Question 1

Marginal resource (labor)cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 2

Data on education and earnings reveal:

Accepted Answer

A)   negative age-earnings profiles for male workers.
B)   no relationship between the two.
C)   a positive relationship between the two.
D)   a negative relationship between the two.E) All of the above
F) A) and C)

Question 3

Authoritative estimates suggest that currently union workers on the average:

Accepted Answer

A)   achieve no wage advantage over nonunion workers in the same occupation.
B)   realize a 5 percent wage advantage over nonunion workers in the same occupation.
C)   realize a 20-30 percent wage advantage over nonunion workers in the same occupation.
D)   realize a 15 percent wage advantage over nonunion workers in the same occupation.E) None of the above
F) A) and B)

Question 4

Human capital investment refers to spending on education and worker training.

Accepted Answer

A) True 
 B)False

Question 5

Inclusive unionism is practiced mostly by:

Accepted Answer

A)   professional and semiprofessional employees.
B)   small unions comprised of skilled workers,such as the bricklayers.
C)   industrial unions.
D)   craft unions.E) A) and B)
F) None of the above

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Accepted Answer

A) True 
 B)False

Question 8

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 B)
F) A) and C)

Question 9

In the United States,the rate of unionization is:

Accepted Answer

A)   higher in mining than in government.
B)   lower in transportation than in agriculture.
C)   higher in transportation than in retail trade.
D)   lower in government than in finance,insurance,and real estate.E) B) and D)
F) A) and C)

Question 10

Wage differentials may result from all the following except:

Accepted Answer

A)   differences in the nonmonetary aspects of various occupations.
B)   differences in the education and skills of workers.
C)   geographic and sociological immobilities of workers.
D)   the tendency of qualified workers to move from lower pay jobs to higher pay jobs.E) A) and D)
F) A) and B)

Question 11

AFL-CIO stands for:

Accepted Answer

A)   American Federation of Labor-Congress of Industrial Organizations.
B)   American Federation of Labor-Committee for Industrial Opportunity.
C)   Assembly of Factory Laborers-Congress of Industrial Organizations.
D)   Assembly of Factory Laborers-Committee for Industrial Opportunity.E) A) and B)
F) None of the above

Question 12

If all workers are homogeneous,all jobs are equally attractive to workers,and labor markets are perfectly competitive:

Accepted Answer

A)   compensating differences would cause wage differentials.
B)   noncompeting groups of workers would result in wage differentials.
C)   all workers would receive the same wage rate.
D)   worker mobility would occur such that wage differentials would widen.E) A) and D)
F) A) and B)

Question 13

The principal-agent problem arises primarily because:

Accepted Answer

A)   principals and agents share a common interest,leading to free-rider problems.
B)   principals and agents are in an adversarial role,sharing no common interests.
C)   principals pursue some of their own objectives,which may conflict with the objectives of the agents.
D)   agents pursue some of their own objectives,which may conflict with the objectives of the principals.E) All of the above
F) None of the above

Question 14

Which of the following statements is correct?

Accepted Answer

A)   There is clear evidence that unions have increased the average level of real wage rates for all workers.
B)   When fringe benefits are taken into account,the overall compensation of union and nonunion workers is equal.
C)   Approximately 10 percent of all work time is lost annually because of strikes.
D)   There were 19 major work stoppages in the United States in 2011.E) C) and D)
F) B) and D)

Question 15

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) A) and B)
F) All of the above

Question 16

The critical feature of a monopsonistic labor market is that the employer:

Accepted Answer

A)   has a perfectly elastic demand curve for labor.
B)   can hire any number of workers it chooses at the going wage rate.
C)   faces an upsloping labor supply curve.
D)   faces a perfectly inelastic labor supply curve.E) A) and D)
F) C) and D)

Question 17

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

Accepted Answer

A)   marginal revenue product is zero.
B)   marginal revenue product exceeds marginal resource (labor) cost by the greatest amount.
C)   marginal resource cost is zero.
D)   marginal revenue product equals marginal resource (labor) cost.E) B) and D)
F) B) and C)

Question 18

The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it.

Accepted Answer

A) True 
 B)False

Question 19

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) A) and B)
F) A) and C)

Question 20

The concept of investment in human capital indicates that:

Accepted Answer

A)   union workers are better educated and more productive than nonunion workers.
B)   expenditures on education can be explained in essentially the same way as expenditures on machinery and equipment.
C)   worker productivity correlates negatively with annual earnings.
D)   the level of education is unrelated to the level of one's income.E) None of the above
F) A) and D)

Exam 16: Wage Determination

The concept of investment in human capital indicates that:

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The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it.

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

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Authoritative estimates suggest that currently union workers on the average:

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Human capital investment refers to spending on education and worker training.

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AFL-CIO stands for:

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Data on education and earnings reveal:

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A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until:

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

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Marginal resource (labor)cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market.

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Which of the following statements is correct?

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The principal-agent problem arises primarily because:

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If all workers are homogeneous,all jobs are equally attractive to workers,and labor markets are perfectly competitive:

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The critical feature of a monopsonistic labor market is that the employer:

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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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Wage differentials may result from all the following except:

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Real wages in the United States in the long run:

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Industrial unions are more likely to increase wage rates by restricting the supply of labor than are craft unions.

Correct AnswerverifiedShow Answer

In the United States,the rate of unionization is:

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Inclusive unionism is practiced mostly by:

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