Question 1

Unions usually have which of the following effects?

Accepted Answer

A)   They increase the profits of unionized firms by motivating workers to work harder.
B)   They increase the growth rate of employment in unionized firms as more workers are attracted to unionized jobs.
C)   They increase the fraction of total compensation paid in the form of employee benefits.
D)   They decrease the total compensation of unionized workers. C

Question 2

Suppose that a union increases wages by 10% but that the impact of this is exactly offset by the union also increasing labor productivity by 10%.Which of the following will occur if the firm can freely set employment levels?

Accepted Answer

A)   Employment will fall by 10%.
B)   The cost of output will go up 10%.
C)   Demand for output will go up by more than 10% if the price elasticity of demand is greater than one.
D)   The firm will substitute labor for capital. A

Question 3

Suppose a study found that union wages were 10% higher than nonunion wages.Unions will have actually raised wages by more than 10% when

Accepted Answer

A)   union workers who lost their jobs found work in the nonunion sector.
B)   consumers shifted their demand to the lower priced nonunion goods.
C)   nonunion employers raised their wages in response to the threat of being unionized.
D)   union workers are more productive workers than nonunion workers. C

Question 4

"Both the elasticity and the position of the labor demand curve are fundamental constraints on a union's ability to accomplish its objectives." Explain why and illustrate your answer graphically.

Accepted Answer

The answer of "Both the elasticity and the position of...

Question 5

Which of the following statements is generally true about unions?

Accepted Answer

A)   Unions raise wages in the range from 30 to 40%.
B)   Public sector unions raise wages more than private sector unions.
C)   The union wage advantage is higher in Europe than it is in the United States.
D)   Unions reduce the dispersion of earnings among workers.

Question 6

What are the two types of unions operating in the United States? What do unions do?

Accepted Answer

The answer of What are the two types of unions...

Question 7

Employee benefits and the share of compensation that goes to benefits are usually

Accepted Answer

A)   roughly equal in unionized and nonunionized firms.
B)   higher in unionized than in nonunionized firms.
C)   lower in unionized than in nonunionized firms.
D)   impossible to compare between unionized and nonunionized firms due to insufficient data.

Question 8

Suppose a study finds that union wages are 10% higher than nonunion wages.This will likely overstate the true advantage of working in the union job when

Accepted Answer

A)   the nonunion job has better skilled workers.
B)   the union job has poorer working conditions.
C)   workers losing union jobs seek out non-union jobs.
D)   unemployment is high.

Question 9

Any point on the contract curve will

Accepted Answer

A)   make the union better off than they would be in monopoly union negotiations.
B)   make the firm better off than they would be in monopoly union negotiations.
C)   make both the union and the firm at least as well off as they would be in monopoly union negotiations.
D)   make both parties worse off than they would be in monopoly union negotiations.

Question 10

Large union wage increases in declining sectors can be explained by

Accepted Answer

A)   industries' inability to substitute capital for labor while product demand is falling.
B)   unions' decision to make wage gains more important than employment guarantees.
C)   industries' unwillingness to negotiate with unions.
D)   industries' ability to sell used capital if necessary.

Question 11

The relative union wage advantage is generally

Accepted Answer

A)   about 50% in the United States.
B)   smaller in the United States than in Europe.
C)   larger in the public sector than in the private sector.
D)   larger during recessions.

Question 12

What is interest arbitration?

Accepted Answer

The answer of What is interest arbitration?...

Question 13

The ________ Act established the National Labor Relations Board and required employers to bargain with unions representing the majority of their employees.

Accepted Answer

A)   Norris-LaGuardia
B)   National Labor Relations
C)   Taft-Hartley
D)   Landrum-Griffin

Question 14

Suppose the firm's demand for labor is LD= 100 - W.The supply of labor is perfectly elastic at a wage of $20.If a monopoly union's goal is to maximize total rents (= [WU - $20] × L),what wage will it seek?

Accepted Answer

A)   $20
B)   $40
C)   $60
D)   $80

Question 15

A union raises the wage of firm X from $10 to $15 an hour.In which of these cases is there a direct reduction in the social welfare?

Accepted Answer

A)   Worker A retains their job at company X, such that company X's profits associated with worker A go down $5 an hour.
B)   Worker B, working for firm Y gets a lower wage due to the spill-over effect.
C)   Worker C, who is getting $7 an hour working for firm Z, would have otherwise gotten a job with firm X at a wage of $8.
D)   Worker D, who is working for firm M, gets a higher wage due to the threat effect.

Question 16

Unionization rates in the United States are highest

Accepted Answer

A)   among white workers.
B)   among young workers.
C)   in the government sector.
D)   in the manufacturing sector.

Question 17

Section 14B of the Taft-Hartley Act

Accepted Answer

A)   permitted individual states to pass "right-to-work" laws.
B)   prohibited "yellow dog" contracts.
C)   required compulsory arbitration of contracts.
D)   contained provisions to increase democracy within unions.

Question 18

The potential gains to a union in terms of wages and employment will be greatest if the firm's demand for labor is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   of unit elasticity.
D)   horizontal.

Question 19

A union cares both about what its members are paid and the number of jobs held by its members.Suppose that the union sets a wage level that maximizes its utility level subject to the constraint that the resulting wage/employment combination must lie on the labor demand curve (call this the monopoly union outcome).Is the monopoly union outcome efficient? Why or why not? Illustrate your answer graphically.

Accepted Answer

The answer of A union cares both about what its...

Question 20

Threat effects are

Accepted Answer

A)   increases in union wages from threats to strike.
B)   increases in non-union wages from threats to unionize.
C)   decreases in union wages from management threats to use replacement workers during a strike.
D)   decreases in non-union wages from the threat of replacement by unemployed union members.

Exam 13: Unions and the Labor Market

Unions usually have which of the following effects?

Suppose that a union increases wages by 10% but that the impact of this is exactly offset by the union also increasing labor productivity by 10%.Which of the following will occur if the firm can freely set employment levels?

Suppose a study found that union wages were 10% higher than nonunion wages.Unions will have actually raised wages by more than 10% when

"Both the elasticity and the position of the labor demand curve are fundamental constraints on a union's ability to accomplish its objectives." Explain why and illustrate your answer graphically.

Which of the following statements is generally true about unions?

What are the two types of unions operating in the United States? What do unions do?

Employee benefits and the share of compensation that goes to benefits are usually

Suppose a study finds that union wages are 10% higher than nonunion wages.This will likely overstate the true advantage of working in the union job when

Any point on the contract curve will

Large union wage increases in declining sectors can be explained by

The relative union wage advantage is generally

What is interest arbitration?

The ________ Act established the National Labor Relations Board and required employers to bargain with unions representing the majority of their employees.

Suppose the firm's demand for labor is L^D= 100 - W.The supply of labor is perfectly elastic at a wage of $20.If a monopoly union's goal is to maximize total rents (= [W_U - $20] × L) ,what wage will it seek?

A union raises the wage of firm X from $10 to $15 an hour.In which of these cases is there a direct reduction in the social welfare?

Unionization rates in the United States are highest

Section 14B of the Taft-Hartley Act

The potential gains to a union in terms of wages and employment will be greatest if the firm's demand for labor is

Threat effects are

Exam 13: Unions and the Labor Market

Unions usually have which of the following effects?

Suppose that a union increases wages by 10% but that the impact of this is exactly offset by the union also increasing labor productivity by 10%.Which of the following will occur if the firm can freely set employment levels?

Suppose a study found that union wages were 10% higher than nonunion wages.Unions will have actually raised wages by more than 10% when

"Both the elasticity and the position of the labor demand curve are fundamental constraints on a union's ability to accomplish its objectives." Explain why and illustrate your answer graphically.

Which of the following statements is generally true about unions?

What are the two types of unions operating in the United States? What do unions do?

Employee benefits and the share of compensation that goes to benefits are usually

Suppose a study finds that union wages are 10% higher than nonunion wages.This will likely overstate the true advantage of working in the union job when

Any point on the contract curve will

Large union wage increases in declining sectors can be explained by

The relative union wage advantage is generally

What is interest arbitration?

The ________ Act established the National Labor Relations Board and required employers to bargain with unions representing the majority of their employees.

Suppose the firm's demand for labor is LD= 100 - W.The supply of labor is perfectly elastic at a wage of $20.If a monopoly union's goal is to maximize total rents (= [WU - $20] × L) ,what wage will it seek?

A union raises the wage of firm X from $10 to $15 an hour.In which of these cases is there a direct reduction in the social welfare?

Unionization rates in the United States are highest

Section 14B of the Taft-Hartley Act

The potential gains to a union in terms of wages and employment will be greatest if the firm's demand for labor is

Threat effects are

Suppose the firm's demand for labor is L^D= 100 - W.The supply of labor is perfectly elastic at a wage of $20.If a monopoly union's goal is to maximize total rents (= [W_U - $20] × L) ,what wage will it seek?