Question 1

A profit-maximizing firm will

Accepted Answer

A)  expand employment if marginal revenue product equals marginal resource cost.
B)  reduce employment if marginal revenue product equals marginal resource cost.
C)  reduce employment if marginal revenue product is less than marginal resource cost.
D)  expand employment if marginal revenue product is less than marginal resource cost.E) B) and C)
F) A) and C)

Question 2

In the demand-enhancing union model, a union tries to increase the wage rate through actions such as promoting the industry's product or raising labor productivity.

Accepted Answer

A) True 
 B)False

Question 3

Real wages in the United States in the long run

Accepted Answer

A)  show no discernible relationship to output per worker.
B)  have increased at about the same rate as increases in output per worker.
C)  have increased slower than increases in output per worker.
D)  have increased faster than increases in output per worker.E) All of the above
F) A) and B)

Question 4

If the nominal wages of carpenters rose by 3 percent in 2019 and the price level decreased by 4 percent, then the real wages of carpenters

Accepted Answer

A)  decreased by 1 percent.
B)  increased by 7 percent.
C)  increased by 1 percent.
D)  increased by 4 percent.E) A) and C)
F) None of the above

Question 5

The table shows labor demand data on the left and labor supply data on the right. How many workers will this profit-maximizing firm choose to employ?

Accepted Answer

A)  4
B)  3
C)  1
D)  2E) A) and C)
F) A) and B)

Question 6

What is a monopsony? Explain its three characteristics as applied to a labor market.

Accepted Answer

A monopsony is a market structure in whi...

Question 7

Real wages in the United States are

Accepted Answer

A)  the highest in the world.
B)  relatively high, but not as high as in some other industrially advanced nations.
C)  much higher than output per worker.
D)  higher than nominal wages.E) B) and D)
F) C) and D)

Question 8

If the nominal wage falls by 2 percent and the price level falls by 5 percent, the real wage will

Accepted Answer

A)  be unaffected.
B)  fall by 7 percent.
C)  rise by 3 percent.
D)  rise by 7 percent.E) None of the above
F) B) and C)

Question 9

An example of a monopsonist is a labor union whose members include all the workers in a particular industry.

Accepted Answer

A) True 
 B)False

Question 10

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) None of the above
F) A) and D)

Question 11

What is meant by managerial prerogatives?

Accepted Answer

Many work agreements contain clauses out...

Question 12

Unions prefer agency shops to open shops.

Accepted Answer

A) True 
 B)False

Question 13

Explain the long-run relationship between real hourly earnings and productivity.

Accepted Answer

There is a close long-run relationship b...

Question 14

Suppose in some economy there are 100 million workers; 8 million of those workers work in retail trade, and 2 million of the retail workers belong to unions. Total union membership in this economy is 30 million. The rate of unionization in the economy is

Accepted Answer

A)  30 percent, and the rate of unionization in retail trade in 20 percent.
B)  8 percent, and the rate of unionization in retail trade is 2 percent.
C)  30 percent, and the rate of unionization in retail trade is 25 percent.
D)  20 percent, and the rate of unionization in retail trade is 25 percent.E) A) and B)
F) C) and D)

Question 15

Discuss the hourly wage of production workers between the United States and some European countries.

Accepted Answer

The general level of real wages in the U...

Question 16

What are the economic effects of imposition of a new occupational license on a labor market?

Accepted Answer

Occupational licenses often lead to poli...

Question 17

Refer to the given data. If this firm can hire as few or many workers as it wants at $9, it is

Accepted Answer

A)  hiring labor in a monopsony labor market.
B)  hiring labor in a purely competitive labor market.
C)  selling its product in a monopolized product market.
D)  selling its product in a purely competitive product market.E) C) and D)
F) A) and C)

Question 18

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

Accepted Answer

A)  $5
B)  $25
C)  $−7
D)  $1E) C) and D)
F) B) and C)

Question 19

What is human capital? How is it related to one's future earnings?

Accepted Answer

Human capital is the knowledge and skill...

Question 20

The graph represents the supply and demand for labor in a purely competitive market. The area 0 abc represents

Accepted Answer

A)  total revenue of the firm.
B)  total earnings of labor.
C)  marginal revenue product of labor.
D)  marginal labor cost.E) A) and C)
F) All of the above

Exam 17: Wage Determination

A profit-maximizing firm will

Correct AnswerverifiedShow Answer

An example of a monopsonist is a labor union whose members include all the workers in a particular industry.

Correct AnswerverifiedShow Answer

Real wages in the United States are

Correct AnswerverifiedShow Answer

Explain the long-run relationship between real hourly earnings and productivity.

Correct AnswerverifiedThere is a close long-run relationship b...View AnswerShow Answer

What is human capital? How is it related to one's future earnings?

Correct AnswerverifiedHuman capital is the knowledge and skill...View AnswerShow Answer

Real wages in the United States in the long run

Correct AnswerverifiedShow Answer

Discuss the hourly wage of production workers between the United States and some European countries.

Correct AnswerverifiedThe general level of real wages in the U...View AnswerShow Answer

The graph represents the supply and demand for labor in a purely competitive market. The area 0 abc represents

Correct AnswerverifiedShow Answer

Unions prefer agency shops to open shops.

Correct AnswerverifiedShow Answer

If the nominal wage falls by 2 percent and the price level falls by 5 percent, the real wage will

Correct AnswerverifiedShow Answer

If the nominal wages of carpenters rose by 3 percent in 2019 and the price level decreased by 4 percent, then the real wages of carpenters

Correct AnswerverifiedShow Answer

Suppose in some economy there are 100 million workers; 8 million of those workers work in retail trade, and 2 million of the retail workers belong to unions. Total union membership in this economy is 30 million. The rate of unionization in the economy is

Correct AnswerverifiedShow Answer

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. What is the marginal revenue product of the fifth worker?

Correct AnswerverifiedShow Answer

Refer to the given data. If this firm can hire as few or many workers as it wants at $9, it is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

What is meant by managerial prerogatives?

Correct AnswerverifiedMany work agreements contain clauses out...View AnswerShow Answer

What is a monopsony? Explain its three characteristics as applied to a labor market.

Correct AnswerverifiedA monopsony is a market structure in whi...View AnswerShow Answer

In the demand-enhancing union model, a union tries to increase the wage rate through actions such as promoting the industry's product or raising labor productivity.

Correct AnswerverifiedShow Answer

What are the economic effects of imposition of a new occupational license on a labor market?

Correct AnswerverifiedOccupational licenses often lead to poli...View AnswerShow Answer

The table shows labor demand data on the left and labor supply data on the right. How many workers will this profit-maximizing firm choose to employ?

Correct AnswerverifiedShow Answer

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There is a close long-run relationship b...
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Human capital is the knowledge and skill...
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Correct Answer
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Correct Answer
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The general level of real wages in the U...
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Many work agreements contain clauses out...
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A monopsony is a market structure in whi...
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Correct Answer
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Correct Answer
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Occupational licenses often lead to poli...
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Correct Answer
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