Chapter 17

"Player drafts" of professional athletes:

promote monopsony in the hire of professional athletes.

A profit-maximizing firm will:

reduce employment if marginal revenue product is less than marginal resource cost.

If the nominal wage rises by 6 percent, and the price level falls by 2 percent, the real wage will:

rise by 8 percent.

A craft union attempts to increase wage rates by:

shifting the labor supply curve to the left.

If an exclusive union is successful in restricting the supply of labor, the:

wage rate will rise.

Suppose the MRP of a firm's twelfth worker is $22 and the worker's marginal wage cost is $16. We can say with certainty that the firm:

will find it profitable to hire more workers.

A monopsonist's wage cost in hiring an additional worker is the:

worker's wage rate plus the wage increases paid to all workers already employed.

The productivity and real wages of workers in industrially advanced economies have risen historically partly because:

workers have been able to use larger quantities of capital equipment.

A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is:

$15.

Which of the following is not correct?

A monopsonistic employer will pay workers a wage rate equal to their MRP.

Which of the following tactics is most associated with the demand-enhancement union model?

Lobbying for increases in public expenditures on the product it is producing.

If a firm faces an upsloping labor supply curve (and there is no union or minimum wage), its:

MRC curve is also upsloping.

If a firm is hiring variable resources D and F in imperfectly competitive input markets, it will maximize profits by employing D and F in such quantifies that:

MRPD/MRCD = MRPF/MRCF = 1.

If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit-maximizing quantities of labor and capital when:

MRPL/MRCL = MRPC/MRCC = 1.

Which of the following is most likely to be an example of monopsony?

The market for major league baseball umpires.

If a single large employer bargains with an inclusive union, the resulting labor market model can best be described as:

a bilateral monopoly.

Bilateral monopoly occurs where:

a monopsonistic employer bargains with an inclusive union.

The individual firm in a purely competitive labor market faces:

a perfectly elastic labor supply curve and a downsloping labor demand curve.

Marginal resource cost refers to the:

amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.

As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market wages:

and employment will both be lower.

In a labor market characterized by bilateral monopoly the wage rate will:

be logically indeterminate.

Marginal revenue product (MRP) of labor refers to the:

increase in total revenue resulting from the hire of one more unit of labor.

A monopsonistic employer:

confronts a marginal resource (labor) cost that is greater than the wage rate.

The market supply curve for labor is upsloping because:

employers as a group must pay higher wages to obtain more workers.

If an industrial union is formed to bargain with a monopsonistic employer, then in this labor market:

employment may either increase or decrease.

Occupational licensing has much the same effect as:

exclusive unionism.

The electricians' union is a good example of:

exclusive unionism.

A profit-maximizing firm will:

expand employment if marginal revenue product exceeds marginal resource cost.

The critical feature of a monopsonistic labor market is that the employer:

faces an upsloping labor supply curve.

If the nominal wage rises by 4 percent, and the price level rises by 7 percent, the real wage will:

fall by 3 percent.

Labor unions may attempt to raise wage rates by:

forcing employers, under the threat of a strike, to pay above-equilibrium wage rates.

The long-run trend of real wages:

has been upward.

Real wages in the United States in the long run:

have increased at about the same rate as increases in output per worker.

A firm hiring labor in a perfectly competitive labor market faces a:

horizontal labor supply curve and downsloping labor demand curve.

The labor supply curve facing a purely competitive employer is __________ whereas the labor supply curve facing a monopsonist is _________.

horizontal; upsloping

Empirical studies suggest that, other things equal, the smaller the number of hospitals in a city, the lower are nurses' wages. This is evidence that:

hospitals may possess some degree of monopsony power.

Increases in the productivity of labor result partly from:

improvements in technology.

Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason for this is to:

increase the demand for construction workers.

If the nominal wages of carpenters rose by 5 percent in 2010 and the price level increased by 3 percent, then the real wages of carpenters:

increased by 2 percent.

The real wage will rise if the nominal wage:

increases more rapidly than the general price level.

Inclusive unionism is practiced mostly by:

industrial unions.

A monopsonistic employer's marginal resource (labor) cost curve:

lies above the labor supply curve because the higher wage paid to an additional worker must also be paid to all other employed workers.

Other things equal, the monopsonistic employer will pay a:

lower wage rate and hire fewer workers than will a purely competitive employer.

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

marginal revenue product equals marginal resource (labor) cost.

In a monopsonistic labor market the employer will maximize profits by employing workers up to that point at which:

marginal revenue product equals marginal resource (labor) cost.

The economic term for a firm that is the sole buyer in a market is:

monopsonist.

Occupational licensing:

often restricts occupational entry and raises the incomes of license holders.

Craft unions:

only organize workers who have a particular skill.

Over the long run, real earnings per worker can increase only at about the same rate as the economy's rate of growth of:

output per worker.

A monopsonistic employer in an unorganized (nonunion) labor market will:

pay a wage rate less than labor's MRP.

A firm operating in a purely competitive resource market faces a resource supply curve that is:

perfectly elastic.

Labor unions are restrained in their wage demands because:

the labor demand curve is downsloping.

If a firm is hiring a certain type of labor under purely competitive conditions:

the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.

In monopsony:

the wage rate paid by the employer varies directly with the number of workers employed.