978-1259723223 Test Bank TBChap017 Part 9

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

Keyboard Navigation

Blooms: Understand

Dif f i c u l 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

325. Exclusive unionism has the economic effect of

A. strengthening the bargaining position of an industrial union.

326.

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Refer to the graph, which shows the supply and demand for unionized manufacturing workers.

The initial equilibrium point is point 1. There is an increase in the demand for manufactured

goods, while at the same time health benefits for unionized manufacturing workers also

increase. Which point would represent the new equilibrium?

A. 3

327.

Refer to the graph, which shows the supply and demand for unionized manufacturing workers.

The initial equilibrium point is point 1. The wages paid in comparable nonunion occupations

increase significantly, while at the same time the price of manufactured goods increases. Which

point would represent the new equilibrium?

A. 2

D. 5

328. If there is a decrease in the demand for union electrical workers and at the same time there

is a drastic cutback in the numbers of electricians trained by the union, then the

A. wages of electricians are likely to increase and the quantity employed will decrease.

329. A bilateral monopoly situation is one where a

A. single firm is a monopolist in two different markets.

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bargaining in a situation of bilateral monopoly.

Test Bank: II

Topic:

Bilateral Monopoly Model

330. When the monopsony model is combined with the inclusive union model, the result is a

case of

A. occupational licensing.

331.

Refer to the graph. A monopsonist will set the wage at

A. Wc.

332.

Refer to the graph. An inclusive union or an industrial union will set the wage rate at

A. Wc.

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Blooms: Understand

Dif f i c u l t y :

02 Medium

Learning Objective: 17–05 Explain why wages and employment are determined by collective

bargaining in a situation of bilateral monopoly.

Test Bank: II

Topic:

Bilateral Monopoly Model

333.

Refer to the graph. If a monopsonist bargains with an inclusive union, as shown, the wage rate

will be

A. Wc.

334. A bilateral monopoly is a situation where a firm is

A. a monopoly in its product market and is a monopsony in its labor market.

335. Under conditions of imperfect competition in the labor market, union efforts to increase

wages

A. will necessarily cause unemployment.

336. The equilibrium wage rate in a bilateral monopoly labor market is

A. determined by the monopoly supplier of labor.

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Dif f i c u l t y :

02 Medium

Learning Objective: 17–05 Explain why wages and employment are determined by collective

bargaining in a situation of bilateral monopoly.

Test Bank: II

Topic:

Bilateral Monopoly Model

337. 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

D. cause firms to substitute labor for capital.

338. Critics contend that imposing a minimum wage higher than the equilibrium wage in a

competitive industry would

D. increase employment in that industry.

339. The minimum wage in the U.S. is

A. set at the federal level, and all states abide by that level.

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federal level.

D. set at the state level, not by the federal government.

340.

In the graph, unemployment created by the minimum wage is

C. B – E.

D. 0.

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Topic:

The Minimum-Wage Controversy

341.

In the labor market shown in the graph, if a minimum wage level is set at Wm, it will cause

A. employment to increase from A to B.

342.

In the labor market shown in the graph, if the demand for labor increases so that the equilibrium

wage rate goes above the minimum wage, Wm, then the minimum-wage law will

A. cause higher unemployment.

343.

If a minimum wage is set at W, what will happen to employment in the monopsonistic labor

market shown in the diagram?

A. Employment will decrease.

344.

Relevant economic data for Company Town Mining, Inc., is shown in the graph. The labor

force (including those not now working) of Company Town organizes and demands a minimum

wage, W, for all workers. If Company Town, Inc., accepts the offer, it will

A. pay lower wages.

345.

Senator Approxmire opposes a proposal requiring that the monopsonist pay a minimum wage of

at least Wmin, stating, “Even if the labor market is monopsonistic, economic theory

unambiguously demonstrates that imposing a minimum wage causes employment to fall.”

Senator Approxmire is

A. correct, because the law of demand states that as the wage rises, the firm demands less labor.

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346.

Consider a company town where the ABC Corporation is the only employer. Assume ABC sells

its output in a purely competitive market. The city council is considering a proposal to lower

the minimum wage from its current level of W2 to W1, as shown in the graph. Given the

marginal revenue product of labor (MRP), labor supply (SL), and marginal cost of labor

(MRC) curves, this policy would

D. reduce employment from L1 to L0.

347. According to the U.S. Bureau of Labor Statistics data on wage differentials, which of the

following professions paid the highest average annual wage in 2014?

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A. surgeons

B. financial managers

C. petroleum engineers

D. law professors

348. Wage differentials occur for all the following reasons except

D. compensating differences to offset nonmonetary differences in jobs.

349. Equilibrium price differentials for productive resources

A. tend to be self-eliminating.

350. Why do skilled workers generally earn more than unskilled workers?

A. The demand for unskilled labor is more inelastic than the demand for skilled labor.

351. A college graduate who works at a firm is also working part–time on a master’s degree in

business and expects to be paid a higher wage after earning the degree. The basic reason for this

wage differential is

A. efficiency wages.

352. The major reason that presidents of major corporations receive an average salary of over

$1 million a year, while police officers receive an average salary of about $56,000 a year, can

best be explained by

A. discrimination.

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Learning Objective: 17–07 List the major causes of wage differentials.

Test Bank: II

Topic:

Wage Differentials

353. The reason that unskilled construction workers typically receive higher wages than retail

sales clerks is best explained by

A. discrimination.

354. The lack of job information for workers would be an example of which explanation for

wage differentials among workers?

355. Discrimination that results in minorities being paid less than whites for identical work

would be an example of which explanation for wage differentials?

A. noncompeting groups

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AACSB: Knowledge Application

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

Keyboard Navigation

Blooms: Remember

D i f f i c u l t y :

01 Easy

Learning Objective: 17–07 List the major causes of wage differentials.

Test Bank: II

Topic:

Wage Differentials

356. Nonmonetary considerations tend to be most important in the allocation of

A. land resources.

357. Other things being equal, the wages of clerical workers would tend to decrease if there

was an increase in

A. the marginal revenue product of clerical workers.

358. Geographic immobility in the labor force results in

A. homogeneous wage rates.