978-1259723223 Test Bank TBChap017 Part 10

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D. persistent wage and unemployment differentials among different regions of the country.

359. Which action taken by a worker would not be an investment in human capital?

A. enrolling in college

360. According to proponents of human capital theory, education

D. is an investment with primarily higher returns and lower risks than those available through

investments in physical or financial capital.

361. Pay plans that are designed to elicit a desired level of performance from workers are

generally called

A. basic wage-plus-fringe benefits plans.

362. The principal-agent problem, as applied to the management of a company, would have the

A. stockholders as the agents and the managers as the principals.

363. The principal-agent problem, as applied to the labor market, would have the

A. employer as the agent and the worker as the principal.

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plans.

Test Bank: II

Topic:

Pay for Performance

364. The principal-agent problem as it applies to labor employment refers to

A. employer and workers wanting the firm to survive and thrive.

365. A firm pays the market equilibrium wage of $15.00 an hour, and the workers produce 25

units of output an hour. If the firm adopts an efficiency-wage policy, then the wage rate for these

workers would be expected to

A. increase and productivity to decrease.

366. Incentive pay plans that seek to tie worker compensation more closely to worker

performance include the following, except

A. commissions or royalties.

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D. efficiency wages.

367. Pay-for-performance systems seek to deal with the

A. unemployment problem.

368.

A wage payment system in a firm incorporates a guaranteed wage with an incentive element,

provided that a certain minimum level of output is achieved. Which of the graphs represents

such a system?

A. 1

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D. 4

369. Taking unauthorized work breaks would be an example of

A. compensating differences.

370. What concept is associated with the notion that employers can get greater effort from

workers by paying them a relatively high, above-equilibrium wage?

A. profit sharing

371. Which would be an example of a negative side effect of pay-for-performance plans?

A. Profit sharing plans will tend to decrease the “free-ride” that some workers get by being part

of a team.

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

A. protect the consumers in specific markets from harm.

373. Unnecessary occupational licensing requirements in an industry tend to

A. increase the supply of the product.

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Blooms: Understand

Di f f i cul t y:

02 Medium

Learning Objective: 17–04 Discuss how unions increase wage rates by pursuing the demand-

enhancement model, the craft union model, or the industrial union model.

Test Bank: II

Topic:

Three Union Models

True / False Questions

374. If you received a 4 percent increase in your nominal wage and the price level increased by

6 percent, then your real wage has increased by 2 percent.

375. Nominal wage measures the purchasing power of a given amount of real wage.

376. One reason for the high wage rates in the United States and other advanced economies is

the high productivity of labor in these countries.

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Blooms: Understand

Di f f i cul t y:

02 Medium

Learning Objective: 17–01 Explain why labor productivity and real hourly compensation track

so closely over time.

Test Bank: II

Topic:

Labor, Wages, and Earnings

377. In a purely competitive labor market, a profit-maximizing firm will hire labor up to the

point where the marginal resource cost equals the wage rate.

378. In a purely competitive labor market, an individual firm must pay a rising price for labor if

it wants to acquire more labor.

379. The supply curve of labor faced by an individual firm in a purely competitive labor market

is horizontal.

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Learning Objective: 17–02 Show how wage rates and employment levels are determined in

competitive labor markets.

Test Bank: II

Topic:

A Purely Competitive Labor Market

380. If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire

12 workers, its marginal resource cost of hiring the 12th worker is $40.

381. A monopsonist in the labor market tends to hire more workers than would be hired if the

labor market were purely competitive.

382. A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal

demand curve for its product in the output market.

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Test Bank: II

Topic:

Monopsony Model

383. A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

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

particular industry.

385. 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.

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386. Professions that require their practitioners to pass a licensure exam, like accountants and

doctors, exemplify the exclusive union model of how a labor union raises wage rates.

387. Restricting the supply of labor is a means of increasing wage rates more commonly used

by industrial unions than craft unions.

388. A bilateral monopoly case is a situation where two monopolists in two countries are

selling competing products in the world market.

389. A bilateral monopoly case is a situation where a firm is a monopolist in its product market

and is also a monopsonist in the market where it acquires its major resource.

390. Minimum wage laws have contributed to higher unemployment levels among teenagers and

minorities.

391. In monopsony situations, a minimum wage might increase wage and employment levels.

392. Education is a form of human capital, and it helps explain wage differentials.

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Di f f i cul t y:

02 Medium

Learning Objective: 17–06 Discuss how minimum wage laws affect labor markets.

Test Bank: II

Topic:

The Minimum-Wage Controversy

393. Wage differentials are fully explained by differences in productivity and human capital

among various workers.

394. There will be no principal-agent problem if a firm‘s owner (like a business consultant)

does all the work of the firm.

395. Commissions or royalties may be an inexpensive way of reducing shirking on a job when

the costs of monitoring work performance are high.

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Topic:

Pay for Performance

396. Firms that pay efficiency wages tend to have higher worker turnover.

Topic:

Pay for Performance

Multiple Choice Questions

397. According to U.S. Bureau of Labor Statistics data, which of the following industries had

the highest unionization rate in 2015?

A. finance

398. Which of the following is not a major reason for the decline of unionism in the U.S.?

A. Employment has shifted away from manufacturing toward services.

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A c c e s s i b i l i t y :

Keyboard Navigation

Blooms: Understand

Di f f i cul t y:

02 Medium

Learning Objective: 17–09 (Appendix) Relate who belongs to U.S. unions, the basics of

collective bargaining, and the economic effects of unions.

Test Bank: II

Topic:

Labor Unions and Their Impacts

399. Which of the following is not a major common topic of collective bargaining?

A. union status

400. Which union status provides the weakest form of union security?

D. closed shop

401. Which union status allows the firm to hire nonunion workers, provided that these workers

would join the union within a specified period or lose their jobs?

A. open shop

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B. agency shop

C. union shop

D. closed shop

402. Which of the following economic effects of unions tends to improve efficiency?

A. featherbedding

True / False Questions

403. In 2015, food workers had a much higher unionization rate than teachers, according to U.S.

Bureau of Labor Statistics data.

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Topic:

Labor Unions and Their Impacts

404. Union membership among workers in America has been declining since the 1950s.

405. Right–to-work laws in some states prohibit the closed-shop and agency-shop union setups.

406. A labor union may engage in a lockout if the collective bargaining process breaks down.

407. One clear effect of labor unions is an increase in the wage rates of their members.