Question 1

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

Accepted Answer

A)  It reflects the employer's unconstrained choice for the quantity demanded of labour given a wage level. 
B)  It represents Pareto-inefficient contracts. 
C)  It represents a set of wage-employment outcomes such that it is impossible to make one party better off without making the other party worse off. 
D)  It is typically more elastic than the contract curve. 
E)  It intersects the isoprofit curves at their highest points.

Question 2

If a union seeks to maximize the total wage bill received by its members:

Accepted Answer

A)  It should seek to attain the alternative wage rate. 
B)  It should seek to negotiate a Pareto-efficient contract. 
C)  It cannot be done without driving the firm bankrupt. 
D)  None of these answers are correct. 
E)  It should seek to attain the highest possible wage rate.

Question 3

The bargaining range refers to:

Accepted Answer

A)  the range of wages for which the efficient contracts are the same as the inefficient contracts. 
B)  the range for the negotiated employment level such that the firm is not unprofitable and there are no unemployed workers. 
C)  the range for the negotiated wage such that the firm is not unprofitable and the workers receive at least the alternative wage. 
D)  the range for the negotiated wage such that the workers make a decent living and the firm is guaranteed a profit. 
E)  the range for the negotiated wage such that the firm is not unprofitable and the workers receive at least the maximum compensation.

Question 4

What distinguishes the right to manage negotiating regime with the Pareto-efficient negotiating regime?

Accepted Answer

A)  The first regime refers to the set of wage-employment outcomes that lie on the contract curve, while the second refers to the set of wage-employment outcomes that lie on the labour demand curve. 
B)  In the first regime, there is a tradeoff between wages and employment levels, but that is not the case for the second regime. 
C)  In the first regime, some of the union members might be unemployed, but that is not possible for the second regime. 
D)  The negotiated wage is always higher in the second regime than it is in the first regime. 
E)  In the first regime, the parties bargain only over the wage, while in the second, they bargain over both wages and employment levels.

Question 5

According to the model of union behaviour, all of the following are possible objectives for union behaviour, except:

Accepted Answer

A)  maximizing the employment level for its members. 
B)  maximizing the wage bill (wage multiplied by employment) that its members receive. 
C)  improving the working conditions as much as possible. 
D)  maximizing the economic rent that its members receive. 
E)  maximizing the wage rate that its members receive.

Question 6

Why do labour unions support increases in the minimum wage?

Accepted Answer

A)  The minimum wages tend to increase the demand for unionized labour. 
B)  It improves the social welfare of its members. 
C)  Their members benefit directly from the wage increase. 
D)  The minimum wages tend to increase the supply of unionized labour. 
E)  It bolsters their reputation of being the defenders of the interests of working people.

Question 7

The overall strength of a union movement depends on all of the following factors, except:

Accepted Answer

A)  the activities of employers. 
B)  the economic environment (state of the business cycle). 
C)  the legal and regulatory climate in which unions might operate. 
D)  the strength of the union movement in neighbouring countries. 
E)  the political climate.

Question 8

The unionization rate will tend to be higher when all of the following apply, except:

Accepted Answer

A)  The higher the wage and the smaller the employment loss from becoming unionized 
B)  The more competitive of the product market 
C)  The lower the costs of organizing labour into unions 
D)  The greater the rents that the targeted firm earns in the product market 
E)  The longer that the employee expects to be working at the firm

Question 9

One recently published theory as to why unionization rates are much higher in Canada than in the U.S. is that:

Accepted Answer

A)  the demographic traits of the labour force in Canada are those that are associated with higher rates of unionization. 
B)  changes in the U.S. legal regime since the end of World War II related to unions have been less favourable to unionization. 
C)  Canadians' social and political values are relatively more collectivist and social democratic in nature, and hence less individualistic and free-market oriented. 
D)  the industrial composition of the labour force in Canada is weighted toward those associated with higher rates of unionization. 
E)  Canadians' social and political values are relatively less collectivist and social democratic in nature, and hence more individualistic and free-market oriented.

Exam 14: Unions and Collective Bargaining