Question 1

Unions prefer agency shops to open shops.

Accepted Answer

A) True 
 B)False  True

Question 2

A firm might choose to pay its employees a wage higher than that which would clear the market because:

Accepted Answer

A)   the higher wage raises the opportunity cost of shirking.
B)   the higher wage may shift the labor demand curve to the left.
C)   the firm will have higher turnover,allowing "new blood" to invigorate older workers,who have a greater tendency to shirk.
D)   this policy reduces the proportion of experienced to inexperienced workers,resulting in a lower overall wage bill. A

Question 3

A union might increase the demand for the labor services of its members by:

Accepted Answer

A)   decreasing the demand for the product it is producing.
B)   decreasing the prices of complementary inputs.
C)   decreasing the prices of substitute inputs.
D)   increasing the prices of complementary inputs. B

Question 4

Other things equal,the monopsonistic employer will pay a:

Accepted Answer

A)   lower wage rate and hire fewer workers than will a purely competitive employer.
B)   higher wage rate but hire fewer workers than will a purely competitive employer.
C)   lower wage rate but hire a larger number of workers than will a purely competitive employer.
D)   higher wage rate and hire a larger number of workers than will a purely competitive employer.

Question 5

The rate of unionization is substantially higher for protective service workers than for sales workers.

Accepted Answer

A) True 
 B)False

Question 6

The majority of union members in the United States belong to unions that are:

Accepted Answer

A)   affiliated with the United Workers of America (UW
A)  .
B)   affiliated with the AFL-CIO.
C)   independent unions that are not affiliated with the AFL-CIO.
D)   growing rapidly in membership.

Question 7

Labor unions are restrained in their wage demands because:

Accepted Answer

A)   legislation limits annual increases in nominal wages to 6 percent.
B)   the labor demand curve is downsloping.
C)   marginal wage cost curves lie above labor supply curves in most labor markets.
D)   most unions deal with monopsonists who have superior bargaining power.

Question 8

In a labor dispute in which the existing contract has expired,a:

Accepted Answer

A)   firm can legally lock up unruly workers.
B)   firm can legally lock out union workers.
C)   union can legally restrict customer access to the firm.
D)   union can legally restrict physical access by management to the firm.

Question 9

For the firm,the major goal of profit sharing plans is to:

Accepted Answer

A)   force workers to incur some of the business risk.
B)   overcome the monopsony problem of having to pay higher wages to attract additional workers.
C)   overcome the principal-agent problem by better aligning the workers' interests with those of the firm.
D)   reduce total compensation payments.

Question 10

In which of the following U.S.industries is the rate of unionization the lowest?

Accepted Answer

A)   Transportation.
B)   Mining.
C)   Manufacturing.
D)   Finance.

Question 11

Which of the following factors is not relevant in explaining the persistence of wage differentials?

Accepted Answer

A)   Labor immobility.
B)   Compensating differences.
C)   Free public education.
D)   Noncompeting groups.

Question 12

(Consider This)Which of the following best explains why total compensation for U.S.workers has increased significantly over the past several decades,but take-home pay by U.S.workers has increased by much less?

Accepted Answer

A)   An increased share of total compensation has gone to provide health insurance to workers.
B)   The share of total compensation going to retirement accounts has increased relative to all other components of compensation.
C)   Total compensation is measured in current dollar terms;take-home pay is measured in inflation-adjusted dollars.
D)   Workers are receiving a much larger share of total compensation in the form of goods and services produced by the firms that employ them.

Question 13

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}
\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\
\begin{array}{c}
\
\underline{\text {Employment}}\
0\
1\
2\
3\
4\
5\
6
\end{array}
\begin{array}{c}
\text {Marginal}\
\underline{\text {Product}}\
0\
14\
12\
9\
7\
4\
2
\end{array}
\begin{array}{c}
\text { Product }\
\underline{\text { Price } }\
\$ 3 \
3 \
3 \
3 \
3 \
3 \
3 
\end{array}
\begin{array}{c}
\
\underline{\text {Employment}}\
0\
1\
2\
3\
4\
5\
6 
\end{array}
\begin{array}{c}
\text { Wage}\
\underline{\text { Rate }} \
 \$ 11 \
11 \
11 \
11 \
11 \
11 \
11
\end{array}
\end{array}$
 Refer to the given data.The labor supply curve facing firms is:

Accepted Answer

A)   such that it does not intersect the labor demand curve.
B)   upsloping.
C)   perfectly inelastic.
D)   perfectly elastic.

Question 14

(Consider This)The main idea highlighted in the story about artist Pablo Picasso is:

Accepted Answer

A)   derived demand.
B)   human capital.
C)   opportunity cost.
D)   occupational licensure.

Question 15

In which of the following U.S.occupations is the rate of unionization the highest?

Accepted Answer

A)   Protective services.
B)   Sales workers.
C)   Managers.
D)   Transportation workers.

Question 16

Use the labor demand data on the left and the labor supply data on the right in answering the following question: $\begin{array}{c}
\underline{\text { Labor Demand Data }}\quad\quad\quad\quad\quad\quad\quad\quad\underline{\text { Labor Supply Data }}\
\begin{array}{c}
\
\underline{\text {Employment}}\
0\
1\
2\
3\
4\
5\
6
\end{array}
\begin{array}{c}
\text {Marginal}\
\underline{\text {Product}}\
0\
14\
12\
9\
7\
4\
2
\end{array}
\begin{array}{c}
\text { Product }\
\underline{\text { Price } }\
\$ 3 \
3 \
3 \
3 \
3 \
3 \
3 
\end{array}
\begin{array}{c}
\
\underline{\text {Employment}}\
0\
1\
2\
3\
4\
5\
6 
\end{array}
\begin{array}{c}
\text { Wage}\
\underline{\text { Rate }} \
 \$ 11 \
11 \
11 \
11 \
11 \
11 \
11
\end{array}
\end{array}$
  Refer to the given data.The firm will maximize profits (or minimize losses)by employing:

Accepted Answer

A)   5 workers.
B)   4 workers.
C)   3 workers.
D)   2 workers.

Question 17

Right-to-work laws prohibit the formation of labor unions.

Accepted Answer

A) True 
 B)False

Question 18

Stock options as a form of payment are designed to:

Accepted Answer

A)   evade the equal-pay-for-equal-work provisions of the federal antidiscrimination law.
B)   boost the overall earnings of minimum-wage workers.
C)   offset monopsony.
D)   address the principal-agent problem.

Question 19

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?

Accepted Answer

A)   A worker takes 20-minute coffee-breaks although the employer allots only 15 minutes for this purpose.
B)   A worker is on the job 50 hours per week although only 40 hours are required for promotion.
C)   A worker opts for early retirement in response to the firm's incentive plan.
D)   A worker's productivity is independent of the wage paid.

Question 20

Six of the 50 states account for approximately half of all union members in the United States.

Accepted Answer

A) True 
 B)False

Exam 16: Wage Determination

Unions prefer agency shops to open shops.

A firm might choose to pay its employees a wage higher than that which would clear the market because:

A union might increase the demand for the labor services of its members by:

Other things equal,the monopsonistic employer will pay a:

The rate of unionization is substantially higher for protective service workers than for sales workers.

The majority of union members in the United States belong to unions that are:

Labor unions are restrained in their wage demands because:

In a labor dispute in which the existing contract has expired,a:

For the firm,the major goal of profit sharing plans is to:

In which of the following U.S.industries is the rate of unionization the lowest?

Which of the following factors is not relevant in explaining the persistence of wage differentials?

(Consider This) Which of the following best explains why total compensation for U.S.workers has increased significantly over the past several decades,but take-home pay by U.S.workers has increased by much less?

(Consider This) The main idea highlighted in the story about artist Pablo Picasso is:

In which of the following U.S.occupations is the rate of unionization the highest?

Right-to-work laws prohibit the formation of labor unions.

Stock options as a form of payment are designed to:

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship?

Six of the 50 states account for approximately half of all union members in the United States.