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c.
the superstar CPA will not earn as much as the superstar golfer because a superstar accountant can only work
with a limited number of clients per day, whereas millions of fans can enjoy the services provided by a
superstar golfer on a given day by watching a televised tournament.
d.
the superstar CPA will not earn as much as the superstar golfer because customers are unable to distinguish
superstar accountant from a mediocre accountant.
203. Sometimes wages are set above the equilibrium level when firms pay
a.
workers with more seniority higher wages than newly-hired workers.
b.
efficiency wages to reduce turnover.
c.
compensating differentials to workers who work the night shift.
d.
more attractive salespeople higher wages than less attractive salespeople.
204. Effective minimum-wage laws will most likely
a.
increase demand for labor.
b.
create a surplus of labor.
c.
increase incomes for all unskilled workers.
d.
decrease incomes for all unskilled workers.
205. Above-equilibrium wages caused by efficiency wages will most likely result in
a.
a shortage of labor.
b.
increased unemployment.
c.
compensating wage differentials.
d.
an decrease in the quantity of labor supplied.
206. When employers pay an efficiency wage above the market equilibrium wage, this will likely result in
a.
a surplus of labor.
b.
no unemployment.
c.
an increase in the number of people employed.
d.
an decrease in the quantity of labor supplied.
207. If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that
a.
the theory of efficiency wages holds true for that market.
b.
there is a powerful labor union representing workers in that market.
c.
workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up
in that market.
d.
All of the above are correct.
208. Which of the following statements is not correct?
a.
Some firms pay wages that are above the equilibrium wage.
b.
Workers sometimes form labor unions to push their wages up.
c.
Wages never deviate from the balance of supply and demand in the market for labor.
d.
The federal government mandates that employers pay their workers at least as much as the minimum wage.
209. Which of the following is not a consequence of above-equilibrium wages in a labor market?
a.
a surplus of labor
b.
unemployment
c.
more unionized jobs
d.
All of the above are consequences of above-equilibrium wages.
210. Which of the following is the most likely outcome of raising the minimum wage?
a.
an increase in both the quantity of labor supplied by workers and the quantity of labor demanded by firms
b.
an increase in the quantity of labor supplied by workers and a decrease in the quantity of labor demanded by
firms
c.
a decrease in the quantity of labor supplied by workers and an increase in the quantity of labor demanded by
firms
Figure 19-1
211. Refer to Figure 19-1. If the minimum wage in this market is $8, then
a.
employment is 10 million
b.
employment is 12 million
c.
there is a surplus of 1 million workers
d.
there is a surplus of 3 million workers
212. Refer to Figure 19-1. Suppose the local labor market was in equilibrium to begin with but then the largest local
employer decided to change its compensation scheme to $8 as shown. Which of the following compensation schemes
could the graph be illustrating?
a.
An efficiency wage.
b.
Discrimination.
c.
A compensating differential.
d.
The superstar phenomenon.
213. Refer to Figure 19-1. What is the change in employment of having the minimum wage at $8 instead of $7?
a.
2 million jobs are gained
b.
no jobs are gained or lost
c.
1 million jobs are lost
d.
3 million jobs are lost
214. Which of the following is true of minimum-wage laws?
a.
They affect skilled workers’ wages.
b.
They create above-equilibrium wages for some unskilled workers.
c.
They create a shortage of unskilled labor.
d.
They negatively affect the employment of skilled workers.
215. Minimum wage laws
a.
creates a surplus of labor in markets where the equilibrium wage is above the minimum wage.
b.
cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place.
c.
are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets.
d.
All of the above are correct.
Figure 19-2
216. Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. The original
equilibrium wage is $10. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $12.50,
then there will be an excess
a.
demand of 100 workers.
b.
demand of 300 workers.
c.
supply of 100 workers.
d.
supply of 300 workers.
217. Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. The original
equilibrium is at $10. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $12.50,
then employment is
a.
500
b.
600
c.
700
d.
800
218. Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. If the minimum
wage were $7.50, employment in this market would be
a.
400
b.
500
c.
600
d.
700
Figure 19-3
The manufacturing labor market.
219. Refer to Figure 19-3. Suppose the manufacturing labor market, which is non-unionized, is in equilibrium at a wage
equal to $25. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market
and negotiates a wage of $30 per hour. Because of the union,
a.
80 people who were once employed are now unemployed.
b.
40 people who were once employed are now unemployed.
c.
80 people who were once unemployed are now employed.
d.
40 people who were once unemployed are now employed.
220. Refer to Figure 19-3. Suppose the manufacturing labor market, which is non-unionized, is in equilibrium at a wage
equal to $20. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market
and negotiates a wage of $30 per hour. After the workers become unionized, how many workers do manufacturing firms
collectively hire?
a.
160 workers
b.
200 workers
c.
240 workers
d.
There is not enough information to determine the number of workers.
Figure 19-4
221. Refer to Figure 19-4. If a union is successful in reducing supply from S1 to S2, the wage will
a.
rise from $15 per hour to $18 per hour and 100 fewer people will be employed.
b.
rise from $15 per hour to $18 per hour and 200 more people will be employed.
c.
fall from $15 per hour to $12 per hour and 100 more people will be employed.
d.
fall from $18 per hour to $15 per hour and 200 fewer people will be employed.
Figure 19-5
222. Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what are the equilibrium wage and
quantity of labor?
a.
$5 and 250
b.
$6 and 200
c.
$8 and 100
d.
$8 and 400
223. Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded of labor
if a minimum wage of $8 per hour is imposed on this market?
a.
100
b.
200
c.
300
d.
400
224. Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the surplus of labor if a
minimum wage of $8 per hour is imposed on this market?
a.
100
b.
200
c.
300
d.
400
225. Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, what is the surplus of labor if a
minimum wage of $8 per hour is imposed on this market?
a.
100
b.
200
c.
300
d.
400
226. Refer to Figure 19-5. Suppose this market begins with demand for labor, D1, and supply of labor, S1, but the labor
supply curve shifts to S2. Which of the following statements best describes the results?
a.
Fewer workers are employed, but those who are employed earn a higher wage.
b.
More workers are employed but they earn a lower wage.
c.
More workers are employed and they earn a higher wage.
d.
The same number of workers are employed and they earn a higher wage.
227. Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, which of the following could be
considered an efficiency wage?
a.
$4
b.
$5
c.
$6
d.
$7
228. First grade teachers who work in Lynn, Massachusetts’s (a large, low income city north of Boston) public schools
earn more than first grade teachers who work in private schools in more affluent communities north of Boston. Lynn
teachers belong to a teachers' union. Which statement best explains the scenario described above?
a.
Lynn school teachers receive a compensating differential because they work in a more difficult environment,
and they receive higher than market equilibrium wages because they are members of a teachers' union.
b.
Lynn school teachers receive a compensating differential because they work in a more difficult environment,
but they do not receive higher than market equilibrium wages because they are members of a teachers' union.
c.
Lynn school teachers do not receive a compensating differential because they work in a more difficult
environment, but they do receive higher than market equilibrium wages because they are members of a
teachers' union.
d.
Lynn school teachers do not receive a compensating differential because they work in a more difficult
environment, and they do not receive higher than market equilibrium wages because they are members of a
teachers' union.
229. A worker association that bargains with employers over wages and working conditions is called
a.
a strike.
b.
an oligopoly.
c.
a firm.
d.
a union.
230. The organized withdrawal of labor from a firm by a union is called
a.
a strike.
b.
a bargain.
c.
a monopoly.
