Chapter 14 questions wage determination

Inclusive unions restrict the number of jobs directly by shifting the labor supply curve to the left; exclusive unions restrict the number of jobs by imposing above-equilibrium wage rates on the employer. True or False

False

The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it. True False

False

` Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market. True False

False

A monopsonistic employer may sell its product in a competitive market. True False

True

Marginal resource (labor) cost will exceed the wage rate when there is imperfect competition in the hire of labor. True False

True

Exclusive unionism attempts to increase wage rates by: a. decreasing the supply of labor. b. setting a minimum or standard wage above the competitive level. c. increasing the supply of labor. d. increasing the demand for labor through productivity increases.

a

If a firm faces an upsloping labor supply curve (and there is no union or minimum wage), its: a. MRC curve is also upsloping. b. MRC curve is perfectly elastic. c. MRP curve is perfectly inelastic. d. MRP curve is also uploping.

a

Refer to the above data. If there is neither a union nor a minimum wage, we can conclude that this firm: a. "purchases" labor in 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

Refer to the above diagram. An industrial (inclusive) union could increase employment in this labor market: a. by negotiating any wage rate between W1 and W4. b. by negotiating a wage rate greater than W4. c. only if it accepted a wage rate below W1. d. only if it could shift the labor demand curve rightward. .

a

Refer to the above diagrams. The firm's total revenue: a. is 0abc. b. is 0wbc. c. is wab. d. cannot be determined.

a

Refer to the above labor market diagram where D is the labor demand curve, S is the labor supply curve, and MRC is the marginal resource (labor) cost curve. If this were a monopsonistic labor market, the equilibrium wage rate and level of employment would be: a. $5 and 3 respectively. b. $6 and 4 respectively. c. $7 and 5 respectively. d. $8 and 3 respectively.

a

Which of the following describes the equilibrium condition in a purely competitive labor market? a. MRP = Wage Rate b. MRP > Wage Rate c. Wage Rate > MRC d. Wage Rate < MRC

a

A monopsonist's wage cost in hiring an additional worker is the: a. worker's wage rate. b. worker's wage rate plus the wage increases paid to all workers already employed. c. worker's wage rate adjusted for the lower price that must be charged for the extra output. d. marginal wage cost less the wage rate.

b

In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which: a. the difference between the wage rate and marginal resource (labor) cost is at a maximum. b. marginal revenue product equals marginal resource (labor) cost. c. the wage rate equals marginal revenue product. d. the wage rate equals marginal resource (labor) cost.

b

Increases in the productivity of labor result partly from: a. the law of diminishing returns. b. improvements in technology. c. reductions in wage rates. d. increases in the quantity of labor.

b

Real wages in the United States in the long run: a. show no discernible relationship to output per worker. b. have increased at about the same rate as increases in output per worker. c. have increased slower than increases in output per worker. d. have increased faster than increases in output per worker.

b

The market supply curve for labor is upsloping because: a. of diminishing returns. b. of the opportunity cost of labor in housekeeping, leisure, or alternative employments. c. of declining MRC. d. each employer is a "wage taker."

b

A monopsonistic employer: a. has a perfectly elastic labor supply curve. b. is necessarily a monopolist in the product market. c. confronts a marginal resource (labor) cost that is greater than the wage rate. d. confronts a marginal resource (labor) cost that is less than the wage rate.

c

A profit-maximizing firm will: a. expand employment if marginal revenue product equals marginal resource cost. b. reduce employment if marginal revenue product equals marginal resource cost. c. reduce employment if marginal revenue product is less than marginal resource cost. d. expand employment if marginal revenue product is less than marginal resource cost.

c

Occupational licensing: a. functions essentially the same as inclusive unionism. b. attracts large numbers of workers and therefore depresses wages. c. often restricts occupational entry and raises the incomes of licensees. d. has been declared illegal in the majority of states.

c

Refer to the above diagrams. The amount available to pay to nonlabor resources: a. is 0abc. b. is 0wbc. c. is wab. d. cannot be determined.

c

Which of the following is most likely to be an example of monopsony? a. the market for fast-food workers in a large summer resort town. b. the market for card dealers in Las Vegas. c. the market for major league baseball umpires. d. the market for retail sales clerks in a major city.

c

A firm hiring labor in a perfectly competitive labor market faces a: a. downward sloping labor supply curve and upward sloping labor demand curve. b. upward sloping labor supply curve and downward sloping labor demand curve. c. upward sloping labor supply curve and horizontal labor demand curve. d. horizontal labor supply curve and downward sloping labor demand curve.

d

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 the production of 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

One implication of efficiency wages is that: a. labor turnover is reduced as wages are reduced. b. the market-clearing wage always exceeds the efficiency wage. c. worker productivity falls as wage rates rise beyond the equilibrium wage. d. if the efficiency wage exceeds the market-clearing wage, permanent unemployment may result.

d

Refer to the above data. How many workers will this firm choose to employ? a. 6 b. 5 c. 4 d. 3

d

Refer to the above labor market diagrams. The tactics of exclusive unionism are portrayed in Figure: a. 4. b. 3. c. 2. d. 1.

d