Chapter 17- Wage Determination
Which of the following is an explanation for the high labor-productivity in the United States? a.) plentiful capital resources b.) high total output in industries c.) high price of labor d.) plentiful labor resources
a.) plentiful capital resources
Which of the following is not a major common topic of collective bargaining? a.) union status b.) product marketing c.) grievance procedures d.) seniority and job security
b.) product marketing
(Supposed to be a chart) Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. What will be the marginal labor cost and wage rate for the individual firm? a.) $6 b.) $7 c.) $8 d.) $9
c.) $8
(Supposed to be a chart) A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker? a.) $5 b.) $25 c.) $−7 d.) $1
d.) $1
Productivity measures (such as output per worker-hour) and wage rates adjusted for inflation in the United States are a.) inversely related. b.) unrelated. c.) directly, but not closely, related. d.) directly and closely related.
d.) directly and closely related.
(Supposed to be a chart) Refer to the given data. If there is neither a union nor a minimum wage, we can conclude that this firm a.) "purchases" labor in a purely competitive labor market. b.) is a monopsonist. c.) faces a perfectly inelastic labor supply curve. d.) has a perfectly elastic labor demand curve.
a.) "purchases" labor in a purely competitive labor market.
Those who feel that unions positively affect productivity and efficiency argue that unions are a.) "voice mechanisms" that reduce labor turnover. b.) "exit mechanisms" that reduce labor turnover. c.) "voice mechanisms" that accelerate labor turnover. d.) "exit mechanisms" that accelerate labor turnover.
a.) "voice mechanisms" that reduce labor turnover.
(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? 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.
a.) An increased share of total compensation has gone to provide health insurance to workers.
(Supposed to be a chart) Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. How would the imposition of a $9 minimum wage rate change the total amount of labor hired in this market? a.) Employment would decrease by 150 to 600 workers total. b.) Employment would increase by 150 to 750 workers total. c.) Employment would decrease by 150 to 750 workers total. d.) Employment would increase by 150 to 900 workers total.
a.) Employment would decrease by 150 to 600 workers total.
The XYZ Corporation's collective bargaining agreement indicates that it may hire either union or nonunion workers and that the latter are under no obligation to join the union. This agreement embodies a.) an open shop. b.) a closed shop. c.) a union shop. d.) an agency shop.
a.) an open shop.
As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market, wages a.) and employment will both be lower. b.) will be higher, but employment will be lower. c.) will be lower, but employment will be higher. d.) and employment will both be higher.
a.) and employment will both be lower.
A monopsonistic employer in an unorganized (nonunion) labor market will a.) pay a wage rate less than labor's MRP. b.) pay the same wage rate but hire fewer workers than if the market was purely competitive. c.) hire the number of workers indicated by the intersection of the MRC and the labor supply curves. d.) pay a wage rate in excess of labor's MRP.
a.) pay a wage rate less than labor's MRP.
In which of the following U.S. occupations is the rate of unionization the highest? a.) protective services b.) sales workers c.) managers d.) transportation workers
a.) protective services
If the supply of labor in a purely competitive labor market increases, then the product a.) supply curve for a single employer will shift to the right. b.) supply curve for a single employer will shift to the left. c.) demand curve for a single employer will shift to the right. d.) demand curve for a single employer will shift to the left.
a.) supply curve for a single employer will shift to the right.
(Supposed to be a chart) A firm faces the labor productivity and cost schedule in the table. What is the marginal resource cost of the seventh worker? a.) $11 b.) $13 c.) $15 d.) $17
b.) $13
(Supposed to be a chart) Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be a.) $16. b.) $24. c.) $30. d.) $32.
b.) $24.
(Supposed to be a chart) Refer to the given data. At the profit-maximizing level of employment, this firm's total revenue will be a.) $16. b.) $30. c.) $24. d.) $32.
b.) $30.
(Supposed to be a chart) Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. What will be the equilibrium wage rate? a.) $7 b.) $8 c.) $9 d.) $10
b.) $8
Suppose in some economy there are 100 million workers; 10 million of those workers work in retail trade, and 1 million of the retail workers belong to unions. Total union membership in this economy is 40 million. The rate of unionization in retail trade is a.) 1 percent. b.) 10 percent. c.) 40 percent. d.) 100 percent.
b.) 10 percent.
(Supposed to be a chart) Refer to the given data. In maximizing its profit, this firm will employ a.) 2 units of labor. b.) 3 units of labor. c.) 4 units of labor. d.) 5 units of labor.
b.) 3 units of labor.
Which of the following is not correct? a.) Other things equal, a monopsonist will pay a lower wage rate than will a firm hiring labor competitively. b.) A monopsonistic employer will pay workers a wage rate equal to their MRP. c.) A purely competitive seller will pay workers a wage rate equal to their MRP. d.) An imperfectly competitive seller will employ additional workers as long as the MRP of additional workers exceeds their MRC.
b.) A monopsonistic employer will pay workers a wage rate equal to their MRP.
Who is the most likely to be a union member in the United States? a.) a female retail trade worker b.) a male transportation worker c.) an African American manager d.) a white agricultural worker
b.) a male transportation worker
Independent unions a.) have greater combined membership than the AFL-CIO. b.) are not affiliated with the AFL-CIO or Change to Win. c.) include the United Autoworkers and United Steelworkers. d.) have about the same combined membership as the AFL-CIO.
b.) are not affiliated with the AFL-CIO or Change to Win.
Which of the following might be expected to increase union membership? a.) increased labor force participation by women and young people b.) decreased imports of manufactured goods c.) increased substitution of capital for labor in the production process d.) continued growth of service-related industries
b.) decreased imports of manufactured goods
In a labor dispute in which the existing contract has expired, a 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.
b.) firm can legally lock out union workers.
In which of the following U.S. industries is the rate of unionization the highest? a.) construction b.) government c.) transportation d.) agriculture
b.) government
(Supposed to be a graph) Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical. Initially the quantities of labor employed in the two sectors are L1 and L'1, and the wage rate in each sector is Wn. If all the workers who lose their jobs in the union sector because of a Wn to Wu union wage increase are reemployed in nonunion sector 2, output in that sector will a.) decrease by F + G. b.) increase by F + G. c.) increase by E + F. d.) increase by E.
b.) increase by F + G.
If the wage rate in a purely competitive labor market increases, it will cause the a.) marginal resource cost curve for a single competitive firm in the industry to shift down. b.) marginal resource cost curve for a single competitive firm in the industry to shift up. c.) labor supply curve for a single competitive firm to shift downward. d.) labor supply curve for the industry to shift rightward.
b.) marginal resource cost curve for a single competitive firm in the industry to shift up.
In the United States, a.) whites have higher unionization rates than African Americans. b.) men have higher unionization rates than women. c.) managers have higher unionization rates than transportation workers. d.) workers in mining have higher unionization rates than workers in government.
b.) men have higher unionization rates than women.
In 2018, the U.S. unionization rate was a.) 11.1 percent, down by nearly one-half from the rate in the mid-1950s. b.) 14.7 percent, up by about one-fourth from the rate in the mid-1950s. c.) 10.5 percent, down by more than one-half from the rate in the mid-1950s. d.) 12.5 percent, down by 3 percentage points from the mid-1950s.
c.) 10.5 percent, down by more than one-half from the rate in the mid-1950s.
The Bureau of Labor Statistics has estimated that, in 2018, there were about _____ million union members in the United States. a.) 12.5 b.) 10.5 c.) 14.7 d.) 16.4
c.) 14.7
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 purely competitive labor market is shown by a.) 1. b.) 2. c.) 3. d.) 4.
c.) 3.
The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by a.) discrimination. b.) geographic immobility. c.) compensating differences. d.) noncompeting labor groups.
c.) compensating differences.
(Supposed to be a graph) Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical. Initially the quantities of labor employed in the two sectors are L1 and L'1, and the wage rate in each sector is Wn. If a union is formed in sector 1 and the union increases the wage rate from Wn to Wu, then employment will a.) decrease, but we cannot determine by how much. b.) decrease by 0L2 in sector 1. c.) decrease by L1L2 in sector 1. d.) increase by L1L2 in sector 1.
c.) decrease by L1L2 in sector 1.
Since 1980, labor union membership in the United States has been a.) absolutely and as a percentage of the labor force. b.) increasing absolutely but declining as a percentage of the labor force. c.) decreasing absolutely and as a percentage of the labor force. d.) decreasing absolutely but increasing as a percentage of the labor force.
c.) decreasing absolutely and as a percentage of the labor force.
In the United States, the rate of unionization is a.) higher in mining than in government. b.) lower in transportation than in agriculture. c.) higher in transportation than in retail trade. d.) lower in government than in finance, insurance, and real estate.
c.) higher in transportation than in retail trade.
Some economists claim that unions reduce economic efficiency by a.) providing a voice mechanism for workers. b.) insisting that promotions be based on ability rather than seniority. c.) imposing restrictions on the kinds of jobs workers may perform. d.) increasing worker turnover.
c.) imposing restrictions on the kinds of jobs workers may perform.
Empirical studies suggest that the efficiency loss associated with the misallocation of labor caused by the union wage advantage is a.) $6 billion per year. b.) about 2 percent of domestic output. c.) less than one-half of 1 percent of domestic output. d.) about 4 percent of domestic output.
c.) less than one-half of 1 percent of domestic output.
(Last Word) Regardless of the motives or public benefits of occupational licensing, the primary effect it has on labor markets is to a.) limit or reduce the demand for labor in an industry. b.) increase the demand for labor in an industry. c.) limit or reduce the supply of labor in an industry. d.) increase the supply of labor in an industry.
c.) limit or reduce the supply of labor in an industry.
Under an agency shop agreement, firms can hire a.) only union workers. b.) nonunion workers, but these workers must join the union within a specified period, say, 30 days. c.) nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity. d.) only nonunion workers.
c.) nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity.
"Player drafts" of professional athletes a.) increase the competitiveness of the labor market for professional athletes. b.) reduce the profitability of professional sports franchises. c.) promote monopsony in the hiring of professional athletes. d.) increase salaries of professional athletes.
c.) promote monopsony in the hiring of professional athletes.
Which of the following bargaining tactics is illegal? a.) a lockout b.) a strike c.) refusal to meet with union representatives d.) hiring strikebreakers
c.) refusal to meet with union representatives
Private-sector strikes and lockouts typically end because a.) the federal government intervenes with a back-to-work order. b.) the parties eventually tire of bickering. c.) they are costly in terms of lost profits and lost wage income. d.) the parties rely heavily on outside arbitration.
c.) they are costly in terms of lost profits and lost wage income.
Nominal monthly wages increase from $1,500 to $1,800, while the price level increases by 4 percent. The percentage change in real monthly wages is about a.) 10 percent. b.) 12 percent. c.) 14 percent. d.) 16 percent.
d.) 16 percent.
(Supposed to be a chart) A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table. If the wage rate decreases from $17 to $13, by how much will the firm expand employment? a.) 5 workers b.) 4 workers c.) 3 workers d.) 2 workers
d.) 2 workers
(Supposed to be a chart) A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $15 per day? a.) 3 b.) 5 c.) 6 d.) 4
d.) 4
(Supposed to be a chart) A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $8 per day? a.) 3 b.) 4 c.) 6 d.) 5
d.) 5
(Supposed to be a chart) Suppose a single firm has the marginal revenue product schedule for a particular type of labor given in the left table. Assume there are 150 firms with the same marginal-revenue-product schedules for this particular type of labor. How many workers will be hired at equilibrium? a.) 300 b.) 450 c.) 600 d.) 750
d.) 750
Which one of the following research findings is most consistent with the hypothesis that unions increase productivity? a.) Other things equal, firm profits are lower where unions are present. b.) Union workers receive, on average, higher fringe benefits relative to wages than nonunion workers. c.) The average amount of work time lost annually to strikes is surprisingly small. d.) Labor turnover is less in unionized firms than in nonunionized firms.
d.) Labor turnover is less in unionized firms than in nonunionized firms.
Which of the following is not a major reason for the decline of unionism in the U.S.? a.) Employment has shifted away from manufacturing toward services. b.) Management has greatly intensified its opposition to unions. c.) Consumer demand has shifted toward foreign manufactured goods and away from union-produced domestic goods. d.) Nonunion firms continue to have poor working conditions.
d.) Nonunion firms continue to have poor working conditions.
Which of the following is correct? a.) The federal government can delay any strike for 80 days. b.) About 3 percent of total work time is lost in the United States because of strikes. c.) Work time lost may overstate the cost of a strike if the work stoppage disrupts production in related industries. d.) Work time lost may overstate the cost of a strike if nonstruck firms increase their production.
d.) Work time lost may overstate the cost of a strike if nonstruck firms increase their production.
The Overnight Construction Company has just signed a collective bargaining contract in which it agrees that all workers it hires must be union members in good standing at the time they are hired. This provision reflects a.) preferential hiring. b.) a maintenance-of-membership shop. c.) a union shop. d.) a closed shop.
d.) a closed shop.
Marginal resource cost refers to the a.) increase in total revenue resulting from the sale of the extra output of one more worker. b.) price at which additional units of a resource can be hired in an imperfectly competitive resource market. c.) increase in total cost resulting from producing one more unit of output. d.) amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.
d.) amount by which a firm's total resource cost increases as the result of hiring one more unit of the resource.
A major function of the National Labor Relations Board is to a.) monitor potentially inflationary increases in wages. b.) provide compulsory arbitration so that strikes and lockouts do not occur. c.) set annual wage increases on an industry-by-industry basis. d.) investigate and rule on charges of unfair labor practices by either management or unions.
d.) investigate and rule on charges of unfair labor practices by either management or unions.
Available research suggests that the union wage advantage diminishes the national output by a.) 15 percent. b.) 8 percent. c.) 3 percent. d.) less than 1 percent.
d.) less than 1 percent.
State right-to-work laws a.) have been enacted by over one-half of the states in the nation. b.) make yellow dog contracts illegal. c.) allow for union shops while prohibiting closed shops. d.) make union and agency shops illegal.
d.) make union and agency shops illegal.
(Last Word) Occupational licensing laws were originally created to attain the following goals, except to a.) protect the consumers in specific markets from harm. b.) foster trust among customers of service providers in specific industries. c.) ensure that service providers in certain industries met high standards of expertise. d.) reduce the supply of service providers in industries that the government wanted to shrink.
d.) reduce the supply of service providers in industries that the government wanted to shrink.
If a firm is hiring a certain type of labor under purely competitive conditions, a.) its labor demand curve will be perfectly elastic at the market-determined wage rate. b.) the labor supply curve will lie above the marginal labor cost curve. c.) the labor supply and marginal labor (resource) cost curves will coincide and be upsloping. d.) the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.
d.) the labor supply and marginal labor (resource) cost curves will coincide and be perfectly elastic.
Which of the following economic effects of unions tends to improve efficiency? a.) featherbedding b.) strike or lockout c.) union wage advantage d.) voice mechanism
d.) voice mechanism
The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent. In this case, the percentage change in the real annual wage is about a.) −1 percent. b.) 3 percent. c.) 5 percent. d.) −2 percent.
d.) −2 percent.