Economics Chapter 19 Average real wages have not risen significantly since approximately

True / False

1. Average real wages have not risen significantly since approximately 1973.

a.

True

b.

False

True

Easy

DISC: Labor markets

United States – BPROG: Analytic

Labor markets

Wage Determination in Competitive Labor Markets

2. Over the last 30 years, the income gap between the rich and the poor has declined.

a.

True

b.

False

Easy

DISC: Labor markets

United States – BPROG: Analytic

Labor markets

Wage Determination in Competitive Labor Markets

3. Labor markets are generally perfectly competitive markets.

a.

True

b.

False

Easy

DISC: Labor markets

United States – BPROG: Analytic

Labor markets

Wage Determination in Competitive Labor Markets

4. There is only a small difference in wages between college graduates and workers who did not attend college.

a.

True

b.

False

DISC: Labor markets

United States – BPROG: Analytic

5. The marginal revenue product is the extra revenue the firm receives by selling one more unit of output.

a.

True

b.

False

Easy

6. Marginal revenue product is the extra revenue the firm receives by hiring one additional unit of input.

a.

True

b.

False

True

Easy

7. If the MRP of labor is below the wage rate, the firm should lay off workers.

a.

True

b.

False

Moderate

8. A worker’s marginal revenue product depends upon his average product.

a.

True

b.

False

Moderate

9. The demand for labor is a derived demand.

a.

True

b.

False

True

Easy

10. Money spent on college tuition is considered human capital by economists.

a.

True

b.

False

True

Easy

11. Rising productivity usually reduces workers’ standards of living.

a.

True

b.

False

Moderate

12. Innovation that improves machinery, power sources and other capital equipment will increase the demand for labor in

the short run.

a.

True

b.

False

Difficult

13. History has shown that over the long run, labor-saving technology has actually not reduced employment.

a.

True

b.

False

True

Moderate

14. Agriculture is a sector of the economy where increased productivity has been accompanied by a significant decrease in

employment.

a.

True

b.

False

True

Easy

15. The majority of new jobs created in the service sector of the U.S. economy have been in the information sector.

a.

True

b.

False

True

Easy

16. A person’s decision to supply a certain amount of labor in a week is simultaneously a decision to consume a certain

amount of leisure per week.

a.

True

b.

False

True

Moderate

17. One of the most significant developments in labor supply in recent times is the increase in the labor force participation

of married women.

a.

True

b.

False

True

Easy

18. All other things being equal, an increase in the supply of labor will lead to a fall in the wage.

a.

True

b.

False

True

Moderate

19. The relationship between the quantity of labor supplied and the wage is governed by an income effect and a

substitution effect.

a.

True

b.

False

True

Easy

20. The income effect of higher wages leads workers to want to work more.

a.

True

b.

False

Moderate

21. The substitution effect is thought to dominate the behavior of low-wage workers.

a.

True

b.

False

True

Moderate

22. The income effect is thought to offset the substitution effect among very high wage earners.

a.

True

b.

False

True

Moderate

23. If the income effect of a change in the wage dominates the substitution effect, then workers will want to work more

when the wage increases.

a.

True

b.

False

Difficult

24. The substitution effect makes workers want to work less when the wage increases.

a.

True

b.

False

Moderate

25. An individual’s supply curve is backward bending.

a.

True

b.

False

True

Easy

26. Since women earn less on average than men, we would expect that the substitution effect of a wage change would be

more likely to dominate for women and the income effect would be more likely to dominate for men.

a.

True

b.

False

True

Difficult

27. Anything that influences a good’s price or the marginal physical product of labor will influence wages.

a.

True

b.

False

True

Moderate

28. Wages will tend to be high in labor markets where supply is relatively high and demand is relatively weak.

a.

True

b.

False

Moderate

29. The supply of workers in an industry is influenced by the available working population and the nonmonetary

attractiveness of the job.

a.

True

b.

False

True

Moderate

30. Wages are comparatively low in markets where demand for labor is low and supply is high.

a.

True

b.

False

True

Moderate

31. The quantity of labor supplied is dependent on the size of the working population and the wage rate.

a.

True

b.

False

True

Easy

32. Economic rents can lead to large wage differentials.

a.

True

b.

False

True

Moderate

33. Earnings of some highly skilled or highly specialized persons can be classified as economic rents.

a.

True

b.

False

True

Easy

34. The salary of an athlete like Peyton Manning is in part a reward for his unique ability-something economists call

economic rent.

a.

True

b.

False

True

Easy

35. Spending on an education is considered an investment because it involves a sacrifice of current income for higher

expected future income.

a.

True

b.

False

True

Moderate

36. An investment in yourself is an investment in what economists call human capital.

a.

True

b.

False

True

Easy

37. Expenditures for attending college can be viewed as an investment in human capital.

a.

True

b.

False

True

Moderate

38. The monetary return on a college education is considered economic rent.

a.

True

b.

False

Easy

39. One implication of human capital theory is that college graduates should earn substantially less than high school

graduates.

a.

True

b.

False

Easy

40. In reality, there is not one labor market, but many.

a.

True

b.

False

True

Moderate

41. After Hurricane Katrina, construction wages in New Orleans rose partly because of the loss of a working population.

a.

True

b.

False

True

Moderate

42. College graduates now earn nearly five times as much as their high school-educated peers but the gap is falling.

a.

True

b.

False

Moderate

43. College graduates now earn nearly twice as much as their high school-educated peers and that gap is increasing.

a.

True

b.

False

True

Moderate

44. Teenagers generally have high marginal revenue products because they have not completed their educations and have

little job experience.

a.

True

b.

False

Moderate

45. The argument that the minimum wage law has significantly increased teenage unemployment is not supported by

recent statistical analysis.

a.

True

b.

False

True

Easy

46. Recent data and analysis confirms that minimum wage laws have significantly increased teenage unemployment.

a.

True

b.

False

Moderate

47. In the view of human capital theorists, educational institutions are factories that take less productive workers as their

raw materials and create more productive workers as output.

a.

True

b.

False

True

Moderate

48. Teenage unemployment rates have consistently been much higher than the overall unemployment rate and black

teenagers have fared worse than white teenagers.

a.

True

b.

False

True

Easy

49. Teenage unemployment rates tend to be substantially higher than the overall unemployment rate.

a.

True

b.

False

True

Easy

50. Recent studies suggest that a rise in the minimum wage results in a substantial cut in the demand for teen labor.

a.

True

b.

False

Moderate

51. Wages in American industry are very high because of wage laws.

a.

True

b.

False

Easy

52. The government enacted minimum wage legislation to protect skilled workers.

a.

True

b.

False

Easy

53. The real minimum wage has increased significantly over the last 40 years.

a.

True

b.

False

Moderate

54. Unionism is much more prevalent in the United States than in other industrialized countries.

a.

True

b.

False

Moderate

55. A labor union is an organization representing workers in negotiations with employers over wages, benefits, and

working conditions.

a.

True

b.

False

True

Easy

56. Over 50 percent of all U.S. workers now belong to unions.

a.

True

b.

False

Easy

57. Less than 13 percent of U.S. workers belong to unions.

a.

True

b.

False

True

Easy

58. Union membership in the United States has fallen compared to what it was in the 1950s.

a.

True

b.

False

True

Easy

59. Union membership was relatively low during the Great Depression.

a.

True

b.

False

True

Easy

60. The primary reason unionization in the United States has been declining is the shift of the U.S. labor force into service

industries and out of manufacturing.

a.

True

b.

False

True

Moderate

61. The increasing share of women in the labor force may have contributed to the decrease in unionization.

a.

True

b.

False

True

Easy

62. American unions came under increasing pressure in the 1950s because of stronger competition both at home and

abroad.

a.

True

b.

False

Easy

63. In comparison to the U.S., Germany has a relatively low percentage of union membership.

a.

True

b.

False

Easy

64. Since a union represents individuals rather than firms, it cannot be considered a monopoly.

a.

True

b.

False

Easy

65. Union leaders who focus on increasing the size of their union will generally accept a wage just above the competitive

level.

a.

True

b.

False

True

Moderate

66. Unions often have the power to push wages above competitive levels.

a.

True

b.

False

True

Easy

67. A union acts like a monopoly seller of labor.

a.

True

b.

False

True

Easy

68. Union leaders who focus on increasing the size of their union will be aggressive in demanding higher wages.

a.

True

b.

False

Easy

69. The United Automobile Workers union can select the most favorable point on the demand curve for labor and the auto

manufacturing companies can do nothing in response.

a.

True

b.

False

Moderate

70. Unions can only achieve wage gains by sacrificing employment.

a.

True

b.

False

Moderate

71. One effect of having access to cheap foreign goods can be to raise workers’ real wages.

a.

True

b.

False

True

Difficult

72. In the U.S. the total amount of work time lost to strikes is less than the amount of work time lost for coffee breaks.

a.

True

b.

False

True

Moderate

73. Union members earn about the same wage level as nonunion members in the same industry.

a.

True

b.

False

Moderate

74. A monopsony is a market situation in which there is only one seller.

a.

True

b.

False

Moderate

75. A monopsony is a market situation in which there is only one buyer.

a.

True

b.

False

True

Moderate