Question 1

The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by

Accepted Answer

A)   discrimination.
B)   geographic immobility.
C)   compensating differences.
D)   noncompeting labor groups.E) All of the above
F) C) and D)

Question 2

In which of the following U.S. industries is the rate of unionization the lowest?

Accepted Answer

A)   transportation
B)   mining
C)   manufacturing
D)   financeE) All of the above
F) A) and D)

Question 3

According to proponents of human capital theory, education

Accepted Answer

A)   increases a worker's productivity.
B)   identifies more productive workers for employers, but does not directly increase productivity.
C)   should result in all workers with college degrees earning more than all workers who hold only high school diplomas.
D)   is an investment with primarily higher returns and lower risks than those available through investments in physical or financial capital.E) B) and D)
F) C) and D)

Question 4

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent. In this case, the percentage change in the real annual wage is about

Accepted Answer

A)   −1 percent.
B)   −2 percent.
C)   3 percent.
D)   5 percent.E) B) and C)
F) A) and B)

Question 5

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

Accepted Answer

A)   increase unemployment in the labor market.
B)   increase firms' demand for labor.
C)   decrease the supply of labor.
D)   cause firms to substitute labor for capital.E) B) and C)
F) A) and B)

Question 6

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

Accepted Answer

A) True 
 B)False

Question 7

The long-run trend of real wages

Accepted Answer

A)   cannot be determined from available data on nominal wages and the price level.
B)   has been downward because the price level has risen faster than nominal wages.
C)   has been upward.
D)   has been downward because labor's share of the domestic income has fallen.E) A) and D)
F) B) and C)

Question 8

The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

Accepted Answer

A)   2 percent
B)   4 percent
C)   6 percent
D)   8 percentE) A) and B)
F) All of the above

Question 9

As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market, wages

Accepted Answer

A)   and employment will both be lower.
B)   will be higher, but employment will be lower.
C)   will be lower, but employment will be higher.
D)   and employment will both be higher.E) A) and D)
F) B) and C)

Question 10

Since 1980, labor union membership in the United States has been

Accepted Answer

A)   increasing absolutely and as a percentage of the labor force.
B)   increasing absolutely but declining as a percentage of the labor force.
C)   decreasing absolutely and as a percentage of the labor force.
D)   decreasing absolutely but increasing as a percentage of the labor force.E) C) and D)
F) All of the above

Question 11

Under an agency shop agreement, firms can hire

Accepted Answer

A)   only union workers.
B)   nonunion workers, but these workers must join the union within a specified period, say, 30 days.
C)   nonunion workers, but these workers must join the union within a specified period, pay union dues, or donate an equivalent amount to charity.
D)   only nonunion workers.E) B) and C)
F) None of the above

Question 12

The reason that the supply curve for labor in a purely competitive market slopes upward is because

Accepted Answer

A)   the wage rate paid to workers falls as more are hired.
B)   the marginal product of labor falls as output increases.
C)   marginal resource cost rises as productivity increases.
D)   higher wages must be paid to bid workers away from other opportunities.E) A) and B)
F) A) and D)

Question 13

Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason for this is to

Accepted Answer

A)   restrict the supply of construction workers.
B)   increase the elasticity of demand for construction workers.
C)   increase the demand for construction workers.
D)   increase the price of substitute inputs.E) B) and C)
F) A) and C)

Question 14

A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is

Accepted Answer

A)   $9.
B)   $10.
C)   $15.
D)   $21.E) None of the above
F) A) and B)

Question 15

The marginal cost of a productive resource is equal to the price of the resource if a firm is

Accepted Answer

A)   a price taker in the output market.
B)   a price taker in the resource market.
C)   able to influence the price of the product by producing more or less of it.
D)   able to influence the price of the factor by buying more or less of it.E) All of the above
F) A) and B)

Question 16

Paying an above-equilibrium wage rate might reduce unit labor costs by

Accepted Answer

A)   permitting the firm to attract lower-quality labor.
B)   increasing the opportunity cost to workers of being fired for shirking.
C)   increasing voluntary worker turnover.
D)   increasing the supply of labor.E) A) and D)
F) B) and C)

Question 17

If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit-maximizing quantities of labor and capital when

Accepted Answer

A)   MRPL/PL=MRPC/PC=1\mathrm{MRP} _{L} / P_{L}=\mathrm{MRP} C / P C=1MRPL​/PL​=MRPC/PC=1 
B)   MRPL/MRCL=MRPC/MRCC=1.\mathrm{MRP}_{L} / \mathrm{MRC} L=\mathrm{MRP}_{C} / \mathrm{MRC} _{C}=1 .MRPL​/MRCL=MRPC​/MRCC​=1. 
C)   the MRP of labor equals the MRP of capital.
D)   the MRC of labor equals the MRC of capital. E) B) and D)
F) B) and C)

Question 18

Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

Accepted Answer

A) True 
 B)False

Question 19

The monopsonistic power of a firm in a labor market tends to be enhanced by

Accepted Answer

A)   entry of new firms in that market.
B)   higher transferability of workers' skills to other professions.
C)   an increasing immobility of workers to other jobs or locations.
D)   technological advances that make online services easier to provide.E) None of the above
F) A) and B)

Question 20

Long-run real wages in the United States have

Accepted Answer

A)   risen because growth in the demand for labor has exceeded growth in the supply of labor.
B)   risen because the supply of labor has fallen over time.
C)   fallen because growth in the supply of labor has exceeded growth in the demand for labor.
D)   fallen because the demand for labor has fallen over time.E) B) and C)
F) All of the above

Exam 17: Wage Determination

Since 1980, labor union membership in the United States has been

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According to proponents of human capital theory, education

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Construction workers frequently sponsor political lobbying in support of greater public spending on highways and public buildings. One reason for this is to

Correct AnswerverifiedShow Answer

The reason that the supply curve for labor in a purely competitive market slopes upward is because

Correct AnswerverifiedShow Answer

In a purely competitive labor market, an individual firm must pay a rising price for labor if it wants to acquire more labor.

Correct AnswerverifiedShow Answer

The reason that unskilled construction workers typically receive higher wages than retail sales clerks is best explained by

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A firm can hire six workers at a wage rate of $8 per hour but must pay $9 per hour to all of its employees to attract a seventh worker. The marginal wage cost of the seventh worker is

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The marginal cost of a productive resource is equal to the price of the resource if a firm is

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The monopsonistic power of a firm in a labor market tends to be enhanced by

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The consumer price index is 113 in Year 1 and 118 in Year 2. The nominal wage rate is $8 in Year 1 and $9 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

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Paying an above-equilibrium wage rate might reduce unit labor costs by

Correct AnswerverifiedShow Answer

The nominal annual wage increases from $20,000 to $21,000, while the price level increases by 7 percent. In this case, the percentage change in the real annual wage is about

Correct AnswerverifiedShow Answer

The long-run trend of real wages

Correct AnswerverifiedShow Answer

Under an agency shop agreement, firms can hire

Correct AnswerverifiedShow Answer

In which of the following U.S. industries is the rate of unionization the lowest?

Correct AnswerverifiedShow Answer

Shirking refers to the behavior of workers who provide less-than-expected effort on the job.

Correct AnswerverifiedShow Answer

If a firm is a monopsonist in the hiring of both labor and capital, it will obtain the profit-maximizing quantities of labor and capital when

Correct AnswerverifiedShow Answer

Long-run real wages in the United States have

Correct AnswerverifiedShow Answer

Critics of the minimum wage argue that an increase in the minimum wage rate above the equilibrium rate of a purely competitive labor market would

Correct AnswerverifiedShow Answer

As compared to a purely competitive labor market, in a nonunionized monopsonistic labor market, wages

Correct AnswerverifiedShow Answer

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