Chapter 11

In imperfect labor markets: VMP = MRP. MRP is not equal to VMP. VMP is zero. MRP is zero.

MRP is not equal to VMP.

If Private Eye Parts Inspection Service, a competitive firm, invests in better computer technology:

MRP will increase. (better technology = increase in MPP. MPPxMr=MRP; therefore if MPP increasees, so does MRP)

Which of the following is a benefit of union membership to the worker?

Management's authority is limited by the union contract.

A(n) _____ is one where employees are not required to join the union, but must pay dues to compensate the union for its services.

agency shop

If Larry is given a $2-per-hour pay increase, and in response he decides to work less overtime, then:

for Larry, the income effect is dominating the substitution effect.

The _______________ explains why individuals would prefer work to leisure time when wages rise.

substitution effect

XYZ Company is currently experiencing a backlog at its loading dock. A manager figures that if she were to hire an extra worker for $100 per day, then sales volumes would increase by $400, due to the removal of the congestion on the dock. The worker's marginal revenue product is:

$400

Title VII of _____ makes it unlawful to "refuse to hire or discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment because of such individual's race, color, religion, sex, or national origin."

the Civil Rights Act

Which antidiscrimination act was signed into law in 2009?

the Lily Ledbetter Act

Which theory of economic discrimination states that labor markets are split into a high-wage primary sector and a low-wage secondary sector?

the dual labor market hypothesis

If Congress were to increase the minimum age at which people can receive Social Security benefits by five years, then we would expect that:

the supply of labor would increase.

If unions are successful at restricting the supply of unionized workers and at increasing the demand for unionized workers:

the wage differential between union and nonunion workers will increase.

A(n) _____ is a workplace where workers are do not have to be union members to be hired, but must join the union within 30 days.

union shop

Trevan is a new hire for a factory in Indiana. He was told that he has 30 days to join the union. His workplace is a(n):

union shop

The union wage differential:

varies substantially across employment sectors.

Which of the following is NOT a characteristic of a competitive labor market?

Firms are price makers (characteristics: Information is widely available and accurate, No employee is considered special or unique, and There is easy entry and exit to the industry)

Which of the following helps explain why wage discrimination still exists?

Women may be less mobile than men when it comes to work

Which of the following events will NOT shift the labor supply curve to the right?

boom in the stock market that increases incomes from investments

When workers of equal ability and productivity are paid different wages:

economic discrimination takes place.

If wages increase at a 5% rate and the quantity demanded of labor decreases 10%, then the demand curve for labor is:

elastic. (10%/5%=2; elastic if it is > 1)

If a sector of an industry is unionized:

employment in the nonunion sector will increase

Gary Becker's theory of economic discrimination explains how firms that discriminate will:

have higher labor costs.

When the individual labor supply curve bends backwards, the ______________ effect dominates and higher wages lead to _____________ hours worked.

income; fewer

Nonwork activities are known in economics as:

leisure.

In a competitive labor market, firms should hire workers up to the point where the:

market wage equals the MRP.

A right-to-work state is one in which:

new employees hired by a company with union representation do not have to join the union

If new technology improves worker productivity, then the marginal physical product of labor will:

rise, shifting demand for labor to the right.

Other things equal, a decrease in demand for male-dominated jobs and an increase in demand for female-dominated jobs:

shrinks the wage differential between men and women.

Competition in labor markets may fail to eliminate wage differentials because:

women continue to opt for occupations with more flexible career paths