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