase worker productivity. 
B) Efficiency wages decrease worker turnover and therefore decrease hiring and training costs. 
C) Efficiency wages decrease worker shirking and therefore increase worker productivity. 
D) Efficiency wages are below the equilibrium wage rate but still attract a sufficient number of workers. 
A) Efficiency wages increase worker health and therefore increase worker productivity. 
B) Efficiency wages decrease worker turnover and therefore decrease hiring and training costs. 
C) Efficiency wages decrease worker shirking and therefore increase worker productivity. 
D) Efficiency wages are below the equilibrium wage rate but still attract a sufficient number of workers.

Question 17

Ariana is the CEO of a corporation that hires nonunion labor.According to the theory of efficiency wages,if she decides to pay her workers more than the competitive equilibrium wage,then

Accepted Answer

A) the profits of her firm might increase. 
B) she will face a shortage of labor. 
C) the turnover of her workers may increase. 
D) None of the above is correct. 
A) the profits of her firm might increase. 
B) she will face a shortage of labor. 
C) the turnover of her workers may increase. 
D) None of the above is correct.

Question 18

If there were no factors keeping wages from reaching equilibrium then there would be no

Accepted Answer

A) cyclical unemployment. 
B) frictional unemployment. 
C) structural unemployment. 
D) natural rate of unemployment. 
A) cyclical unemployment. 
B) frictional unemployment. 
C) structural unemployment. 
D) natural rate of unemployment.

Question 19

Buddy is the owner of a firm that bottles beer in St.Louis,Missouri.There are many other such firms in the area.Buddy decides that if he pays his workers a wage higher than the going market wage,his profits will increase.Which of the following is a likely explanation for his decision?

Accepted Answer

A) The higher the wage,the less often his workers will choose to leave his firm. 
B) The higher the wage,the lower will be the costs of obtaining needed supplies. 
C) The higher the wage,the more he can charge for his beer 
D) The higher the wage,the more he will have to monitor his workers for shirking. 
A) The higher the wage,the less often his workers will choose to leave his firm. 
B) The higher the wage,the lower will be the costs of obtaining needed supplies. 
C) The higher the wage,the more he can charge for his beer 
D) The higher the wage,the more he will have to monitor his workers for shirking.

Question 20

Sectoral changes in demand

Accepted Answer

A) create frictional unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment. 
B) create structural unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates frictional unemployment. 
C) and firms paying wages above equilibrium to attract a better pool of candidates both create structural unemployment. 
D) and firms paying wages above equilibrium to attract a better pool of candidates both create frictional unemployment. 
A) create frictional unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment. 
B) create structural unemployment,while firms paying wages above equilibrium to attract a better pool of candidates creates frictional unemployment. 
C) and firms paying wages above equilibrium to attract a better pool of candidates both create structural unemployment. 
D) and firms paying wages above equilibrium to attract a better pool of candidates both create frictional unemployment.

Exam 15: Unemployment: The Theory of Efficiency Wages

Efficiency wages create a labor

Efficiency wages,minimum-wage laws,and unions all keep wages

Efficiency wages

Caroline is the owner of a hair-styling salon and spa.She decides to raise the wages of her workers even though she faces an excess supply of labor.Her decision

Minimum-wage laws and unions are similar to each other but different from efficiency wages in that minimum-wage law and unions

Job search

Efficiency wages create a

A firm may pay efficiency wages in an attempt to

In which of the following situations should a firm pay efficiency wages?

Efficiency wages

Paying efficiency wages means that wages are

Which of the following is an example of an efficiency wage?

Rafael is the newly-appointed plant manager for a company that manufactures head phones.Rafael's senior supervisors told him that the output the firm produces,given the number of workers employed,indicates that some workers may be shirking.According to efficiency wage theory,what should he do?

A firm may pay efficiency wages in an attempt to

Efficiency wages contribute to

Which of the following is not a reason that paying efficiency wages may increase a firm's profit?

Ariana is the CEO of a corporation that hires nonunion labor.According to the theory of efficiency wages,if she decides to pay her workers more than the competitive equilibrium wage,then

If there were no factors keeping wages from reaching equilibrium then there would be no

Buddy is the owner of a firm that bottles beer in St.Louis,Missouri.There are many other such firms in the area.Buddy decides that if he pays his workers a wage higher than the going market wage,his profits will increase.Which of the following is a likely explanation for his decision?

Sectoral changes in demand

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion