Ch. 4 ~ Business and Labor

Which of the following could explain the relatively high wages earned by certain medical professionals, like nurse practitioners and physicians

The training and certification required for these professions lead to a relatively low quantity of labor supplied at any give wage

securities and exchange commission

US government agency that is responsible for regulating the stock market and protecting investors from dangerous or illegal financial practices

which of the following describes the substitution effect

as wages increase, an individual's leisure becomes more costly, making him less likely to choose leisure over labor

law of diminishing marginal returns

at a certain level of factors of production, there is a decrease in the marginal output of a production process as the amount of a single factor of production is incrementally increased, while all other factors of production remain constant

An employer has narrowed a list of applicants down to two individuals. The two candidates look nearly identical on paper, but one of them has earned a four-year college degree. The employer decides to offer employment to the college graduate. What does this example illustrate

the screening effect

a small grocery store buys its produce from a local farm that operates as a sole proprietorship. which of the following might be a concern to the grocery store management

the supply of produce could suddenly cease with the death or incapacitation of the farm owner

screening effect

the theory that completion of college or higher education indicates that a job applicant is both intelligent and hard working

A state agency has recently removed the certification and training requirements for hairdressers in the state. What is likely to happen in the labor market for hairdressers

the wages paid to hairdressers will fall

if your goal is to earn the highest wage possible, which of the following industries has the most favorable characteristics

there are many firms producing very popular products, but the production process is so technical that properly-trained employees are hard to come by

in arbitration, what do leaders of the labor union and the representatives of company management agree to

to bring a third party into their negotiations who has the ability to make binding decisions

wage discrimination

when employers make hiring and wage decisions based on factors such as race, gender, and religion without consideration of job skills, level of education, experience, or expertise

right-to-work laws

laws that prevent union-security agreements between unions and employers and allow for open-shop agreements

corporations, limited partnerships, and limited liability partnerships differ from sole proprietorships and general partnerships in

liability

what type of partnership is characterized by the limited liability of all partners

limited liability partnership

labor management relations act of 1947

limited the influence and abilities of labor unions, such as the ability to enforce closed shop and union shop agreements with employers

which of the following could be used by management during a labor dispute

lockout

If a corporation were interested in raising funds without affecting the level of ownership that each shareholder currently enjoys, which of the following actions might be taken

selling bonds

stock

shares of ownership distributed by a corporation to investors

In response to a lack of qualified nurses in the area, a state government has funded a campaign to increase the number of high school graduates interested in nursing careers. If successful, the campaign would

shift the labor supply curve to the right

minimum wage

the lowest hourly rate at which an employer must pay an employee under US law

reservation wage

the lowest wage at which a person will consider working in a particular position or type of employment

The Bureau of Labor statistics identifies an occupational trend in the labor market for medical professionals, where wages have increased significantly over the past several years. As a result of this observed occupational trend, more individuals within the economy enter the labor market. How does this influence wages and employment within the labor market

the market equilibrium wage will decrease, and the equilibrium quantity of labor will increase

labor market

the market for employment in an economy

learning effect

the method by which education increases the productivity and skill level of workers and allows these workers to demand higher wages

which of the following has contributed to the decline in private sector union membership within the US over the past few decades

the number of workers in manufacturing has fallen

collective bargaining

the practice featuring representatives of labor and management attempting to negotiate a mutually acceptable labor agreement

incorporation

the process of legally filing a business as a corporation and obtaining government approval and corporate charter

market supply of labor

the quantity of workers of a given type and skill level who willingly supply their labor to firms at various wage levels

labor productivity

the ratio between the total output of goods and services and number of labor hours worked

Amelia has laid the groundwork for a fledgling business and is considering incorporating. Which of the following is a valid concern that she might have

the regulations will be more burdensome than in other business structures

in the market for labor, demand describes

the relationship between the quantity of labor that firms are willing to hire and the wage that they are willing to pay

A firm sells pairs of jeans. The market price for a pair of jeans is $30$30. With one worker the firm can make 9 pairs of jeans in an hour. With two workers the firm can make 19 pairs of jeans in an hour. What is the marginal revenue product of labor for the second worker

$300 per hour

which of the following examples describes a publicly held corporation

A small restaurant chain, founded and operated by a single family, is owned by shareholders who purchase their shares on the stock exchange

Explain one way in which hiring an additional worker could lead to an increase in human capital

Hiring an additional worker could lead to an increase in human capital if the worker were to bring new skills and experience that can be taught to other workers

which of the following is a realistic concern faced by the owners of sole proprietorships

If the business becomes unable to pay its debts, the owner may have to sell personal assets to cover the debt payments

Aaron is an independent journalist and content creator who specializes in long-form video essays that discuss economic concepts. He is thinking about taking an online course that teaches how to use a new video editing software. Explain the benefits to society and the costs for Aaron in taking this course

The benefits are that Aaron will be more productive, which will lead to more output, as well as increased human capital as a result of his videos. The costs to Aaron are the time and money to take the course, along with any forgone income that could have been earned during this time.

Jonathan owns and operates a successful sole proprietorship. A friend, who owns a similar business, suggests that they combine their businesses and form a new partnership. Which of the following should Jonathan consider before making a decision

When Jonathan and his friend pool their resources, the business will likely grow faster than it otherwise would; however, Jonathan will lose some of the control over decision-making that he currently enjoys

general partnership

a basic business arrangement in which two or more people have agreed to engage in business practices together, to share in all assets and profits, and to share the responsibilities of both financial and legal liabilities of a jointly owned business structure

sole proprietorship

a business owned and managed by a single individual

partnership

a business structure where the ownership is distributed among two or more partners

franchise

a business that pays an up-front fee and any applicable royalties to a franchisor for access to their business model, products, advertising and marketing, and branding

franchisor

a company that owns the royalties, trademarks, and products of a brand and sells the rights to franchisees at a cost

service cooperative

a cooperative that provides a service rather than a good

which of the following would cause the equilibrium wage rate to increase and the equilibrium quantity of labor to decrease

a decrease in the labor supply

A car washing company has developed a successful business model with effective pricing and marketing. To leverage this success, the company plans to sell licenses to potential business owners, giving them permission to use the name, product, and prices of the car washing company at different locations. In this scenario, the car washing company is

a franchisor

Four friends would like to sell their hand-crafted goods in an online store. After pooling their resources, they discover that they have more than enough in savings to cover the costs of starting and operating the business. All four friends will contribute to the daily operation of the business, and each would like the ability to make business decisions of their own. Which of the following business structures would be preferable

a general partnership

internal revenue service

a government agency that handles all revenue services, including the taxing of businesses and individuals

board of directors

a group of individuals appointed by the shareholders of a corporation who are responsible for making management decisions and overseeing the day-to-day operations of the business

clayton antitrust act of 1914

a law that enabled workers to go on strike against their employers

national labor relations act

a law that gave private-sector employees the right to unionize and use collective bargaining and collective action

fair labor standards act

a law that granted workers the right to an established minimum wage and overtime pay for work weeks that exceeded 40 hours

certificate of incorporation

a legal document or license issued by the state government to allow owners of a business to create a corporation as a separate legal entity

producers cooperative

a marketing cooperative that helps members to sell their products to companies, central marketers, or consumers

interest-based bargaining

a negotiation approach featuring parties collaborating to find a "win-win" solution to their dispute

limited liability partnership

a partnership in which all partners are limited partners

limited partnership

a partnership in which only one partner is required to be a general partner

mediation

a process involving a neutral outsider bought in to help the two sides reach an agreement but who has no authority over decision-making

arbitration

a process that involves a neutral third party that has the power to resolve a dispute by rendering a mandatory decision that is legally binding

occupational trend

a sustained movement in a particular labor market that can relate to job growth, job loss, labor force, or changes in wage rates

boycott

a tactic in which a union as well as its supporters and sympathizers refuse to engage in business with a firm with which the union has a labor dispute

which of the following is an example of an industrial union

a union composed of movie-making professionals

picketing

a union tactic used during labor disagreements where the workers walk outside of the employer's location with signs that highlight their grievances

industrial union

a union that represents workers who are in the same industry but have different positions or skills

craft union

a union that represents workers who have the same skill or work in the same profession

cooperatives

a voluntary association of people formed to carry on some kind of activity that will mutually benefit the participants

consumer cooperative

a volunteer association that was brought together to buy goods like food and clothes in bulk

lockout

action taken by employers refusing to allow employees access to the worksite

Alejandro recently established a maintenance company as a sole proprietorship. He was hired to repair the air conditioner on a residential property, but he accidentally caused damage to the air conditioning unit valued at over $6,000. Alejandro has only had the business for a week and has paid about $200 for tools. Which of the following is true

alejandro is liable for all of the damages since the owner of a sole proprietorship does not have limited liability

mutual agency

all of the partners in the business have the same legal and authorization rights when representing the business

closed shop

an agreement made between an employer and union where, before hiring an employee, the worker must already be a member of the union

labor union

an assembly of workers who have organized in order to pursue common work-related goals

not-for-profit organization

an organization that has been awarded tax-exempt status by the internal revenue service (IRS) because it does not seek financial gain and promotes the collective goals of its members. a not-for-profit organization does not need to provide public benefit

nonprofit organization

an organization that has been awarded tax-exempt status by the internal revenue service (IRS) because it promotes a social cause and provides a benefit to the public rather than seek financial gain for its owners

strike

an organized work stoppage by workers to force an employer to address union demands

corporation

businesses that have been created and legally filed as a separate entity from the owners of the business

what is one way that businesses can improve the labor productivity of their workforce through human capital

by offering coverage for mental health

labor market trends

changes in the conditions in labor markets that influence labor market demand or labor market supply

grievances

complaints filed by workers regarding violations of collective bargaining contracts when they believe they have been treated unfairly and their contract has been breached

which of the following are benefits enjoyed by sole proprietorships

control of decision-making low regulatory burden

Sophia and Mia are interested in starting a business venture together. Other firms in the industry face high financial risks and tricky legal requirements that could easily get them into costly trouble. Which of the following would be the wisest choice of business structure for Sophia and Mia to pursue

corporation

which of the following business structures is said to have unlimited life

corporation

publicly held corporation

corporations that can raise capital and acquire funding by selling company stock on the public market

which of the following describes a primary difference between corporations and unincorporated businesses

decisions are made by a board of directors

the derived demand for labor comes from

demand for the goods and services that the labor produces

unlimited liability

each partner is responsible for any debts incurred by the firm

what primary responsibility do the shareholders of a corporation have?

electing a board of directors

prior to labor unions, both the employer and employee had the legal right to terminate an employee agreement for any reason. this is known as

employment at will

A nonprofit organization with 501(c)(3) designation differs from other nonprofits in that the 501(c)(3) nonprofit organization

enjoys local, state, and federal tax exemptions

in the market for labor, the demand curve slopes downward. this is due to which of the following facts

firms will hire fewer workers at higher wages

Which of the following benefits do franchisees enjoy over other small business owners?

franchises benefit from the successful marketing provided by franchisors franchises have a lower 5-year failure rate than other small businesses

Why might a potential business owner consider purchasing a franchise license

franchisors have done the work of pricing, marketing, and branding for them

which of the following describes a primary difference between distributive bargaining and interest-based bargaining

interest-based bargaining seeks a solution that is beneficial to all parties

shareholders

investors in a corporation who own shares of common stock

A recent high school graduate would like to establish an online tutoring service as a sole proprietorship operating under her own name. Having never worked before and having no current income, which of the following hurdles is she likely to face

it will be difficult to cover start-up costs since banks will be unlikely to loan her money

james would like to create a sole proprietorship operating under the name super lawn care. which of the following is true

james will need to register the business with his local state as the name of his business differs from his own

jonah and jaycee are partners. which of the following illustrates the concept of mutual agency

jonah signs a purchase agreement with a supplier while jaycee agrees to hire a marketing firm to drum up business

unskilled labor

labor that doesn't require workers to have any specialized training or skill sets

skilled labor

labor that is highly trained, educated, and experienced

physical capital

man-made objects used to create other goods and services

which of the following is a stock exchange in the US

new york stock exchange

private foundations

nonprofit organizations featuring funding coming from private families, single individuals, or a corporation

nonprofit organizations differ from for-profit businesses in that

nonprofit organizations retain profit rather than distribute it to shareholders

public charities

nonprofit organizations that receive their funds from a broad base of contributors including individuals, corporations and possible government grants

Olivia is considering working a secretary job for a small law firm. Given the opportunity costs of working the job, she will not accept a wage less than $12$12 per hour. Which of the following is likely to raise Olivia's reservation wage

olivia learns that the job is more challenging than she initially thought

which of the following could be classified as a franchise

one of several hair salons owned and operated by individuals but licensed and supported by a single entity

a sole proprietorship is distinguished by the fact that it has

only one owner

limited liability

owners and shareholders are not personally liable for any debts or liabilities incurred by the business

an advantage of a corporation is that

owners have limited liability for debt

in a general partnership

partners usually draw up legal papers called articles of partnership

dividends

portions of the corporate profits distributed to shareholders

closely held corporation

private corporations that do not sell their stock to the general public

Local craftsmen form a voluntary association, pooling resources and engaging in other cooperative behaviors to increase sales of their products. This scenario is an example of a

producer cooperative

productivity

ratio between the number of inputs or factors of production required to produce a good or service and the level of output

limited life

refers to the limited life of the partnership

Riley and Layla are interested in forming a partnership but are concerned about the associated taxes. If the partnership agreement is set such that 80% of earnings go to Riley and 20% go to Layla, which of the following correctly describes how taxes will be paid on the earnings

riley and layla will each pay personal income tax on the portion of earnings that is theirs

what are the primary differences between a bond and a stock

stocks are units of ownership in a corporation, while bonds are certificates of debt

unlimited life

the ability of a business to operate indefinitely despite changes in ownership, management, etc.

marginal revenue product of labor

the additional revenue a firm generates by employing one additional unit of labor

marginal cost of labor

the amount the firm must pay for each additional worker that it hires

which of the following describes a key difference between arbitration and mediation

the arbitrator has the power to render a binding decision

You have recently discovered that a local business has been designated 501(c)(3). Which of the following must be true

the business has federal tax exemptions

open shop

the condition allowing workers hired by an employer not have to join a union but still entitled to the same benefits and pay

union shop

the condition that allows workers who do not belong to the union to be hired; however, they need to join the union with a specific time period if they want to remain employed

distributive bargaining

the conventional approach to collective bargaining featuring both parties negotiating but not exactly working together in resolving their differences

how does the taxation of a corporation differ from that of a sole proprietorship and partnership

the corporation is taxed, and then shareholders are additionally taxed

Three partners have formed a limited partnership with two limited partners each earning 5% of the profits and the general partner earning 90%. While the general partner enjoys greater earnings, what is the disadvantage of being a general partner

the general partner has unlimited liability

labor force

the group of individuals in an economy who are either employed or actively seeking employment

human capital

the knowledge and skills a worker gains through education and experience

which of the following describes the primary difference between craft and industrial unions

workers of a particular trade, not an entire industry, form a craft union