Chapter 17 micro

1. W < MRP; W < MRC 2. W = MRP; W < MRC 3. W = MRP; W = MRC 4. W > MRP; W > MRC Refer to the list. The outcome in a monopsony labor market is shown by a. 1. b. 3. c. 2. d. 4.

a. 1.

Which statement is correct? a. The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage. b. The percentage change in the price level minus the percentage change in the nominal wage equals the percentage change in the real wage. c. The percentage change in the nominal wage plus the percentage change in the price level equals the percentage change in the real wage. d. The percentage change in the real wage minus the percentage change in the price level equals the percentage change in the nominal wage.

a. The percentage change in the nominal wage minus the percentage change in the price level equals the percentage change in real wage.

If a single large employer bargains with an inclusive union, the resulting labor market model can best be described as a. a bilateral monopoly. b. countervailing power. c. an internal labor market. d. a cartel.

a. a bilateral monopoly.

Labor unions may attempt to raise wage rates by a. forcing employers, under the threat of a strike, to pay above-equilibrium wage rates. b. decreasing the demand for labor. c. increasing the price of complementary resources. d. increasing the supply of labor.

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

According to some supporters of the minimum wage, it has very small or even nonexistent negative employment effects because a. it reduces turnover among minimum-wage workers, prompts employers to use them more efficiently, and thus raises their average productivity. b. employers substitute lower fringe benefits for higher pay, keeping their compensation costs the same. c. it encourages teenagers to stay in school. d. the demand for minimum-wage labor is highly elastic.

a. it reduces turnover among minimum-wage workers, prompts employers to use them more efficiently, and thus raises their average productivity.

Under conditions of imperfect competition in the labor market, union efforts to increase wages a. may either increase or decrease the level of employment. b. will strengthen the monopoly power of management. c. will necessarily cause unemployment. d. will necessarily reduce unemployment.

a. may either increase or decrease the level of employment.

Craft unions a. only organize workers who have a particular set of skills. b. attempt to organize workers at all skill levels in a firm or industry. c. have been declared illegal by federal legislation. d. attempt to increase the supply of their particular type of labor.

a. only organize workers who have a particular set of skills.

The critical feature of a monopsonistic labor market is that the employer a. has a perfectly elastic demand curve for labor. b. faces an upsloping labor supply curve. c. faces a perfectly inelastic labor supply curve. d. can hire any number of workers it chooses at the going wage rate.

b. faces an upsloping labor supply curve.

Which of the following is not an example of a market imperfection that might explain persistent wage differentials within an occupation? a. geographic immobility of workers b. noncompeting groups c. poor information about job opportunities and pay d. discrimination

b. noncompeting groups

Human capital is best defined as a. the substitution of labor for machinery in the production process. b. the productive skills and knowledge that workers acquire from education and training. c. any piece of machinery that must be combined with labor to be productive. d. the exchange of money for real assets.

b. the productive skills and knowledge that workers acquire from education and training.

Minimum-wage legislation is less likely to have adverse effects on employment when the a. derived demand for labor is shifting to the left. b. demand for labor is relatively elastic. c. affected labor market is monopsonistic. d. economy has high unemployment.

c. affected labor market is monopsonistic.

The electricians' union is a good example of a. inclusive unionism. b. an industrial union. c. exclusive unionism. d. how unions can simultaneously increase wage rates and employment by increasing the demand for labor.

c. exclusive unionism.

(Consider This) The story about artist Pablo Picasso illustrates the point that a. principal-agent problems can occur in unusual settings. b. geographical immobility impedes an efficient allocation of labor resources. c. present skills reflect past accumulations of human capital. d. the demand for labor is a derived demand.

c. present skills reflect past accumulations of human capital.

In the context of labor markets, shirking refers to a. the nonmonetary disadvantages of certain jobs. b. any scheme where pay is directly related to worker output. c. the neglecting or evading of work. d. the elimination of monitoring costs.

c. the neglecting or evading of work.

In considering real-world situations, we must recognize the fact that by "wages" in this chapter, we mean the following, except the a. total price that employers pay to obtain labor. b. total of direct payments and fringe benefits to workers. c. total income earned by households. d. total compensation of workers.

c. total income earned by households.

Which one of the following best exemplifies the principal-agent problem in the employer-employee relationship? a. A worker's productivity is independent of the wage paid. b. A worker opts for early retirement in response to the firm's incentive plan. c. A worker is on the job 50 hours per week although only 40 hours are required for promotion. d. A worker takes 20-minute coffee breaks although the employer allots only 15 minutes for this purpose.

d. A worker takes 20-minute coffee breaks although the employer allots only 15 minutes for this purpose.

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would a. increase firms' demand for labor. b. cause firms to substitute labor for capital. c. decrease the supply of labor. d. increase unemployment in the labor market.

d. increase unemployment in the labor market.

Compensation paid in proportion to the number of units of personal output best describes a. royalties. b. profit sharing. c. bonuses. d. piece rates.

d. piece rates.

According to international comparisons, which nation had the highest hourly pay in U.S. dollar terms in 2013? a. United states b. sweden c. australia d. germany

d. sweden

What is the profit maximizing point?

the point where MRP=MRC