ECON 2302 CH 16-22

In Figure 30.2 the equilibrium wage rate is

$16 per hour

If the elasticity of labor is 0.60, a 15 percent increase in the wage rate will induce a

9.0 percent increase in the quantity of labor supplied

If a chair can be sold for $20 and it takes a worker two hours to make a chair, the marginal revenue product of this worker is

$10 per hour

How many workers are willing and able to work at the optimal union wage rate in Figure 31.1?

24.

Table 30.2 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment. In table 30.2 suppose a hairstylist is paid $600 per week. How many hairstylists should a profit-maximizing salon hire?

3

A production process is defined as

A specific combination of resources used to produce a good or service

The marginal revenue product establishes

An upper limit to the wage rate an employer is willing and able to pay.

The market supply curve for labor curve is upward-sloping because

As the wage rises, most workers are willing to work more hours

The trend in the United States toward the merger of unions is driven by the labor movement's desire to accomplish all of the following except

Avoid low-wage workers in service industries

For wages to be higher without sacrificing jobs, productivity must decrease.

FALSE

The law of diminishing returns states that, ceteris paribus, the

MPP of labor declines as more of it is employed with a given quantity of other (fixed) inputs

In competitive markets, the marginal revenue product curve and marginal physical product curve can have similar shapes because

MRP = P x MPP

A union shop is an employment setting in which workers

Must join the union within 30 days after being hired

The profit-maximizing level of labor, in a union-dominated labor market, occurs where

NRP = Marginal factor cost

In a bilateral monopoly, wages and employment are determined by

Negotiation.

In Figure 30.2 a minimum wage of $12 will result in

No shortage or surplus of workers

An individual's labor supply curve

Slopes upward initially, and then may bend backward.

When the minimum wage is raised in a competitive market, ceteris paribus

Some workers are better off and some are worse off

Management's power in collective bargaining sessions rests on

The ability to lock out workers by closing stores or factories

The marginal physical product of labor is equal to

The change in total output associated with one additional unit of labor.

The elasticity of labor supply does not depend on

The demand for labor

The value of an hour of leisure can best be estimated as

The hourly wage that could have been earned

The wage rate is

The payment for labor

Which of the following would not shift the market for labor, ceteris paribus?

The wage paid to labor

A market with one buyer and one seller is a

bilateral monopoly

When a strike or lockout occurs,

both labor and management suffer

The exercise of union power will tend to

increase the supply of labor available to nonunion industries

The market supply of labor is

the total quantity of labor that workers are willing and able to supply at alternative wage rates in a given time period

Table 30.2 shows how many hairstyling appointments a hair salon can schedule per week based on the number of stylists. In the spaces provided, compute the marginal physical product (MPP) of the hair stylists, total revenue, and marginal revenue product of the stylists, assuming that a hairstylist charges $60 per appointment. What is the marginal revenue product of the second hairstylist?

$1,200 per week

Table 31.1 shows the number of workers a firm is willing to hire per hour at different wage rates. Complete the table by computing the total wage bill (total labor cost) and the marginal wage. Which of the following wages in Table 31.1 would allow the most workers to be hired?

$10 per hour

Table 31.1 shows the number of workers a firm is willing to hire per hour at different wage rates. Complete the table by computing the total wage bill (total labor cost) and the marginal wage. Assume the union collects dues of 1 percent of the total wage bill. At what wage in Table 31.1 would the union maximize the amount of dues it collects?

$14 per hour

Assume that the product price is $4 per unit and the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1, the contribution to total revenue of the fourth worker hired is

$16 per hour

Assume that the product price is $4 per unit and that the hourly wage for workers is $12. Neither price nor wage changes with output. In Table 30.1 the marginal revenue product of the second worker hired is

$24 per hour

In Figure 30.2 unemployed labor at the equilibrium wage is equal to

0 workers

The largest labor union in the United States represents approximately

1 percent of the labor force

The number of people employed in the competitive market depicted in Figure 30.2 at a wage of $20.00 per hour is

160

Assume that the product price is $4 per unit and the hourly wage rate for workers is $12. Neither price nor wages changes with output. In Table 30.1 the marginal physical product of the third worker hired is

5 units per hour

Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit. In Table 30.5, what is the cost efficiency of the second unit of labor?

6 units per $1 of cost

The labor share of total income is the proportion of total income earned by

All workers

As marginal physical product diminishes, marginal revenue product

Also diminishes

Cost efficiency refers to the

Amount of output associated with an additional dollar spent on input.

If wages are relatively high, the individual labor supply curve may

Bend backward

Assume the apple market is competitive. If citizens want wages and the number of available jobs for apple pickers to increase, the best strategy would be to

Buy more apples

A monopsonist must pay a higher net wage rate to hire additional workers because as a single

Buyer in the market, it faces an upward-sloping supply curve for labor.

If there are many employers in a market and each has unlimited market power, the demand for labor is likely to be characterized as

Competitive.

The unionization rate in the United States has been

Declining for over 40 years

As an individual earns additional income, the marginal utility of income tends to

Decrease

In the last 10 years, private union membership has

Decreased, while public union membership has increased

As labor productivity increases, which of the following shifts in the labor market should occur?

Demand for labor should shift to the right.

If consumers decide to buy fewer strawberries, then the

Demand for strawberry pickers will fall

Because a union is a form of monopoly, it must be concerned about the ________ slope of the demand curve for labor

Downward

Because firms are willing to hire additional workers at lower wages, the market labor demand curve is

Downward-sloping

Unions must worry about the marginal wage because it indicates the

Effect on the total wage bill of hiring additional workers

With a union, the number of workers hired is where

Employment is lower than at the competitive equilibrium

If the income effect dominates the substitution effect, the labor supply curve will be backward-bending.

FALSE

In general, it can be said that leisure is a "free good"

FALSE

Monopolists in the labor market equate the marginal wage with the marginal revenue product to find the desired level of employment for a union.

FALSE

Monopsonists hire the amount of labor that will equate the marginal factor cost with the derived demand curve for labor.

FALSE

The collective bargaining process can result in a wage below the supply curve of labor.

FALSE

The desires level of union employment occurs where the marginal wage curve intersects the labor supply curve.

FALSE

The intersection of the labor market supply and market demand curves establishes the minimum wage.

FALSE

The intersection of the marginal prices or wages and marginal factor cost determines the wage in bilateral monopoly.

FALSE

Relative to nonunion wages, one reason union wages are

Higher is because unions are more likely in capital-intensive industries where wages tend to be higher

Typical goals of a labor union in the United States include

Higher wages, better working conditions, and more nonwage compensation

If the demand for hair gel increases, the effect on the hair gel manufacturing job market will be to

Increase the demand for labor and increase equilibrium wages

Workers typically require higher wages in order to work additional hours because of the

Increasing opportunity cost of labor

Which of the following is not true about the demand for factors of production?

It is a function of the elasticity of supply

Given that unions face a downward-sloping demand curve for labor, which of the following is not true concerning the optimal union wage rate at a given employment level?

It is above the labor demand curve

If leisure activities become more attractive, there will be a

Leftward shift of the labor supply curve

If payroll taxes are increased, there will be a

Leftward shift of the labor supply curve.

Walmart, the largest employer in the United States, employs

Less than 1 percent of the labor force

A firm should hire an additional worker as long as the wage rate is

Less than or equal to the MRP

Total wages paid to labor are maximized when workers are hired up to the point where the

Marginal wage equals zero

In Figure 30.2 a minimum wage of $20 will result in

Surplus of 32 workers

A monopsonist must raise the wage rate if it desires to hire additional workers.

TRUE

A monopsonist will hire fewer workers at a lower wage rate than would prevail in a competitive market.

TRUE

A production process is a specific combination of resources used to produce a good or service.

TRUE

A profit-maximizing firm should continue to hire workers until the MRP has declined to the level of the market wage rate in a competitive labor market.

TRUE

Cost efficiency is achieved when the MPP of a worker relative to the worker's wage is the same for all workers.

TRUE

If a union achieves above-equilibrium wages for its membership, the wages of nonunion workers will generally suffer.

TRUE

If the MPP is declining, ceteris paribus, the MRP must decline.

TRUE

If the cost efficiency of input A is 45 pounds per $1 of cost, and the cost efficiency of input B is 40 pounds per $1 of cost, then input A is more cost-efficient than input B.

TRUE

Institutional constraints, such as immigration policies, affect the shape and location of the labor supply curve.

TRUE

The relative decline in manufacturing in the United States has contributed to the decline in unionization.

TRUE

To be successful in changing wage rates and employment conditions, labor unions need to have control over only

The labor supply decisions of individual workers

All of the following are true for a monopsonist except

The market demand for labor is upward-sloping

As long as additional workers are attracted into the labor force by higher wages, the market labor supply curve is

Upward-sloping

The largest employer in the United States is

Walmart

The labor supply curve will be negatively sloped if the substitution effect of wages is

Weaker than the income effect of wages