labor economics
Suppose productivity stood at 5.00 in year 1, and 5.25 in year 2. If year 1 is the base year, the productivity index for year 2 is
105
As a percentage of total employment, government employment in the United States is currently about
15%
If union workers in a given occupation are paid $20 per hour while nonunion workers receive $16 per hour, the measured union wage advantage is
25%
Which one of the following most closely corresponds to the average annual rate of productivity growth in the United States for the period 1973-1995?
1-2%
Which one of the following is a true statement?
The union wage advantage is greater if fringe benefits are included.
Suppose a proposed law will ban migration into the United States. Considering who gains and who loses from migration, economic theory suggests that, in general,
U.S. businesses would object to the law, and U.S. workers would support it.
Which of the following is not an explanation advanced to explain the increase in earnings inequality?
a decreased demand for skilled labor
Which of the following is not a benefit to employers of an internal labor market?
a greater return from investment in general training
Which one of the following most closely approximates pure specific training?
learning a management information system that is unique to your firm
Compared to the long-run labor demand curve, the firm's short-run curve is typically
less elastic
Compared to the 1950s, current union membership as a percent of the labor force in the U.S. is
lower in the private sector and higher in the oublic-sector
The relatively low labor force participation rate of African-American males may be partly explained by
all of the choices are correct
The official BLS unemployment rate may understate economic hardship because
all part-time workers are considered fully employed.
Refer to the following diagram. Suppose that all other nonwage aspects of the jobs in these two markets are identical. We would expect labor supply in B to increase if (8)
earnings are more variable in A
Refer to the following quintile earnings distribution data. QuintilePercent Lowest 20%4% Second 20%11% Third 20%16% Fourth 20%24% Highest 20%45% The median of this distribution is in the (16)
fourth 20%
Compared to their private sector counterparts, government workers
have lower quit rates
The probability of accepting the next wage offer is
lower, the higher is the acceptance wage.
Of the following occupational groups, 2018 average hourly earnings were greatest among
management, business, and financial workers
Refer to the graph below. The slope of line segment 0D can be interpreted as the (ch 5)
marginal product of labor at Y
the slope of an isoquant at any point reflects the
marginal rate of technical subsitution
According to empirical estimates, approximately what proportion of the observed female-male earnings gap and African American-white earnings gap can be explained by nondiscriminatory factors?
more than half
Refer to the following diagram. Compared to D1, a person whose demand curve is given by D2 will likely obtain
more education and recieve higher earnings
Which of the following best describes the interest rate effect? As the price level rises,
more money is demanded, interest rates rise, and investment spending falls.
To pay for health care reforms, suppose a new payroll tax is levied on employers. The economic burden of the new tax will fall
more on workers the more inelastic is the labor supply curve.
The level of union organization that is most likely to "organize the unorganized" is the
national union
Suppose productivity increases by 5% in industry X and 2% in industry Y. Further suppose the demand for X has fallen while the demand for Y has increased. If economy-wide productivity and the average wage each rise by 3%, we should expect that
no statement can be made concerning output and employment in either industry without more information.
The multifactor explanation of the distribution of earnings typically excludes
nonmonetary returns to training
Refer to the following diagram, in which Waa/ Ww is the ratio of the African American wage rate to the white wage rate. The horizontal portion of the demand curve will be extended by an increase in the (14)
number of firms that do not discriminate
Which one of the following is generally considered a characteristic of a perfectly competitive labor market?
numerous firms hiring labor from the same pool of qualified workers
Refer to the following diagram. The equilibrium positions shown imply that in the relevant wage range, this person is
on the up sloping segment of the individual labor supply curve
A union wage advantage is less likely to occur where
only a few firms within a competitive industry are unionized.
Compared to a high-wage worker, a low-wage worker will tend to
pursue more time-intensive activites
Allowing for changes in product demand, the relationship between productivity growth and employment growth across industries over the past 10 years is best described as
random
Labor productivity is best defined as
real GDP divided by the number of worker hours.
For employers, the chief advantage of royalties and commissions is that these pay policies
reduce skiring where work effort is costly to observe
Which of the following actions might a union use to try to restrict the growth of labor supply?
reduce the number of qualified workers
An increase of 500 illegal alien workers would most likely
reduce wages paid to native workers in industries which typically hire illegal aliens, displacing fewer than 500 native workers from these jobs.
Empirical evidence indicates that lottery prize winners ________ their labor force participation after winning; further, spouses of lottery prize winners tend to be ________ likely to work after winning the lottery.
reduce; less
The three basic characteristics of the economic perspective are
relative scarcity, purposeful behavior, and adaptability.
Which one of the following will tend to decrease the perceived costs of a move relative to the perceived benefits?
renting, as opposed to owning, one's home
THE LANDRUM-GRIFFIN ACT
required regularly scheduled elections of union workers
Because scarcity forces people to make purposeful choices, labor market participants
respond to changes in percieved costs and benefits
Refer to the following diagram of a competitive labor market. Suppose the wage is currently W3 and L1 is the level of employment. Then we should expect the wage to (ch 6/7)
rise and employment to rise
Immigration to the United States
surged in the early 1990s because of the amnesty provisions in the Immigration Reform and Control Act.
Nobel Laureate Gary Becker is known for economic theories in all of the following areas except
the "old" labor economics
Labor economics is studied as a distinct subfield of economics because
the bulk of national income is received by labor.,the concepts of supply and demand must be revised somewhat when applied to labor markets.,labor economics can be used to analyze major socioeconomic trends such as the surge in the number of women workers.
The firm's wage-fringe isoprofit curve typically has a slope less than 1 (absolute value) because
the composition of fringe benefits may increase worker productivity.
The concept of demand must be modified when applied to labor markets to reflect the fact that
the demand for labor is derived from the demand for the various products that labor produces.
Cross-sectional data suggest that, all else equal
the labor force participation rate of married women varies inversely with the husband's income.
Proponents of the view that a fundamental change in the economy occurred in the late 1990s cite as evidence all of the following except
the procyclical nature of productivity growth
If the screening hypothesis is true,
the private rate of return to education will tend to overstate the social rate of return.
The nonunion wage rate may rise as the result of a union wage increase because of the
threat effect
On an indifference map reflecting the tradeoff between income and leisure, higher levels of utility are achieved by moving
to an indifference curve further from the origen
As distinct from product market transactions, labor market transactions are unique in that
to the seller, the nonmonetary characteristics of the sale can be as important as the price.
Compared to the allocatively efficient amount, a monopsonist tends to hire
too few workers because marginal wage cost exceeds the wage rate
Empirical evidence suggests that
training lengthens employment durations.
Refer to the following diagram. The income effect of the illustrated wage decrease causes this individual to work
two more hours
The federally mandated minimum wage
typically falls in value owing to inflation until periodically adjusted by Congress.
The private rate of return on human capital may ________ the social rate because ________.
understate; schooling provides external benefits
Refer to the following table that shows the short-run production relationship and the product demand schedule for a firm. LaborOutputOutput Price110$20.0021519.0031918.0042217.0052416.0062515.00 What is the value of the third worker's marginal product?
$51
Assume under an income-maintenance program that the basic benefit (income guarantee) is $9,000 and the benefit-reduction rate is 50%. If a family has an earned income of $3,000 per year, its subsidy payment will be
$7500
Consider an individual who will invest a total of $10,000 in direct and indirect costs for training in order to increase earnings by $12,500 for the next year. Suppose the interest rate is 8%. If this person plans to retire the following year, the net present value of this investment is closest to
$1,600
A firm can hire 20 workers for $10 per hour, but finds it must raise the wage to $11 to attract another worker. If it must pay all its workers the same wage, the marginal wage cost of the 21st worker is
$10
Charley's employer is considering him for a general training program that will cost $3 per hour. His current marginal revenue product is $15 per hour and will rise to $20 upon completion of the program. Of the following, Charley's training and posttraining wage, respectively, will most likely be
$12 and $20
Mary's employer is considering her for a firm-specific training program that will cost $3 per hour. Her current marginal revenue product is $15 per hour and will rise to $20 upon completion of the program. Of the following, Mary's training and posttraining wage, respectively, will most likely be
$15 and $17
Refer to the diagram below, which shows a competitive low-wage labor market. Consider the diagram. Suppose the government establishes a minimum wage of $7.00 in this market. If all displaced workers subsequently contribute an amount equal to their next most productive employment, the net loss of domestic output is (12/13)
$40
Refer to the table below. There are initially 28 workers in market A and 63 workers in market B, as indicated by the shaded cells. All markets are assumed competitive and there is perfect information and costless migration; jobs in markets A and B are identical in all nonwage aspects. LAVMPALBVMPB2510.006012.00269.506111.50279.006211.00288.506310.50298.006410.00307.50659.50317.00669.00 After all adjustments to equilibrium take place in this market, the equilibrium wage rates in markets A and B, respectively, are
$9.50; $9.50
Refer to the following graph, which shows the probability distribution of wage offers for Sally, who is currently unemployed and searching for a job. If $9.50 is the acceptance wage, what is the probability of Sally finding her next wage offer unacceptable?
.50
Refer to the following graph of the demand for and supply of armed forces personnel. Suppose the government's demand for military personnel is Dd and that it wishes to draft G persons at a wage of $A. The full cost to society of this proposal is area (12/13)
0BCG
Refer to the following table that shows the short-run production relationship and the product demand schedule for a firm. LaborOutputOutput Price110$20.0021519.0031918.0042217.0052416.0062515.00 How many workers will this firm hire if the wage is $15?
4
Refer to the following diagram, which shows the earnings distribution for a small hypothetical economy (all figures in thousands). The number of persons with annual earnings between $50,000 and $70,000 is (16)
4.,000
In Littleville, which has 1,000 residents, 400 people do not currently work. Of these 400 persons, 240 are under age 16, 10 are institutionalized, 25 have become discouraged and quit seeking work, and 75 others are either full-time students or homemakers. Of the 600 people who do work, 150 work part-time but wish to work full-time. What is the official unemployment rate in Littleville?
50/650
In 2017, the bottom 20% of all full-time workers in the United States received ________ of total earnings, while the top 20% received ________.
7%, 45%
The African American to white hourly wage ratio is currently about
80%
Lower-paid workers potentially have more to gain from unionization. This fact explains why
African Americans are more likely to be unionized than whites.
Refer to the diagram below. All points along the ray 0P reflect a constant proportion of wages to fringe benefits. Given isoprofit line 1, this worker's wage-fringe optimum is given by point (6/7)
B
Which of the following is not predicted by the hedonic theory of wages, all else constant?
Firms that pay lower wages but offer more amenities have higher than average profits.
Suppose there is an increase in immigration rates of unskilled, illegal aliens. Which of the following is not likely to result?
For each immigrant who receives a job, there would be one less job available for a native worker.
Of the following, which country experienced the fastest rate of productivity growth over the period 2007-2017?
France
Which of the following best explains why the market labor supply curve is upward sloping, even though individual supply curves are normally backward-bending?
Higher wages in a given market attract more workers away from other activities, more than compensating for any reduction in hours by individuals already in the market.
Which one of the following is a true statement?
Historically, technological change has created more jobs than it has made obsolete.
Which of the following is given as a justification of the health and safety standards established by OSHA?
Information and occupational mobility are imperfect, so the wage premium for job safety provides inadequate incentive for firms to provide safety.
Which of the following best exemplifies a piece-rate compensation scheme?
Jose's pay is proportional to the number of wiring harnesses he assembles each day.
Which of the following is not a source of downward wage rigidity?
Layoffs are discouraged due to the method used to finance unemployment compensation insurance.
Which of the following statements is supported by empirical evidence?
Lower productivity growth for unionized firms is primarily due to these firms being in industries with slow productivity growth.
Of the following, union membership is highest in
Michigan
Which of the following would be considered a real (as opposed to pecuniary) externality associated with migration?
More public services will be required in the destination, and there will be excess capacity of public goods in the origin.
Refer to the following diagram. MCs is the firm's marginal cost of providing safety, while MBs is the marginal benefit to society of one more unit of safety. Because of imperfect information and costly worker mobility, MBs' is the firm's perceived marginal benefit of safety. The firm's profit-maximizing level of safety is (12/13)
Q's
Refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. The allocatively efficient level of employment for this firm is given by
Q2
Refer to the following diagram. MCs is the firm's marginal cost of providing safety, while MBs is the marginal benefit to society of one more unit of safety. Because of imperfect information and costly worker mobility, MBs' is the firm's perceived marginal benefit of safety. From society's standpoint, the optimal level of safety is (12/13)
Qs
On a standard income-leisure diagram, Sara has steeper indifference curves than John. This likely reflects the fact that
Sara values leisure more highly compared to income than John does.
Which of the following best describes the impact of government transfers on human capital investment decisions?
Some transfers reduce the incentive to invest in human capital because higher wages are accompanied by loss of benefits; other transfers increase investment by reducing the cost of investing.
The wage rate paid workers at Flow, Inc. will most likely exceed that at otherwise identical Stock Co. if
Stock Co. offers better pension and insurance benefits than Flow, Inc.
Which of the following best describes the substitution effect of a wage decrease?
The cost of labor is relatively lower, causing the firm to use relatively more labor.
Which of the following best describes the output effect of a wage decrease?
The firm's marginal cost falls, the firm desires to produce more output, and therefore more labor is required.
Which of the following is a true statement?
Unions accelerate the evolution of internal labor markets, and internal labor markets invite unionization.
Which one of the following does not help to explain why union workers receive more fringe benefits than nonunion workers?
Unions are primarily composed of younger workers who have more to gain from long-term compensation such as the kind provided by union pension plans.
Refer to the following diagram that shows the labor demand for a monopolistic firm hiring labor from a competitive labor market. At the profit-maximizing level of employment, the wage rate is ________ and the level of employment is ________. (ch 6/7)
W1; Q1
Which of the following best describes the events following the deregulation of the trucking and airline industries by 1980?
Wages in both industries fell, although the decline was much more rapid in the trucking industry.
Refer to the following diagram. Initially, wage rates are WM in Country M and WU in Country U. Subsequent migration results in an equalization of wage rates. For Country M capital owners, migration causes a collective loss equal to area
WebcWm
Which of the following statements about on-the-job training is most supported by empirical evidence?
Workers with more formal education also tend to receive more on-the-job training.
Because resources are scarce relative to human wants, economics is best described as
a science of choice
The slope of a wage-fringe indifference curve reflects
a worker's willingness to give up an extra dollar of wages in exchange for an extra dollar of fringe benefits.
Personal differences in demand for human capital curves can be explained by differences in all of the following, except
access to investment funds
One implication of efficiency wage models is that
an excess supply of labor may be created
Suppose a state law is passed which prohibits the state liquor board from issuing any new liquor licenses. (Such licenses are required to sell liquor.) The law would allow prospective tavern operators to purchase an existing license on the open market from a willing current owner of such a license. Which outcome would you expect to result from this regulation?
an increase in economic rent to current holders of liquor licenses
Which one of the following would reduce the unemployment rate while leaving the size of the labor force unchanged?
an increase in flow 6
Which of the following can be predicted to increase the demand for labor?
an increase in product demand
All else equal, which of the following will increase the demand for labor in a particular market?
an increase in the number of employers
In the long run, the substitution effect of a lower wage
and the output effect both increase the quantity of labor demanded
In the context of the basic work-leisure model, "leisure" time includes
any time not devoted to a paying job
A majority of the workers earning the minimum wage
are females
productivity growth
as been associated with growing aggregate employment
Refer to the diagram below. All points along the ray 0P reflect a constant proportion of wages to fringe benefits. If the isoprofit line shifts from line 1 to line 2, then (6/7)
as the firm moves from line 1 to line 2, it could provide more fringe benefits while paying the same wage rate.
Assume that all workers are equally productive, but the white wage is $14 and the African American wage is $10. An employer who employs only African American workers has a discrimination coefficient of
at most $4
In their study of beauty and earnings, Hamermesh and Biddle report that
attractive people enter into occupations where appearance is productive, but also earn more than plain people in jobs where beauty does not affect productivity.
Refer to the following diagram, which shows the earnings distribution for a small hypothetical economy (all figures in thousands). (16)
between $20,000 and $30,000
Consider the effects of a government transfer payment that falls as income rises (such as food stamps). Economic theory predicts that
both the income and substitution effects tend to reduce work effort.
The "old" view of labor economics stresses ________, while the "new" view focuses upon ________.
description; analysis
An individual wage-fringe isoprofit line shows
combinations of wages and fringe benefits that result in the same profit to the firm.
Refer to the following labor-leisure diagram. The worker's current budget line is given by line AB1, and she is working AD hours. As illustrated, this public good is likely (12/13)
complementary with leisure
an internal labor market it
conducive to unionization because high levels of specific training endow workers with substantial bargaining power.
Compared to the basic work-leisure choice model, Becker's model of time allocation
considers the household rather than the individual as the basic decision-making unit.
Until recently, the labor force participation rate of African-American women has ________ the rate of white women. In recent years the labor force participation rate of African-American men has ________ the rate of white men.
consistently exceeded; been slightly less than
Research by Solon on intergenerational mobility across countries indicates that
countries with greater earnings inequality tend to have less intergenerational earnings mobility.
Refer to the following diagram. The shift from budget line AB1 to AB2 implies a(n)
decrease in the wage rate
An increase in government demand for output is a tool that would most likely be used to combat
demand-deficient unemployment
The authors suggest that unions developed primarily in response to
dependency of workers on factory owners as a result of industrialization.
Because there is a ________ marginal rate of substitution of fringe benefits for wages, a worker's wage-fringe indifference curves are typically _______.
diminishing; convex to the origin
Empirical evidence suggests that the
discouraged-worker effect dominates the added-worker effect; the participation rate varies inversely with the unemployment rate.
Which of the following is not a characteristic of an internal labor market?
equal access by internal and external workers to jobs at all skill levels
If part of the typical college graduate's additional earnings is attributable to ability and not to education,
estimated rates of return will overstate the actual rate of return.
Refer to the following aggregate demand-aggregate supply diagram. If aggregate demand is given by AD2, the economy will
exceed the full-employment level of output in the short run.
All else equal, the acceptance wage
falls when unemployment benefits expire.
"Any worker for whom the present value of lifetime earnings will increase by migration will choose to move." This statement is
false; there may be psychic costs of moving that deter migration.
Which of the following is an example of a nonexhaustive (transfer) government expenditure?
farm price supports
According to the textbook, each of the following factors may have contributed to increased female labor force participation except
fewer educational opportunities
Which of the following is not a cause of fringe benefit growth?
fringe benefits are income inelastic
The declining college wage premium in the 1970s is generally attributed to the
growing supply of college graduates in that period.
overall, unions have generally
had a negligible effect on labor's share
Which of the following is not a major responsibility of a national union?
handling grievance procedures
The ratio of African American to white hourly wages
has changed little since 1979
the contingent work force
has grown more than three times as fast as the rest of the work force over the last three decades.
Refer to the following graph, in which π1 and π2 are a firm's isoprofit curves. The monopoly union outcome is given by point ū. Compared to the monopoly union outcome, wage and employment contracts along the bargaining curve between x and y entail (ch 10)
higher utility to the union and higher profits to the firm.
Compared to the 1960s, the natural rate of unemployment in the 1970s and 1980s was
higher, because of changes in the composition of the labor force.
If a worker's wage rate rises,
household production will shift away from time-intensive commodities toward goods-intensive commodities.
The largest increase in the female-male earning ratio occurred
in the 1980s through the mid-1990s.
Economists typically believe that the goal of a union is to
increase both the wages and employment of its members
An unanticipated reduction in the rate of inflation is expected to
increase the unemployment rate in the short run, but not in the long run.
For any given individual, an increase in the income tax rate will
increase work effort if the income effect outweighs the substitution effect.
international trade
increases labor demand in some industries and reduces it in others
Most studies conclude that aggregate labor supply is very
inelastic, so that income taxes are borne mainly by workers.
Compared to a conscripted military, an all-volunteer military
is likley to substitute capital for labor
As a percentage of benefits, the largest share goes to
insurance
Wage rates are most likely to be set in accordance with administrative rules and procedures in the
internal labor market
The Equal Pay Act of 1963 was of little help to many women because
it did not address occupational segregation
an isoquant shows all combinations
labor and capital yield the same total output
Wage rates tend to change with national rather than with industry productivity because
labor supply responses tend to prevent wages from diverging in the various industries.
of the following industries, 2018 averages hourly earnings were greatest in
mining
Refer to the following diagram, in which Sd is the supply curve of domestic labor and St is the total labor supply curve including the supplies of illegal immigrant workers. L is measured in thousands of workers. Consider the market depicted in the diagram. Supporters of illegal immigrants claim that no domestic workers are willing to do this type of work. Their claims are
misleading; although no domestic workers are currently performing this work, some domestic workers would take these jobs at wages above $7.
Which one of the following topics is most suited to microeconomic analysis?
mobility and migration decisions
If persons of greater ability also tend to invest more in human capital, then the impact of human capital on earnings will be
overstated
discrimination contributes to earnings inequality through
pay discrimination, occupational segregation, and human capital discrimination
Internal labor markets may contribute to dynamic efficiency by
paying older workers more than their marginal revenue products.
Refer to the following diagram. Consider a worker who faces a trade-off between higher wages and a more relaxed work environment as shown in the diagram. A worker whose indifference curves are relatively steep
places a relatively high value on additional informality on the job
Firms will reduce job safety as long as
potential cost savings are at least as great as wage increases that might have to be paid to attract labor into risky jobs.
The measured union wage advantage will understate the pure advantage because of the
product-market effect
Internal labor markets benefit senior employees by
providing them with increased protection from job layoff.
As of 2018, which of the following U.S. industries was more than 30% unionized?
public administration
Research by Moulton and by Gittleman and Pierce found that
public sector wage differentials have diminished in recent years.
In an internal labor market, promotions are generally accorded on the basis of
seniority
For the 1948-2018 period in the United States, the rate of productivity growth in years of declining real output was
slower than in years of expanding real output
In a particular family, both spouse A and spouse B could earn $20 per hour in market work. However, spouse A has a comparative advantage in the production of home-produced goods. Becker's model of time allocation predicts that
spouse A will tend to specialize in home production, spouse B in market work.
People who receive relatively high pay also tend to work in a relatively desirable work environment. This is probably because
the differential required to compensate for high skill more than offsets the differential required for poor working conditions.
In the equation for the net present value of migration, Vp=∑Nn−1E2−E1(1+i)n−∑Nn−1C(1+i)n−ZVp=∑n-1NE2-E11+in-∑n-1NC1+in-Z , the term "C" refers to
the direct and indirect monetary costs of moving.
One implication of Becker's "taste-for-discrimination" model is that
the existence of competitive market forces will cause discrimination to diminish and eventually disappear.
All else equal, investment in education will be greater,
the greater the earnings differential between more- and less-educated workers.
Which one of the following topics is most suited to macroeconomic analysis?
the impact of a recession on the country's unemployment rate
Which of the following would tend to increase labor supply to a particular job?
the percieved status of the job improves
all else equal, a worker is likess likely to move
the smaller the wage differential between the destination and the origin
An example of a sociological immobility is
the so-called "glass ceiling" (a form of discrimination) prevents women from moving into certain high-paying managerial jobs.
All else equal, the social rate of return to education will be lower than the private return if
the social return correctly calculates costs by including education subsidies.
the higher the individual's wage rate
the steeper the budget constraint
the slope of a standard budget constraint reflects
the wage rate
Suppose the federal government builds a new flood control project that takes thousands of acres of land out of agricultural production. Which of the following is most likely to occur as a result?
the wages of farm workers will decline
Market labor supply curves are generally
upward sloping, as higher wages attract workers away from their next best alternatives.
If OSHA were to become increasingly effective in reducing workplace hazards, then
wage differentials between safe and hazardous jobs would diminish.
Refer to the following diagram of a perfectly competitive labor market. For the supply and demand curves in the diagram, the level of employment will be highest at
wage rate at W2
Which of the following is a form of frictional unemployment?
wait unemployment
"Yellow-dog contracts"
were used by employers to restrict union membership.
The added-worker effect suggests that
when one family member loses a job, other family members may enter the labor force.
general training
will be paid for by the employee in the form of a reduced wage.
In Becker's "taste-for-discrimination" model, an employer who is prejudiced against African Americans
will hire only African Americans if the wage differential exceeds his discrimination coefficient.
A single union firm in a competitive industry otherwise comprised of nonunion firms
will make economic losses if it pays a wage rate above its competitors.
Refer to the following diagram. Suppose this labor market is monopsonistic, so that the wage is W1 and employment is Q1. If W* is imposed as the minimum (12/13)
will rise to Q2
evidence indicates that most of the growth in earnings inequality since 1970 is
within each age group and within each industry
According to efficiency wage models, the firm's profits will increase whenever the wage causes
worker productivity to increase by a larger proportion than the wage increase.
Refer to the following diagram of a monopsonistic labor market. If legislation set the minimum wage at W2, then employment (ch 6/7)
would rise from its original monopsony level