Deck 14: Labour Markets

Question 1

If you choose to stay in school beyond the compulsory minimum period, you are

A) realizing the benefits of your investment in human capital.
B) wasting your time from an economic standpoint.
C) refusing to invest in your human capital.
D) delaying your investment in human capital.
E) investing further in your human capital.

Answer 1

E

Question 2

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. Suppose this labour market is in a monopsonistic equilibrium. Then, suppose the workers form a union to negotiate the wage with the firm. In this case the wage will be
And the employment will be .

A) $30 per hour; 1000 units of labour
B) $35 per hour; 750 units of labour
C) above $35 per hour; less than 750 units of labour
D) above $25 per hour; above or below 750 units of labour, depending on the negotiated wage
E) between $25 and $35 per hour; between 750 and 1000 units of labour

Answer 2

D

Question 3

Economists observe clear evidence of a union wage premium but do not observe the clear union effect on employment levels predicted from theory. One explanation for this is

A) that the labour supply curve shifts to the right in the collective bargaining process, thereby eliminating any employment effect.
B) that the labour supply curve, in the presence of a union, is very inelastic, which implies only a very small effect on employment.
C) that union- based advertising for the product increases demand for the product, shifts the demand curve to the right and eliminates any employment effect.
D) the union's ability, through the collective bargaining process, to pressure firms to hire more workers than they otherwise would at the union wage.
E) both C and D are correct.

Answer 3

E

Question 4

In terms of human capital, which of the following is the best example of an inherited skill?

A) a neurosurgeon who can perform brain surgery after many years of training
B) a salesman doubles his sales after taking a training course
C) a worker who exercises is healthier and therefore more productive
D) a retail worker who is able to work overtime each week
E) a music teacher who can carry a tune for the school choir

Question 5

The following statements describe the adverse effects suffered by groups subject to labour- market discrimination. Which of the statements is false?

A) The discriminatory wage differentials will persist as long as the discrimination exists.
B) They will receive lower wages on average than other groups.
C) Their children's ability and willingness to invest in human capital will be less on average than those of children of other groups.
D) They will be more likely to experience spells of unemployment.
E) Their human capital will increase.

Question 6

Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20(w). The labour supply curve is QS = 400 + 40(w). Suppose that a union now successfully organizes the workers at this mall and obtains a wage rate of $11 (but does not affect the demand curve). One result is

A) a decrease in employment of 20 workers.
B) a decrease in employment of 60 workers.
C) an increase in employment of 40 workers.
D) an increase in employment of 20 workers.
E) a decrease in employment of 40 workers.

Question 7

The three diagrams below show the supply and demand for teenage babysitters in one local area. The initial supply curve is S0 in all cases. FIGURE 14- 3
Refer to Figure 14- 3. Suppose the teenage babysitters in one local area are earning an equilibrium wage of $6 per hour. Now suppose that the local government imposes a minimum wage of $8 per hour for babysitters. Which diagram illustrates the new supply curve (SA) for babysitters?

A) diagram 1
B) diagram 2
C) diagram 3
D) none of the diagrams
E) any of the diagrams

Question 8

FIGURE 14- 5
Refer to Figure 14- 5. Suppose this labour market is competitive. If a minimum wage of W3 is then imposed, the quantity of labour hired would be

A) Q1.
B) Q2.
C) Q3.
D) Q4.
E) Q5.

Question 9

If a union succeeds in shifting the labour supply curve to the left, it can achieve wages above the

A) competitive level and all workers will gain.
B) equilibrium level as well as increasing employment.
C) competitive level but will reduce the level of employment .
D) equilibrium level without affecting employment.
E) competitive level without a pool of unemployed workers seeking to work at the higher wage.

Question 10

A typical firm hiring in a perfectly competitive labour market faces a marginal cost curve for labour that is

A) parallel to the firm's marginal cost curve for its product.
B) downward sloping.
C) horizontal.
D) vertical.
E) equal to the supply curve of the firm.

Question 11

FIGURE 14- 5
Refer to Figure 14- 5. If this labour market is monopsonistic, an increase in the minimum wage from
W2 to W3 would

A) have no effect on employment.
B) increase employment from what would have initially occurred.
C) increase employment in this industry but decrease it in other industries.
D) create unemployment where there previously was none.
E) create unemployment in other minimum wage sectors.

Question 12

Suppose that the professional association of dentists reduces entry into their profession by lengthening the required training program. The likely effect is that

A) the demand curve for dentists will shift to the right.
B) the supply curve of dentists will shift to the left.
C) both the demand and supply curves for dentists will shift to the left.
D) there will be an increase in the quantity of dentists supplied.
E) the supply curve of dentists will shift to the right.

Question 13

In the 1950s and 1960s, Arvida, Quebec, was basically a one- company town where Alcan was the sole buyer of labour services. This is a good example of

A) monopsony.
B) monopolistic competition.
C) union power.
D) oligopoly.
E) pure monopoly.

Question 14

Some people are concerned that "good" manufacturing jobs are being replaced by "bad" service- sector jobs. Why is this not necessarily a problem?

A) Productivity increases in the service sector are likely underestimated.
B) Consumers have an increased demand for services as real income increases.
C) The decline in manufacturing employment is partly due to increasing productivity in that sector.
D) Average real per capita income has continued to rise, despite the rise of the service sector.
E) all of the above

Question 15

The purpose of a labour union is to

A) exploit its labour- market power in the same way a monopolist exploits its market power in product markets.
B) increase employment in its industry.
C) decrease employment in its industry.
D) maintain a minimum level of employment.
E) exploit its labour- market power in the same way a monopolist exploits its market power in labour markets.

Question 16

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. Suppose this labour market is in a monopsonistic equilibrium. Then, suppose the provincial government of British Columbia imposes a minimum wage for employees in this industry of $38 per hour. What will be the effects on wages and employment?

A) wages will rise by $3 per hour and employment will fall by 125 units of labour.
B) wages will rise by $8 per hour and employment will fall below 750 units of labour
C) wages will rise by $8 per hour and employment will remain unchanged.
D) wages will rise by $8 per hour and employment will fall by between 0 and 250 units of labour.
E) wages will rise by $13 per hour and employment will fall below 750 units of labour.

Question 17

Consider a small, remote town with only one employer - a gold mining firm. Suppose the current work force is 875 workers, each of whom is paid $6000 per month. In order to attract one additional worker , the employer must increase the wage to $6025 per month. The marginal cost of this additional worker is

A) $5.28 million per month.
B) $27 900 per month.
C) $21 875 per month.
D) $5.25 million per month.
E) $21 900 per month.

Question 18

FIGURE 14- 2
Refer to Figure 14- 2. If the labour market were in a monopsonistic equilibrium, the predicted wage and number of workers employed would be

A) W4 and Q4.
B) W2 and Q1.
C) W1 and Q2.
D) W1 and Q3.
E) W5 and Q4.

Question 19

One attempt to provide some minimum level of human capital for all citizens is a system of

A) unionism.
B) comparable worth.
C) income taxation.
D) minimum wages.
E) compulsory and publicly financed education.

Question 20

If we compare the wage rate and the level of employment achieved in a competitive labour market with those in a monopsonistic labour market, the latter will generate

A) the same outcomes as in a competitive labour market.
B) a lower level of employment and a lower wage.
C) a lower level of employment and a higher wage rate.
D) a higher level of employment and a higher wage rate.
E) a higher level of employment and a lower wage.

Question 21

If a wage- setting union enters a monopsonistic labour market, the union can cause

A) wages to rise above the level set by the monopsonist, but only if it allows employment to fall below the level set by the monopsonist.
B) wages to rise to what would have been the competitive level but no higher.
C) wages or employment to rise above the level set by the monopsonist, but not both.
D) the level of non- wage benefits to rise but cannot affect either wages or employment.
E) both wages and employment to rise over the monopsonistic level.

Question 22

Given the continuing decline in manufacturing's share of total employment in Canada and other developed economies, which of the following provides a possible explanation that this phenomenon is a genuine problem?

A) Productivity increases in the service sector are likely underestimated.
B) Many service jobs are low- wage, part- time, jobs, and many are without benefits.
C) The decline is partly due to increasing productivity in that sector.
D) Real disposable income has continued to rise.
E) Consumers have an increased demand for services as real income increases.

Question 23

If a minimum wage is set above the free- market equilibrium wage in a competitive labour market, the labour market will experience an increase in wages and

A) employment will increase.
B) there will be no unemployment.
C) employment will decrease.
D) employment will remain the same.
E) there is an unpredictable effect on employment.

Question 24

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. Compared to the outcome in a competitive labour market, the wage and employment outcome in this town's monopsonistic labour market are as follows:

A) wages are higher by $10 per hour and employment is lower by 250 units of labour.
B) wages are lower by $5 per hour and employment is lower by 250 units of labour.
C) wages are lower by $10 per hour and employment is the same as the competitive outcome.
D) wages and employment are both the same as the competitive outcome.
E) wages are the same as the competitive outcome and employment is higher by 250 units if labour.

Question 25

Wage differentials due to cross- worker differences in human capital

A) are not justifiable on efficiency grounds.
B) are an example of economic distortions due to monopoly power.
C) are not an important source of observed wage differentials.
D) will persist in competitive equilibrium.
E) are only due to distortions in labour markets.

Question 26

The average union wage premium in Canada is

A) less than 10 percent.
B) more than 50 percent.
C) between 15 and 30 percent.
D) between 10 and 15 percent.
E) between 30 and 50 percent.

Question 27

Unions currently represent employed workers in Canada.

A) approximately 30 percent of
B) half of the
C) more than 50 percent of
D) all of the
E) less than 10 percent of

Question 28

FIGURE 14- 2
Refer to Figure 14- 2. In a perfectly competitive labour market, the equilibrium wage rate and the quantity of labour employed would be

A) W5 and Q5.
B) W5 and Q4.
C) W1 and Q1.
D) W4 and Q4.
E) W2 and Q2.

Question 29

In a perfectly competitive labour market, all workers would earn the same wage if

A) the world was fair.
B) regional variables mattered.
C) jobs and workers were identical in every way.
D) workers' education and experience were identical.
E) all jobs had the same working conditions.

Question 30

Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20(w). The labour supply curve is QS = 400 + 40(w). Suppose that a union now successfully organizes the workers at this mall and obtains a wage rate of $11 (but does not affect the demand curve). The number of workers employed after unionization is .

A) 880
B) 780
C) - not determinable from the information provided
D) 400
E) 1000

Question 31

A legislated minimum wage

A) will have the same wage and employment effects in competitive and monopsonistic labour markets.
B) in a monopsonistic labour market, if binding, may increase wage rates but it must decrease employment.
C) in a competitive labour market, if binding, may increase wages and will increase employment.
D) will have no effect if the market is monopsonistic.
E) in a monopsonistic labour market, if set equal to the competitive wage, will increase wages and employment.

Question 32

The union wage premium refers to the

A) portion of a union wage attributable to fees payable to the union.
B) wage that an employer is able to set unilaterally.
C) trade- off the union faces between the level of the wage and the size of the union.
D) higher wage attributable only to the union status of the job.
E) wage that a union is able to set unilaterally.

Question 33

Suppose market E discriminates against one group of workers and market O does not. Unemployment in market O would result if

A) there is no statutory minimum wage.
B) the demand curve in market O shifts to the right and wages are slow to adjust.
C) the free- market equilibrium wage in market O is below the legal minimum wage.
D) the supply curve in market O shifts to the left and wages are slow to adjust.
E) some workers are unwilling to work in E- market jobs.

Question 34

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. Suppose the workers in this town form a union to negotiate the wage rate with the firm. Economists refer to this situation as

A) a monopolistic labour market.
B) a unionized monopoly.
C) a monopoly.
D) a bilateral monopoly.
E) a competitive labour market.

Question 35

Unions currently represent public- sector workers in Canada.

A) less than 30 percent of
B) all of the
C) approximately half of the
D) approximately two- thirds of
E) less than 10 percent of

Question 36

In Canada in 2008, the share of total employment in agriculture is about

A) 50%.
B) 2%.
C) 10%
D) 20%.
E) 0.2%.

Question 37

For a monopsonist in a labour market, the firm's MC curve for labour lies the competitive supply curve for labour; just as the marginal revenue curve for a monopolist lies the demand curve for its product.

A) above; below
B) below; below
C) below; above
D) above; above

Question 38

FIGURE 14- 5
Refer to Figure 14- 5. If this labour market were perfectly competitive, the predicted wage and employment level would be

A) W2 and Q3.
B) W3 and Q4.
C) W1 and Q2.
D) W4 and Q5.
E) W3 and Q2.

Question 39

For a monopsonist that faces an upward- sloping labour supply curve, the marginal cost of labour curve will be above the supply curve because

A) the extra labour supplied is less capable than previous units of labour supplied.
B) the average wage exceeds the marginal wage when the average wage is rising.
C) the increased wage necessary to attract an extra worker must be paid to everyone already employed.
D) the marginal cost of labour equals the average cost of labour.
E) the increased wage necessary to attract an extra worker is paid to that worker alone.

Question 40

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. The wage paid by this monopsonistic firm will be and employment will be _ .

A) $25 per hour; 750 units of labour
B) between $25 and $35 per hour; between 750 and 1000 units of labour
C) below $25 per hour; below 750 units of labour
D) $30 per hour; 1000 units of labour
E) $35 per hour; 750 units of labour

Question 41

During recessions, individual investment in higher education typically _ _ due to the relatively opportunity cost of time spent in university.

A) stays constant; constant
B) rises; low
C) rises; high
D) falls; low
E) falls; high

Question 42

The table below shows the competitive labour demand and labour supply schedules in a particular labour market. $\begin{array}{|l|l|l|}\hline \text { Wage Rate } & \text { Demanded } & \text { Supplied } \\(\$ / \text { hour }) & \text { Quantity of } & \text { Quantity }\\&\text { Labour } & \text { of Labour } \\&\text { (hours/month) }&\text { (hours/month) }\\\hline \$ 4 & 1300 & 500 \\\hline \$ 6 & 1000 & 1000 \\\hline \$ 8 & 800 & 1300 \\\hline \$ 9 & 400 & 1500 \\\hline 11 & 200 & 1800 \\\hline \end{array}$
$\text { TABLE } 14-1$

-Refer to Table 14- 1. In a competitive labour market, a legislated minimum wage imposed at $8 per hour would

A) have no effect on the competitive equilibrium level of employment.
B) lead to an equilibrium wage lower than the competitive wage.
C) have no effect on the competitive equilibrium wage.
D) lead to unemployment of 300 units.
E) lead to unemployment of 500 units.

Question 43

One or two generations ago, fewer Canadians completed post- secondary training and education. One explanation for this is

A) a decrease in demand for more education in recent years.
B) that the opportunity cost of port- secondary education has increased.
C) a negative relationship between the acquisition of human capital and overall earnings.
D) the relative wage of more highly educated people has increased in recent years.
E) wage differentials due to formal education have diminished over time.

Question 44

A labour union can most easily raise the wages received by its members by

A) increasing the demand for the product.
B) raising employment.
C) decreasing the supply of labour from its members.
D) increasing the demand for labour.
E) improving productivity.

Question 45

The three diagrams below show the supply and demand for teenage babysitters in one local area. The initial supply curve is S0 in all cases. FIGURE 14- 3
Refer to Figure 14- 3. Suppose all of the teenage babysitters in one local area form an association and set a minimum acceptable wage of $8 per hour. Which diagram illustrates the new supply curve (SA) for babysitters?

A) diagram 1
B) diagram 2
C) diagram 3
D) none of the diagrams
E) any of the diagrams

Question 46

In recent years, some business schools in Canada have begun charging tuition of close to $35 000 per year for a graduate degree, whereas Arts faculties charge much lower tuition for their graduate degrees. Students are prepared to pay the high tuition in a business school because

A) the expected payoff in terms of higher future wages is large.
B) the marginal cost of a business degree is less than the marginal benefit of a business degree.
C) the cost of providing the business education is far higher than the cost of the Arts education.
D) the marginal revenue product of a business degree is lower than the marginal revenue product of an Arts degree.
E) they recognize that the investment in human capital is not worthwhile.

Question 47

If there is only a single buyer in the labour market, that buyer is called

A) a single- product firm.
B) a monopsonist.
C) a monopolist.
D) an oligopsonist.
E) an oligopolist.

Question 48

FIGURE 14- 2
Refer to Figure 14- 2. Suppose the labour market is initially in a monopsonistic equilibrium. If a strong union is then formed and establishes a minimum wage of W1,

A) the wage rate and employment will both increase to their competitive levels.
B) the wage rate will increase but employment will decrease.
C) employment will decrease to Q2.
D) there will be an effect on either wages or employment but not both.
E) the wage rate will decrease but employment will increase.

Question 49

Suppose that a professional association strengthened the limits to entry into their profession and at the same time lengthened its required apprenticeship program. The likely effect would be that

A) both the demand and supply curves for labour would shift to the left.
B) there would be an increase in the quantity of labour supplied.
C) the demand curve for labour would shift to the right.
D) the supply curve for labour would shift to the left.
E) the supply curve for labour would shift to the right.

Question 50

FIGURE 14- 2
Refer to Figure 14- 2. Suppose the labour market is in a monopsonistic equilibrium. If a minimum wage is then imposed at W5, the effect would be to

A) increase employment only.
B) decrease wages but employment would remain the same.
C) waste policy effort, as there would be no effect whatsoever in the labour market.
D) increase wages and maintain employment but create a pool of unemployed workers.
E) increase wages and create a shortage of workers.

Question 51

Consider a monopsonistic labour market. Ten units of labour will be supplied if the wage rate is
$12, and 11 units of labour will be supplied if the wage rate is $14. The marginal cost of the eleventh worker is

A) $2.
B) $12.
C) between $12 and $14.
D) $14.
E) more than $14.

Question 52

Suppose a labour union enters a competitive labour market and is successful in raising wages above the competitive equilibrium level. In this situation,

A) those workers already employed will earn a lower wage than before.
B) employment in the industry will surely increase.
C) the market supply curve for labour will be upward sloping over its entire range.
D) the number of firms in the industry will increase and the demand for labour curve will shift to the right, causing a subsequent increase in the wage.
E) each firm in the industry will face a horizontal supply curve for labour at the union wage, up to the maximum quantity of labour that is prepared to work at that wage.

Question 53

All of the following are classified as human capital EXCEPT:

A) experience.
B) gender.
C) training.
D) education.
E) health.

Question 54

Labour- market discrimination, which keeps one group of workers out of elite (E) occupations and limits them to ordinary (O) occupations, will have which of the following effects?

A) a decrease in supply and higher wages in the O occupation
B) a decrease in supply and higher wages in the E occupations.
C) more employment in the E occupations.
D) more unemployment in the E occupations.
E) a decrease in supply and lower wages in the O occupations.

Question 55

A minimum wage is said to be binding if

A) it is set above the market wage that would otherwise prevail.
B) it is the lowest wage that allows a level of income above the poverty line.
C) it is set below the market wage that would otherwise prevail.
D) it has been set by collective bargaining.
E) all workers who desire employment at that wage are in fact employed.

Question 56

FIGURE 14- 2
Refer to Figure 14- 2. Suppose the labour market is perfectly competitive. If a minimum wage of W5 were then established, the predicted effect would be which one of the following?

A) Q3 workers would now be employed.
B) Q2 workers would be employed and unemployment would equal Q2Q3.
C) Employment would fall by the amount Q1Q4.
D) Q4 workers would be employed and there would be no unemployment.
E) Employment would remain the same as in a competitive market.

Question 57

Suppose your firm is a monopsonist hiring only one variable input. If you want to maximize profits, you will purchase that variable input up to the point where the

A) MRP curve for the input intersects the marginal cost curve for the input.
B) cost of the input equals the profit generated by the employment of that input.
C) demand curve intersects the supply curve of the input.
D) marginal product of that input equals the price of one unit of the input.
E) wage rate is the highest.

Question 58

Canadian studies on the effects of minimum- wage laws

A) find that they decrease the level of employment, particularly for low- skilled workers.
B) suggest that they have no effect whatsoever on employment.
C) support the evidence from the United States that these laws increase wages and employment.
D) find that employment increases with increases in minimum wages, thus supporting the argument that labour markets are monopsonistic.
E) support the theoretical predictions that minimum- wage laws increase employment.

Question 59

In collective bargaining between a labour union and a firm, the

A) union sets the wage and the employer decides how much labour will be hired.
B) employer sets the wages and the union decides how many workers will be hired.
C) wage is negotiated, whereas the firm is generally free to choose the level of employment.
D) only the level of employment is negotiated.
E) wage and the number of workers to be hired is negotiated.

Question 60

One possible reason for wage differentials is that

A) there are competitive forces operating in labour markets.
B) there is only a single national labour market.
C) workers have more- or- less equal skills.
D) working conditions are the same for most jobs.
E) discrimination affects labour- market outcomes.

Question 61

The table below shows the competitive labour demand and labour supply schedules in a particular labour market. $\begin{array}{|l|l|l|}\hline \text { Wage Rate } & \text { Demanded } & \text { Supplied } \\(\$ / \text { hour }) & \text { Quantity of } & \text { Quantity }\\&\text { Labour } & \text { of Labour } \\&\text { (hours/month) }&\text { (hours/month) }\\\hline \$ 4 & 1300 & 500 \\\hline \$ 6 & 1000 & 1000 \\\hline \$ 8 & 800 & 1300 \\\hline \$ 9 & 400 & 1500 \\\hline 11 & 200 & 1800 \\\hline \end{array}$
$\text { TABLE } 14-1$

-Refer to Table 14- 1. In a competitive labour market that clears, the equilibrium employment level would be

A) 800 units.
B) 400 units.
C) 1300 units.
D) 500 units.
E) 1000 units.

Question 62

If competitive labour market E discriminates against one group of workers and market O does not, we can predict an increase in

A) economy- wide wage rates.
B) the welfare of the average worker.
C) wages in market O.
D) employment in market E.
E) wages in market E.

Question 63

Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20(w). The labour supply curve is QS = 400 + 40(w). What is the equilibrium level of employment?

A) 40
B) 20
C) 800
D) 1000
E) 400

Question 64

As a seller of labour services, a labour union is a form of

A) illegal cartel.
B) monopoly.
C) monopolistic competitor.
D) oligopoly.
E) monopsony.

Question 65

The three diagrams below show the supply and demand for teenage babysitters in one local area. The initial supply curve is S0 in all cases. FIGURE 14- 3
Refer to Figure 14- 3. Suppose the teenage babysitters in one local area are earning an equilibrium wage of $6 per hour. Now suppose the local government reduces the minimum age for working as a babysitter from 14 to 12 years of age. Which diagram illustrates the new supply curve (SA) for babysitters?

A) diagram 1
B) diagram 2
C) diagram 3
D) none of the diagrams
E) any of the diagrams

Question 66

The table below shows the competitive labour demand and labour supply schedules in a particular labour market. $\begin{array}{|l|l|l|}\hline \text { Wage Rate } & \text { Demanded } & \text { Supplied } \\(\$ / \text { hour }) & \text { Quantity of } & \text { Quantity }\\&\text { Labour } & \text { of Labour } \\&\text { (hours/month) }&\text { (hours/month) }\\\hline \$ 4 & 1300 & 500 \\\hline \$ 6 & 1000 & 1000 \\\hline \$ 8 & 800 & 1300 \\\hline \$ 9 & 400 & 1500 \\\hline 11 & 200 & 1800 \\\hline \end{array}$
$\text { TABLE } 14-1$

-Refer to Table 14- 1. In a competitive labour market, a legislated minimum wage imposed at $4 per hour would

A) lead to unemployment of 500 units.
B) lead to an equilibrium wage higher than the competitive wage.
C) have no effect on the competitive equilibrium level of employment.
D) lead to an employment level lower than the competitive level.
E) lead to over- employment of 500 units.

Question 67

The diagram below shows the supply and demand for labour in a hypothetical town in northern British Columbia, with only one employer, a logging company. FIGURE 14- 4
Refer to Figure 14- 4. Suppose this labour market is in a monopsonistic equilibrium. Then, suppose the provincial government of British Columbia imposes a minimum wage for employees in this industry of $30 per hour. What will be the effects on wages and employment?

A) wages will not change and employment will change by between 0 and 250 units of labour
B) wages will fall by $5 per hour and employment will increase by 250 units of labour
C) wages will rise by $5 per hour and employment will increase by 250 units of labour
D) wages will not change and employment will not change
E) wages will not change and employment will increase by 250 units of labour

Question 68

To a monopsonist in a labour market, the average cost curve of labour

A) lies below the supply curve of labour.
B) coincides with the marginal cost curve of labour only below the profit- maximizing wage rate.
C) is the supply curve of labour, which lies below the marginal cost curve for labour.
D) lies above the supply curve of labour.
E) is the marginal cost curve of labour when the supply curve is upward sloping.

Question 69

FIGURE 14- 5
Refer to Figure 14- 5. Suppose this labour market is competitive. If a minimum wage of W4 is then imposed, the quantity of labour supplied would be

A) Q1.
B) Q2.
C) Q3.
D) Q4.
E) Q5.

Question 70

One of the most unionized industries in Canada is

A) finance and insurance.
B) education.
C) non- governmental administrative services.
D) agriculture.
E) real estate.

Question 71

39 FIGURE 14- 6

-Refer to Figure 14- 6. If a labour union negotiates the wage to W2 in an otherwise competitive labour market,

A) the supply of labour will stay the same.
B) employers will hire L1 labour.
C) equilibrium will occur at W1 and L2.
D) the demand for labour will shift to D2.
E) employers will hire L2 labour.

Question 72

FIGURE 14- 5
Refer to Figure 14- 5. Suppose the labour market is competitive. If a minimum wage of W3 is then imposed, the number of unemployed workers would be

A) 0Q4.
B) 0Q2.
C) Q3 - Q1.
D) Q3 - Q2.
E) Q4 - Q2.

Question 73

A firm in a perfectly competitive labour market faces a labour supply curve that

A) coincides with the firm's demand for labour curve.
B) is upward sloping.
C) coincides with the firm's marginal cost of labour curve.
D) coincides with the firm's marginal cost curve.
E) is downward sloping.

Question 74

Some types of discrimination in the labour market will be limited by

A) entry of of discriminating firms into the market.
B) the minimum wage.
C) greater monopoly power in the market.
D) an increase in the number of individuals discriminated against.
E) the desire of firms to maximize profits.

Question 75

If there is discrimination against some workers in market A but no discrimination in market B, then we can predict
1) a decrease in supply and higher wages in the A occupations.;
2) more employment in the A occupations.;
3) more unemployment in the B occupations if there is a binding minimum wage.

A) 1 and 3
B) 3 only
C) 1 and 2
D) 2 only
E) 1 only

Question 76

Labour- market discrimination results in a

A) lower demand in all occupations.
B) lower supply in all occupations.
C) lower supply in discriminating occupations and a higher supply in non- discriminating occupations.
D) higher supply in discriminating occupations and a lower supply in non- discriminating occupations.
E) higher demand in both occupations.

Question 77

Investment in human capital can be very costly to the individual, but it can also generate large returns. Canadian data from 2007 show that average employment income for a university graduate is approximately of the average employment income of a worker with no more than a high school diploma.

A) 125 percent
B) 50 percent
C) 200 percent
D) 300 percent
E) 400 percent

Question 78

Consider a monopsonistic labour market. One hundred units of labour will be supplied if the wage rate is $12, and 101 units of labour will be supplied if the wage rate is $14. The marginal cost of the 101st worker is

A) $14.
B) $140.
C) $214.
D) $1414.
E) -- not enough information to know.

Question 79

Suppose there is a competitive market for retail workers at a large shopping mall that is large enough to constitute its own labour market. The labour demand curve is QD = 1000 - 20(w). The labour supply curve is QS = 400 + 40(w). Suppose that a union now successfully organizes the workers at this mall and obtains a wage rate of $11 (but does not affect the demand curve). The number of workers who wish to work at the new wage is _.

A) 780
B) 400
C) 440
D) 1000
E) 840

Question 80

A legislated minimum wage is said to be binding when

A) it decreases the turnover rate among employees.
B) it is enforced by legal authorities.
C) an industry is poorly organized and composed largely of unskilled labour.
D) it raises wage rates in an industry above the free- market equilibrium level.
E) it is below an industry's free- market equilibrium wage.