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17-161
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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.
17-164
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written consent of McGraw-Hill Education.
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.
17-166
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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.
17-168
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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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written consent of McGraw-Hill Education.
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.
17-170
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.
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?
17-176
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written consent of McGraw-Hill Education.
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.
17-178
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written consent of McGraw-Hill Education.
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
17-179
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written consent of McGraw-Hill Education.
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.
