ECON Wage Determination

What might cause salespeople to participate in questionable or fraudulent practices? A. Efficiency wages B. Commissions C. Piece rate pay D. Profit sharing

B. Commissions

The minimum wage has strong political support according to: A. proponents of the minimum wage B. opponents of the minimum wage C. voting patterns and surveys D. minimum wage workers

C. voting patterns and surveys

The nominal wage and the prices of the goods and services a person purchases determines her or his: A. marginal utility. B. wealth. C. pure wage. D. utility. E. real wage.

E. real wage.

The U.S. labor force has _____________ significantly over recent decades.

increased

If a firm's employs three units with marginal revenue products of $14, $13, and $12, respectively, then the firm's total revenue is: A. $39. B. $36. C. $117. D. $2,184. E. $42.

A. $39. (14+13+12)

Which of the following is a reason for the high productivity of labor in most industrially advanced economies? A. Access to natural resources B. Access to independent resources C. Access to financial resources D. Access to variable resources

A. Access to natural resources

Real hourly ________________ is equal to wages and salaries plus employers' contributions to social insurance and private benefit plans.

compensation

A(n) _____________ union that includes virtually all available workers in its membership can put firms under great pressure to agree to its wage demands.

industrial

When economists use the term ___________ in its broadest sense, professional individuals such as lawyers, professors, and dentists, as well as small business owners.

labor

A union that raises wage rates by attempting to gain control over a firm's total _________ supply and threatens to withhold labor via a strike is using the ___________ Union model.

labor; inclusive

In a purely competitive labor market, total cost (wages plus other income payments) equals total ________________. Therefore, a firm earns only a(n) ________________ profit that covers its total operating costs.

revenue; normal

The principal-agent problem, when applied to corporations, refers to the ________________ as the principal and the _____________ as the agent.

stockholders; executives

___________ is one of four reasons given why labor supply conditions differ in various labor markets. A. Competing groups B. Physical capital C. Compensating similarities D. Compensating differences

D. Compensating differences

The ___________ wage is the quantity of goods and services a worker can obtain from nominal wages.

real

When a labor _________ is formed in an otherwise competitive labor market, it usually negotiates with a relatively large number of ___________.

union; firms

What determines the equilibrium wage rate and level of employment in a purely competitive labor market? A. The intersection of the market labor demand curve and the individual firm's labor supply curve. B. The degree to which workers have been able to bargain through their unions to maintain constant wages. C. The intersection of the market labor demand curve and the market labor supply curve.

C. The intersection of the market labor demand curve and the market labor supply curve.

When the unions use the "craft union model" to increase the demand for union labor, they can _________ wage rates by ________ the supply of labor. A. decrease; reducing B. increase; increase C. increase; reducing D. decrease; increasing E. hold; increasing

C. increase; reducing D. decrease; increasing

The general, or ________________ level of wages, like the general level of prices, includes a wide range of different wage rates.

average

Abundant ______________ goods and natural resources is one reason for the high productivity of labor in industrially advanced economies.

capital

The demand for labor, or for any other resource, depends on its _________________.

productivity

Non-competing groups is a reason why _________ supply differs in various markets.

labor

In the real world, suppliers of land, capital, and entrepreneurial talent: A. share in the income from production. B. share in the income from production equally with the suppliers of labor. C. are the only shareholders of firms. D. do not share in the income from production.

A. share in the income from production.

Which of the following are criticisms of the minimum wage? A. It leads to a higher level of inflation. B. It causes firms to hire fewer workers. C. It is poorly targeted to reduce household poverty. D. It leads to monopsony in the labor market.

B. It causes firms to hire fewer workers. C. It is poorly targeted to reduce household poverty.

In ________, many firms compete with one another to hire a specific type of labor. A. a monopsony B. a purely competitive labor market C. an inclusive or industrial market D. an exclusive market

B. a purely competitive labor market

The various market imperfections imperfections that impede workers from low-paying jobs to higher-paying jobs are: A. geographic mobility B. discrimination C. geographic immobility D. lack of job information E. unions and government restraints

B. discrimination C. geographic immobility D. lack of job information E. unions and government restraints

Which of the following summarises the significance of worker productivity and product demand in determining high pay rates? A. Where labor is unproductive and product demand is weak, firms must pay more to encourage greater output. B. Where labor is highly productive and resource demand is strong, labor demand also is strong and pay is high. C. Where labor is highly productive and product demand is strong, labor demand also is strong and pay is high. D. Where labor is highly productive and product demand is strong, labor supply also is strong and pay is high.

C. Where labor is highly productive and product demand is strong, labor demand also is strong and pay is high.

How do unions increase the demand for union labor? A. By negotiating lower wage rates for their union members. B. By altering their union memberships. C. By altering the price of direct and indirect inputs other than labor. D. By altering the supply of labor.

C. By altering the price of direct and indirect inputs other than labor.

A union whose members possess a particular skill, such as carpentry, masonry or plumbing is what type of union? A. Lateral monopoly union B. Bilateral monopoly union C. Craft union D. Inclusive or industrial union

C. Craft union

____________ another reason for the high productivity of labor in industrially advanced economies. A. Barriers to international trade are B. Labor quantity is C. Labor quality is D. Inclusive technology is E. Increased compensation is

C. Labor quality is

Which of the following is the most important goal of a labor union? A. To increase vacation time B. To increase insurance benefits C. To raise wage rates D. To pursue special interests

C. To raise wage rates

The ____________ the level of productivity of labor, the greater the demand for that labor.

greater

Critics contend that a minimum wage ____________ (increase/decrease) will simply cause employers to hire fewer workers.

increase

When unions employ the inclusive or industrial model to expand union membership and firms agree to unions demands it, has the following effects on the firm: A. Wages rise above competitive wage rates B. Firms must pay demanded union wages to avoid a strike C. Management gains more control over daily operations due to higher wages D. The quality of workers improves dramatically E. Quantity of output declines

A. Wages rise above competitive wage rates B. Firms must pay demanded union wages to avoid a strike E. Quantity of output declines

As a result of the many factors responsible for high productivity increases in the United States, increases in labor ____________ have outstripped ________________ in labor supply.

demand; increases

The _____________ of labor in industrially advanced economies is relatively large compared with the ___________ of labor.

demand; supply

A wage ___________ refers to hourly wage rates and annual salaries differing among occupations.

differential

When unions artificially restrict the supply of labor, this is referred to as _______________ or ____________ unionism.

exclusive; craft

In a purely competitive labor market, individual _________ and ___________ are wage takers, because neither can exert any control over the market wage rate.

firms; workers

Marginal revenue productivity, noncompeting groups and compensating differences explain most of the wage differentials in the economy but it is _________ _________ that impede workers from moving from lower-paying jobs to higher-paying jobs.

market imperfections

The use of ______________ options as an incentive pay plan for performance may encourage some executives to manipulate a company's equity value in the short-run so they can personally profit while many loyal employees suffer the long-term consequences of a sharp decline in the companies real equity value.

stock

Craft unions have frequently forced employers to agree to hire only union members, thereby gaining virtually complete control of the labor _____________.

supply

Which of the following are less obvious factors that contribute to the high productivity of labor in the United States? A. A business, social, and political environment that emphasises production and productivity. B. Increased specialisation of production C. Tariffs on carefully selected goods and other barriers to international trade. D. The efficiency and flexibility of management

A. A business, social, and political environment that emphasises production and productivity. B. Increased specialisation of production D. The efficiency and flexibility of management

Which of the following is a reason for the high productivity of labor in industrially advanced economies? A. Advanced technology B. Equal amounts of capital and labor C. Flexibility of workers D. Inefficiency of management E. Labor quantity

A. Advanced technology

For which of the following reasons does the earnings for better-educated workers rise more rapidly than those of poorly educated workers? A. Employers provide better-educated workers with on-the-job training. B. Workers with better education always look for longer duration. C. Additional training to educated workers boosts worker marginal revenue productivity. D. Better-educated workers are always able to negotiate higher wages.

A. Employers provide better-educated workers with on-the-job training. C. Additional training to educated workers boosts worker marginal revenue productivity.

Which of the following statements describe a negative side effect of efficiency wages? A. Firms may suffer the loss of the creative energy that new employees often bring to the workplace. B. The close cooperation that is needed for maximum team production may be jeopardised. C. Firms may manipulate cost and revenue streams to create a false appearance of rapidly rising profit. D. Firms always experience higher turnovers, and end up having a lesser experienced workforce.

A. Firms may suffer the loss of the creative energy that new employees often bring to the workplace. B. The close cooperation that is needed for maximum team production may be jeopardised. C. Firms may manipulate cost and revenue streams to create a false appearance of rapidly rising profit.

Unions artificially restrict labor supply through which of the following? A. Long apprenticeships B. Eliminating training requirements C. Limiting quantity of new members D. High initiation fees

A. Long apprenticeships C. Limiting quantity of new members D. High initiation fees

Which of the following identify the reasons why demand and supply conditions differ various labor markets in understanding wage differentials? A. Non-competing Groups B. Market Imperfection C. Compensating Differences D. Marginal Revenue Costs E. Marginal Revenue Productivity F. Physical Capital Resources

A. Non-competing Groups B. Market Imperfection C. Compensating Differences E. Marginal Revenue Productivity

Which of the following best describe a purely competitive labor market? A. Numerous firms compete with one another in hiring a specific type of labor. B. Individual firms and workers are wage makers, because neither can exert any control over the market wage rate. C. A small number of firms compete with one another to hire a specific type of labor. D. Individual firms and workers are wage takers, because neither can exert any control over the market wage rate. E. Each of many qualified workers with identical skills supplies a specific type of labor.

A. Numerous firms compete with one another in hiring a specific type of labor. D. Individual firms and workers are wage takers, because neither can exert any control over the market wage rate. E. Each of many qualified workers with identical skills supplies a specific type of labor.

Which of the following are reasons for the high productivity of labor? A. Plentiful capital equipment B. Efficient and flexible management C. Labor quality D. Access to abundant natural resources E. Advanced technology F. Union rules and regulations

A. Plentiful capital equipment B. Efficient and flexible management C. Labor quality D. Access to abundant natural resources E. Advanced technology

Which of the following are all policies or legislation by which unions have, over the years, increased wage rates by reducing the supply of labor? A. Restriction of permanent immigration B. Reduction of child labor C. Encouraging permanent immigration D. Encouraging compulsory retirement E. Enforcing a shorter workweek

A. Restriction of permanent immigration B. Reduction of child labor D. Encouraging compulsory retirement E. Enforcing a shorter workweek

Which of the following union models attempts to increase the demand for the products union members produce and or altering the prices of related inputs? A. The demand-enhancement model B. The industrial model C. The craft union model D. The supply-enhancement model

A. The demand-enhancement model

Using the figure given, what happens to the wage rate and quantity of labor demanded if unions can increase the current demand for the goods and services they help produce? A. Wage Rate changes from Wc to Wu B. Quantity of Labor changes from 0 to Qu C. Quantity of Labor changes from Oc to Ou D. Wage Rate changes from 0 to Wu

A. Wage Rate changes from Wc to Wu C. Quantity of Labor changes from Oc to Ou

Which of the following are ways that labor services are provided? A. Workers compete with one another in selling their services. B. Workers diversify and allow market conditions to rule. C. Workers unionise and sell their labor services collectively.

A. Workers compete with one another in selling their services. C. Workers unionise and sell their labor services collectively.

Which of the following explains the effects on equilibrium wage and labor if an industrial union is formed? A. a higher above-equilibrium wage rate B. a perfectly elastic labor supply C. a lower below equilibrium wage rate D. a perfectly elastic labor demand E. a relatively elastic labor supply

A. a higher above-equilibrium wage rate B. a perfectly elastic labor supply

The expressed purpose of licensing is to protect consumers from incompetent practitioners, but licensing can result in: A. above-competitive wages and earnings for those in the licensing occupation. B. expanded availability of the practitioners to consumers. C. below-competitive wages and earnings for those in the licensed occupation. D. below-competitive wages and earnings for those in complementary resources.

A. above-competitive wages and earnings for those in the licensing occupation.

Labor quality is another reason for the high productivity of labor in ______________ economies. A. advanced B. all types of C. backward D. undeveloped

A. advanced

In a purely competitive labor market, ___________. Therefore, a firm earns ___________ that covers all its operating costs. A. total cost equals total revenue; only a normal profit. B. total cost equals total revenue; an economic profit. C. marginal cost equals total revenue; only a normal profit.

A. total cost equals total revenue; only a normal profit.

Higher wages in a particular labor market will entice more workers to offer their services in that labor market, assuming: A. wages are constant in other labor markets. B. wages are constant in other resource markets. C. wages are lower in other labor markets. D. wages are higher in other labor markets.

A. wages are constant in other labor markets. C. wages are lower in other labor markets.

Many qualified workers with identical skills supply a specific type of labor in which kind of market? A. A pure monopoly market B. A purely competitive labor market C. A purely monopolistically competitive labor market. D. A pure monopsony market

B. A purely competitive labor market

Which of the following are criticisms of the minimum wage? A. An above-equilibrium minimum wage will cause employers to hire more workers. B. An above-equilibrium minimum wage will cause employers to hire fewer workers. C. It is poorly targeted to reduce household poverty. D. A below-equilibrium minimum wage will cause employers to hire fewer workers. E. It is poorly targeted to reduce teenage employment.

B. An above-equilibrium minimum wage will cause employers to hire fewer workers. C. It is poorly targeted to reduce household poverty.

Which of the following are examples of incentive pay plans or schemes? A. Workers Compensation B. Commissions C. Piece rates D. Bonuses E. Salary pay

B. Commissions C. Piece rates D. Bonuses

Which of the following are union wage models? A. Collective Bargaining Model B. Demand-Enhancement Model C. Inclusive or Industrial Model D. Exclusive ir Craft Union Model

B. Demand-Enhancement Model C. Inclusive or Industrial Model D. Exclusive ir Craft Union Model

______________ is a reason why demand conditions differ in various labor markets. A. Taste-for-Discrimination B. Marginal revenue productivity C. Labor supply D. Marginal cost

B. Marginal revenue productivity

Market imperfections are a reason why: A. demand and supply conditions are similar across labor markets B. demand and supply conditions differ in various labor markets C. supply conditions are similar in various labor markets D. demand conditions are similar in various labor markets

B. demand and supply conditions differ in various labor markets

All of the following statements describe and extend the principal-agent problem, except: A. workers may take unauthorised breaks. B. firms and workers have identical interests. C. workers do not always share the vision of the firm. D. workers may provide less than the agreed-upon effort.

B. firms and workers have identical interests

No current consensus exists on the employment or unemployment effects of the present level of the _________ wage. A. real B. minimum C. nominal

B. minimum

Differing amounts of human capital is a: A. source of mistrust B. source of wage differentials C. source of wage increases D. source of similar wage rates

B. source of wage differentials

Occupational licensing is form of craft union model which often leads to policies: A. that serve only to restrict entry to the occupation and to reduce labor demand. B. that serve only to restrict entry to the occupation and to reduce labor supply. C. that serve only to restrict entry to the occupation and to increase labor supply. D. that serve only to restrict exit to the occupation and to reduce labor supply.

B. that serve only to restrict entry to the occupation and to reduce labor supply.

Even in a competitive labor market: A. the higher wage rate might discourage firms from finding more productive tasks for low-paid workers. B. the higher wage rate might prompt firms to find more productive tasks for low-paid workers, thereby raising their productivity. C. the lower wage rate might prompt firms to find more productive tasks for low-paid workers, thereby raising their productivity.

B. the higher wage rate might prompt firms to find more productive tasks for low-paid workers, thereby raising their productivity.

The number of employed in unionised firms falls when: A. the number of union members falls B. unions are successful in increasing wages C. unions are successful in decreasing wages D. the number of unions members rise

B. unions are successful in increasing wages

Compensation is equal to A. wages and salaries excluding employers' contributions to social insurance and private benefit plans. B. wages and salaries plus employers' contributions to social insurance and private benefit plans. C. wages and salaries plus employers' deductions for social insurance and private benefit plans.

B. wages and salaries plus employers' contributions to social insurance and private benefit plans.

Which of the following distinguish between the wage rate and labor earnings? A. Labor earnings are determined by adding the number of hours worked and the hourly wage rate. B. Labor earnings are determined by dividing the number of hours worked by the hourly wage rate. C. The wage rate is a variable used to determine labor earnings. D. Labor earnings are determined by multiplying the number of hours worked and the hourly wage rate.

C. The wage rate is a variable used to determine labor earnings. D. Labor earnings are determined by multiplying the number of hours worked and the hourly wage rate.

Hourly wages, annual salaries, bonuses, commissions, and royalties are all examples of ___________ ___________ ____________, whereas paid vacations, health insurance, and pensions are examples of ___________, all of which are combined and considered as parts of wages. A. personal charitable donations; entitlements. B. government mandated entitlements; non-entitlements. C. direct money payments; benefits. D. indirect money payments; perks.

C. direct money payments; benefits.

Workers who have made greater investments in education achieve higher incomes during their careers because: A. there are fewer such workers, so their supply is limited relative to more-educated workers. B. there are fewer such workers, so their demand is limited relative to less-educated workers. C. more educated workers tend to be more productive and thus in greater demand. D. there are fewer such workers, so their supply is limited relative to less-educated workers.

C. more educated workers tend to be more productive and thus in greater demand. D. there are fewer such workers, so their supply is limited relative to less-educated workers.

Over the long run, when workers produce more real output per hour, A. more real income is available to distribute to them for each unit produced. B. the owners of the firm simply take the additional revenues, leaving workers with the same real income. C. more real income is available to distribute to them for each hour worked. D. more nominal income is available to distribute to them for each hour worked.

C. more real income is available to distribute to them for each hour worked. D. more nominal income is available to distribute to them for each hour worked.

Over the long-run, when workers produce _________, more real income is available to distribute to them for each hour worked. A. less real output per hour B. less real output per person C. more real output per hour D. more real output per person E. less nominal output per hour

C. more real output per hour

Which of the following is a belief of most labor unions? A. They believe their ability to affect the supply of labor is limited. B. They believe their ability to influence the demand for labor is unlimited. C. They believe they cannot affect the demand for labor in any way. D. They believe their ability to influence the demand for labor is limited.

D. They believe their ability to influence the demand for labor is limited.

Unions seek to __________ their labor by supporting policies that will reduce or hold down the price of a complementary resource. A. increase the supply of B. decrease the demand for C. decrease the supply of D. increase the demand for

D. increase the demand for

A higher minimum wage in a low-pay labor market may produce more jobs by eliminating the motive that ______________ firms have for restricting employment. A. inclusive B. industrial C. exclusive craft D. monopsonistic E. competitive

D. monopsonistic

A(n) _________ is the amount of money received per hour, day, or year in return for labor services performed without any adjustment for inflation. A. adjusted wage B. pure wage C. inflationary wage D. nominal wage E. real wage

D. nominal wage

Compensating differences is a reason why ________ conditions differ in various labor markets. A. cost B. population C. demand D. supply

D. supply

The price paid per unit of labor services, in many cases an hour of work, is referred to as the: A. inflation rate B. percentage rate. C. marginal resource product D. wage rate. E. interest rate.

D. wage rate.

On the supply side of the labor market: A. workers are always in short supply B. workers are not heterogeneous C. workers are never in short supply D. workers are not homogeneous

D. workers are not homogeneous

Which of the following statements have been used to support the minimum wage? A. A higher wage may reduce labor turnover, increasing the average productivity of firm's workers. B. In low-pay labor market with some monopsony power, the minimum wage can decrease wage rates causing significant unemployment. C. In low-pay labor market with some monopsony power, the minimum wage can increase wage rates without causing significant unemployment. D. A higher minimum wage may produce more jobs by eliminating the motive that monopsonistic firms have for restricting employment. E. A higher wage might prompt firms to find more productive tasks for low-paid workers, thus raising their productivity.

E. A higher wage might prompt firms to find more productive tasks for low-paid workers, thus raising their productivity D. A higher minimum wage may produce more jobs by eliminating the motive that monopsonistic firms have for restricting employment A. A higher wage may reduce labor turnover, increasing the average productivity of firm's workers C. In a low-pay labor market with some monopsony power, the minimum wage can increase wage rates without causing significant unemployment

Compensating differences are wage differentials that must be paid to compensate for ___________ differences in various jobs.

Non-monetary

_________________ licensing refers to pressuring federal, state and local government to pass laws that say that some group can practice their trade only if they meet certain requirements.

Occupational

The personal stock of knowledge, know-how and skills that enables a person to be productive and to earn income is known as human ______________.

capital

Where union labor and another resource are _____________, a price reduction in the other resource will increase the ____________ for union labor through the output effect.

complementary; demand

Bonuses based on personal performance of employees may lead to reduced __________ among ___________ members in order to maximise sales and output.

cooperation; team

A firm's non-labor costs includes its _________________ and implicit payments for land, capital,and entrepreneurship.

explicit

Since the passage of the Fair Labor Standards Act in 1938, the US has had a federal ____________ wage.

minimum

In a less competitive and low-pay labor market where employers possess some ______________ power, the minimum wage can ____________ (increase/decrease) wage rates without causing significant unemployment.

monopsony; increase

At any time, the labor can consist of many _______________ groups of workers, each representing more than one occupation for which the members of a particular group qualify.

noncompeting

The _______ is the price that employers pay for labor.

wage

Real ___________ and labor _____________ do not always rise in lockstep in the short term because suppliers of land, capital, and entrepreneurial talent retain the additional income from increased output.

wages; productivity