Question 1

Economists regard expenditures on education as investments because

Accepted Answer

A)   they are subject to tax deductions at the same rate as are expenditures on machinery and equipment.
B)   education is economically beneficial at the same time it is being acquired.
C)   such expenditures are current costs that are intended to enhance future earnings.
D)   they differ from expenditures on health and worker mobility.E) C) and D)
F) All of the above

Question 2

Pay-for-performance systems seek to deal with the

Accepted Answer

A)   unemployment problem.
B)   monitoring problem.
C)   discouraged worker problem.
D)   principal-agent problem.E) B) and C)
F) A) and D)

Question 3

In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which

Accepted Answer

A)   the difference between the wage rate and marginal resource (labor)  cost is at a maximum.
B)   marginal revenue product equals marginal resource (labor)  cost.
C)   the wage rate equals marginal revenue product.
D)   the wage rate equals marginal resource (labor)  cost.E) A) and B)
F) A) and C)

Question 4

Occupational licensing laws were originally created to attain the following goals, except to

Accepted Answer

A)   protect the consumers in specific markets from harm.
B)   foster trust among customers of service providers in specific industries.
C)   ensure that service providers in certain industries met high standards of expertise.
D)   reduce the supply of service providers in industries that the government wanted to shrink.E) A) and D)
F) C) and D)

Question 5

Unions often oppose increases in the prices of complementary inputs. (For example, truck drivers may oppose increases in taxes on diesel fuel.)  They do this because increases in the prices of complementary inputs might

Accepted Answer

A)   increase the supply of competing labor through the output effect.
B)   increase the supply of competing labor through the substitution effect.
C)   decrease the demand for union labor through the output effect.
D)   decrease the demand for union labor through the substitution effect.E) B) and D)
F) B) and C)

Question 6

Inclusive unions restrict the number of jobs directly by shifting the labor supply curve to the left; exclusive unions restrict the number of jobs by imposing above-equilibrium wage rates on the employer.

Accepted Answer

A) True 
 B)False

Question 7

Private-sector strikes and lockouts typically end because

Accepted Answer

A)   the federal government intervenes with a back-to-work order.
B)   the parties eventually tire of bickering.
C)   they are costly in terms of lost profits and lost wage income.
D)   the parties rely heavily on outside arbitration.E) A) and B)
F) All of the above

Question 8

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 C)
F) A) and C)

Question 9

In a certain labor market, workers are required to have a certain skill-set. There are many workers who have the skill-set, but they can only find employment in one company. That one company is called a

Accepted Answer

A)   pure monopoly.
B)   monopolistic competitor.
C)   monopsony.
D)   natural monopoly.E) None of the above
F) A) and B)

Question 10

Compensating differences in wages

Accepted Answer

A)   compensate workers for differences in their human capital.
B)   reward workers differently based on differences in the desirability of jobs.
C)   describe the tendency for the wages of all occupations to adjust to the median level.
D)   do not exist if jobs have different nonmonetary characteristics.E) B) and C)
F) None of the above

Question 11

The presence of an agency shop requires all workers to join the union within the first 30 days of employment.

Accepted Answer

A) True 
 B)False

Question 12

In 2015, about percent of employed wage and salary workers belonged to unions.

Accepted Answer

A)   25.0
B)   5.5
C)   16.4
D)   11.1E) B) and C)
F) A) and B)

Question 13

The concept of "wages" includes the following items, except

Accepted Answer

A)   direct money payments like salaries and commissions.
B)   bonuses and royalties.
C)   amounts spent by workers.
D)   fringe benefits like health insurance and paid leave.E) B) and C)
F) C) and D)

Question 14

The wages of plumbers are likely to increase when

Accepted Answer

A)   licensing standards for the occupation are increased.
B)   there is an increase in the cost of plumbing supplies.
C)   the length of the training period for plumbers is decreased.
D)   more do-it-yourself home improvement centers open across the nation.E) B) and D)
F) A) and B)

Question 15

Occupational licensing has much the same effect as

Accepted Answer

A)   inclusive unionism.
B)   exclusive unionism.
C)   bilateral monopoly.
D)   monopsony.E) A) and C)
F) A) and B)

Question 16

Why do skilled workers generally earn more than unskilled workers?

Accepted Answer

A)   The demand for unskilled labor is more inelastic than the demand for skilled labor.
B)   Skilled labor has higher marginal revenue products than unskilled labor.
C)   The demand for unskilled labor is greater than the demand for skilled labor.
D)   The supply of skilled labor is greater than the supply of unskilled labor.E) A) and C)
F) A) and D)

Question 17

A monopsonistic employer in an unorganized (nonunion)  labor market will

Accepted Answer

A)   pay a wage rate less than labor's MRP.
B)   pay the same wage rate but hire fewer workers than if the market was purely competitive.
C)   hire the number of workers indicated by the intersection of the MRC and the labor supply curves.
D)   pay a wage rate in excess of labor's MRP.E) A) and D)
F) A) and B)

Question 18

A monopsonistic employer may sell its product in a competitive market.

Accepted Answer

A) True 
 B)False

Question 19

When the monopsony model is combined with the inclusive union model, the result is a case of

Accepted Answer

A)   occupational licensing.
B)   noncompeting groups.
C)   bilateral monopoly.
D)   institutional immobility.E) A) and D)
F) A) and C)

Question 20

A bilateral monopoly situation is one where a

Accepted Answer

A)   single firm is a monopolist in two different markets.
B)   market is effectively split between two exclusive monopolies.
C)   monopolistic seller faces a monopsonistic buyer.
D)   firm is a monopoly in the product market and a monopsony in the labor market.E) B) and D)
F) None of the above

Exam 17: Wage Determination

In a monopsonistic labor market, the employer will maximize profits by employing workers up to that point at which

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A monopsonistic employer in an unorganized (nonunion) labor market will

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Private-sector strikes and lockouts typically end because

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Pay-for-performance systems seek to deal with the

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Why do skilled workers generally earn more than unskilled workers?

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In a certain labor market, workers are required to have a certain skill-set. There are many workers who have the skill-set, but they can only find employment in one company. That one company is called a

Correct AnswerverifiedShow Answer

The wages of plumbers are likely to increase when

Correct AnswerverifiedShow Answer

A bilateral monopoly situation is one where a

Correct AnswerverifiedShow Answer

Occupational licensing has much the same effect as

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Economists regard expenditures on education as investments because

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In the United States, the rate of unionization is

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A monopsonistic employer may sell its product in a competitive market.

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The presence of an agency shop requires all workers to join the union within the first 30 days of employment.

Correct AnswerverifiedShow Answer

Occupational licensing laws were originally created to attain the following goals, except to

Correct AnswerverifiedShow Answer

When the monopsony model is combined with the inclusive union model, the result is a case of

Correct AnswerverifiedShow Answer

The concept of "wages" includes the following items, except

Correct AnswerverifiedShow Answer

In 2015, about percent of employed wage and salary workers belonged to unions.

Correct AnswerverifiedShow Answer

Compensating differences in wages

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Unions often oppose increases in the prices of complementary inputs. (For example, truck drivers may oppose increases in taxes on diesel fuel.) They do this because increases in the prices of complementary inputs might

Correct AnswerverifiedShow Answer

Inclusive unions restrict the number of jobs directly by shifting the labor supply curve to the left; exclusive unions restrict the number of jobs by imposing above-equilibrium wage rates on the employer.

Correct AnswerverifiedShow Answer

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