Chapter 29 Unions and Labor Market Monopoly Power 945
97) A labor union composed of workers in the same industry is called
A) a craft union. B) an industrial union.
C) a company shop. D) a guild.
98) The Taft Hartley Act outlawed all of the following practices EXCEPT
A) secondary boycotts. B) union shops.
C) closed shops. D) sympathy strikes.
99) A plumbers union is an example of
A) an industrial union. B) a craft union.
C) skilled workers union. D) auxiliary union.
100) A union of all workers from a particular industry is a(n)
A) craft union. B) conglomerate union.
C) industrial union. D) expansive union.
101) A situation in which union membership is required before a person can be hired is a
A) closed shop. B) union shop.
C) agency shop. D) restricted shop.
102) The 1935 Act granting workers the right to form unions and bargain collectively is known as
A) the National Labor Relations Act or Wagner Act.
B) the Wheeler Act.
C) the Taft Hartley Act.
D) the Modernization Act.
103) A situation in which a worker can be hired without being in a union but has to join a union after
a specified period of time is a
A) closed shop. B) union shop.
C) open shop. D) restricted shop.
104) A right to work law is
A) a federal law making the closed shop illegal.
B) a federal law making the union shop illegal.
C) a state law making the union shop illegal.
D) a state law making the open shop illegal.
105) Suppose that under its collective bargaining agreement the XYZ Corp. can hire nonunion
workers, but these workers must join the union within 60 days. This agreement is an example of
A) an open shop. B) a closed shop.
C) a company union. D) a union shop.
106) Right to work laws
A) make it illegal to require union membership as a condition of continuing employment in a
particular firm.
B) make it illegal to require a union member to work abroad.
C) make it illegal for a state to pass any laws regarding union membership.
D) make a closed shop arrangement a legal condition that allows employees to obtain a
particular job.
107) Suppose that under its collective bargaining agreement, the XYZ Co. can only hire union
members in good standing at the time of hiring. XYZ Co. is
A) a union shop. B) a closed shop.
C) an open shop. D) a company union.
108) Which of the following is FALSE regarding unions?
A) The American Federation of Labor (AFL), composed of craft unions, was formed in 1886
under the leadership of Samuel Gompers.
B) For a period after World War I the government temporarily stopped protecting labor s
right to organize.
C) During the Great Depression, legislation was passed that made collective bargaining
illegal.
D) The AFL and the CIO merged in 1955.
109) State right to work laws
A) prohibit discrimination in hiring.
B) force companies to submit to Equal Employment Opportunities Commission arbitration in
disputes.
C) encourage companies to hire minorities.
D) make compulsory union membership illegal.
110) All of the following are true regarding the current status of labor unions EXCEPT
A) organized labor s heyday occurred from the 1940s through the 1970s.
B) part of the explanation for the decline in union membership has to do with the shift away
from manufacturing.
C) the deregulation of certain industries has also contributed to a decline in unionism.
D) recent labor laws have diminished worker s rights.
111) Currently about what percentage of the civilian labor force is unionized in the United States?
A) 6 percent B) 12 percent C) 30 percent D) 70 percent
112) What time period in U.S. history do we generally recognize as the heyday of labor union
membership?
A) 1900s 1920s B) 1920s 1940s C) 1940s 1970s D) 1970s 2000s
113) Which of the following is NOT correct regarding the status of U.S. labor unions?
A) Today fewer than one in eight workers is a union member.
B) A key reason for the decline in union membership is the relative decline in manufacturing
jobs as a share of total employment.
C) Greater domestic and global competition has had a part in bringing about a decline in
unions.
D) Global trade has increased the number of union members in the United States.
114) A work stoppage by a union in solidarity with another union s cause is known as a
A) secondary boycott. B) sympathy strike.
C)
j
urisdictional dispute. D) primary boycott.
115) Since the 1960s, the share of the labor force that is unionized in the United States has
A) increased except for the government sector.
B) increased.
C) declined.
D) declined except in the private sector.
116) The largest labor union in the United States is the
A) National Education Association.
B) International Brotherhood of Teamsters.
C) United Food and Commercial Workers International Union.
D) Service Employees International Union.
117) Collective bargaining
A) has nothing to do with fringe benefits.
B) is bargaining between unions and management.
C) is illegal in many states.
D) is practiced in non union related disputes.
118) Distinguish between craft unions and industrial unions.
119) Discuss the significant laws passed since the Great Depression that affect labor management
relations.
120) Distinguish between a closed shop and a union shop. Are either or both shops legal? Explain.
121) What was the overall trend of U.S. union membership beginning the 1960s? What was the main
reason behind that trend?
29.2 Union Goals and Strategies
1) The impact of a strike is limited to the ability of the union to
A) prevent replacement workers from continuing their work.
B) lower its wage demands of non union members.
C) control the pension fund.
D) none of the above.
2) Which of the following would increase the demand for union labor?
A) Increasing worker productivity
B) Increasing the demand for union made goods
C) Decreasing the demand for non union manufactured goods
D) All of the above
3) The most powerful tool unions have at their disposal when bargaining with management is
A) the Taft Hartley Act. B) the ability to strike.
C) the secondary boycott. D) the power of pure competition.
4) If a union succeeds in forcing employers in a perfectly competitive product market to increase
wages above the equilibrium level, then the level of unemployment
A) will increase. B) will remain constant.
C) will decrease. D) may increase or decrease.
5) One method unions use to ration available jobs among excess workers is
A) lengthy apprenticeships. B) to hire only white collar workers.
C) collective bargaining. D) refuse to unionize.
6) Unions face a trade off between higher wages and
A) fewer available positions. B) more available positions.
C) equipment. D) none of the above.
7) If a union negotiates and obtains a wage rate above the competitive wage rate,
A) it must find a way to make workers more productive.
B) employment in the union sector will increase relative to employment in the nonunion
sector.
C) it must find a way to ration jobs among the excessive number of workers who wish to
work in the union sector.
D) unemployment will increase in the nonunion sector relative to the union sector.
8) If a union establishes by collective bargaining a wage rate that is above a competitive market
equilibrium wage rate, then
A) an excess quantity of labor will be supplied.
B) a shortage of labor will result.
C) there will be an increase in total employment.
D) management will want to substitute labor for machinery.
9) If a union sets the wage rate to maximize the total wage receipts of its members, the price
elasticity of demand for labor would be
A) zero. B) numerically equal to 1.
C) finite, but greater than 1. D) positive, but less than 1.
10) If a union sets the wage rate to maximize the total wage receipts of its members, the marginal
revenue would be
A) zero. B) negative.
C) positive, but greater than 1. D) positive, but less than 1.
11) A union can induce a rise in equilibrium wages in a unionized industry by
A) not striking.
B) successfully increasing the demand for union labor.
C) successfully decreasing the demand for union labor.
D) reducing the marginal revenue product of firms employing union labor.
12) When a group of workers forms a union, they introduce an element of
A) pure competition into the labor market. B) monopoly into the labor market.
C) monopoly into the product market. D) monopsony into the product market.
13) If a union succeeds in increasing the wage rate by restricting labor supply, then
A) all of its members will be better off. B) some members may lose their jobs.
C) all of its members will be worse off. D) more of its members will be employed.
14) If a union wishes to maximize the number of union members employed, it will
A) accept the competitive wage.
B) set a wage below the competitive wage.
C) set a wage where the elasticity of demand for labor equals one.
D) set a wage above the competitive wage.
15) Consider the above figure, which displays the situation faced by a union employed by a firm
with the labor demand curve D. This union has total membership of Q 3workers, but its single
wage setting goal is to maximize wages for the Q1members with the most seniority. If the
union managers accomplish this goal, what occurs?
A) All of the union members will be employed at the wage rate W3.
B) All of the union members will be employed at the wage rate W1.
C) The senior members of the union will receive a wage equal to W3
,
but Q3union members
will be unemployed.
D) The select group of senior union members will have work and receive a wage of W 3
,
but
Q3Q1union members will not be employed by the firm.
16) In the above figure, if the union has Q2members and wants to ensure that all members have
jobs, it will set wage equal to
A) W1. B) W2.
C) W3. D) none of the above.
17) Look at the above figure. A union wishes to maximize wage income for employed union
members, so it should aim for a wage rate ________ and a number of employed members equal
to
A) W1
,
Q3B) W2
,
Q2C) W3
,
Q1D) W4
,
Q3
18) When unions raise wages beyond what productivity increases would permit,
A) more union workers are employed.
B) there are higher wages for all union members.
C) there is a redistribution of income from low to high seniority workers.
D) nonunion workers wages in the economy also increase.
19) If a union limits its size to the number of employed members it had when the union was first
formed, over time there will be
A) an increase in the supply of union labor.
B) falling wages as demand for workers increases.
C) rising wages as demand for workers increases and the supply increases proportionally.
D) rising wages as demand for workers increases but some potential workers are denied a
place in the union.
20) A tariff on imported goods produced by an unlimited industry could benefit the members of the
domestic union since the tariff would most likely
A) lower the price of the output that workers purchase.
B) lower the domestic production of the good and increase wages.
C) increase the demand for domestic, union made goods.
D) decrease the cost of the imported goods.
21) Methods that are sometimes used by unions to increase wages of union workers include
I. advertising to increase the demand for union made goods.
II. campaigning against imports.
A) I only B) II only C) Both I and II D) Neither I nor II
22) Unions can increase labor productivity by
A) maximizing the number of workers in the union.
B) reducing the supply of workers over time.
C) reducing conflicts between workers and management.
D) reducing the quantity of poorly made imports into the country.
23) A union sponsored television campaign urging U.S. consumers to Look for the union label is
designed to
A) increase the productivity of union labor.
B) increase the derived demand for union labor by shifting consumer preferences in favor of
union made goods.
C) raise wages by restricting the supply of union workers.
D) remind consumers that if they do not buy union made goods, unions will strike.
24) All of the following can raise wages of union members EXCEPT
A) increasing the demand for non union made goods.
B) increasing the demand for union made goods.
C) limiting union membership over time.
D) increasing the productivity of union workers.
25) In an analytical sense, unions can be thought of as
A) setters of minimum wages. B) monopoly buyers of workers.
C) generators of inflation. D) monopsonies.
26) Collective bargaining contracts between management and the union negotiators
A) also apply to the workers who are not members of the union.
B) usually are settled only after a strike.
C) cover wages only.
D) cover wages and fringe benefits only.
27) The ultimate threat of a union is
A) the lockout.
B) the President s power granted by the Taft Hartley Act.
C) the unity of spirit of the union membership.
D) the strike.
28) A strikebreaker is
A) a temporary worker hired by a company to replace a union member who is striking.
B) when the President imposes a cooling off period.
C) someone who engages in featherbedding.
D) a secondary boycott.
29) The purpose of a strike is
A) to obtain higher wages for union members only.
B) to solve jurisdictional disputes.
C) to obtain a closed shop.
D) to force management to accept the union s proposed contract terms.
30) Other things equal, granting unemployment benefits or welfare benefits to striking workers
A) reduces the likelihood of a strike since management will be more cooperative.
B) reduces the costs of a strike to workers and will increase their willingness to strike.
C) reduces the likelihood of a strike since union workers make wages significantly above
unemployment benefits or welfare payments.
D) increases the willingness of management to permit a strike.
31) Strikes occur in about ________ percent of the labor management negotiations.
A) 2 B) 16 C) 25 D) 40
32) Suppose a union successfully negotiates a wage rate for its members that is above the
competitive wage rate, then
A) employment in the union sector will increase.
B) the union must find a way to make union workers more productive.
C) the union must also negotiate a fringe
b
enefit package that the membership will like.
D) the union must find a way to ration jobs among the excessive number of workers who
wish to work at the negotiated wage.
33) Suppose a union successfully negotiates a wage rate for its members that is above the
competitive wage rate, then
A) the quantity of labor demanded will be greater than the quantity supplied.
B) the quantity of labor demanded will be less than the quantity supplied.
C) the labor market will be in equilibrium.
D) it is impossible to tell whether or not the labor market will be in equilibrium without more
information.
34) Suppose a union successfully negotiates a wage rate for its members that is above the
competitive wage rate, then
A) there will be downward pressure on the wage rate until equilibrium is established.
B) right to work laws become effective.
C) there is a shortage of jobs.
D) there is excess demand for labor.
35) Suppose a union successfully negotiates for its members a wage rate that is above the
competitive wage rate, then
A) there will be a surplus of jobs.
B) antitrust laws become effective.
C) there will be downward pressure on the wage rate until equilibrium is established.
D) there will be an excess supply of labor.
36) Unions can ration the excess supply of labor generated by the establishment of a wage that is
above the competitive wage by
A) lengthening the time period for apprenticeship programs.
B) lowering union dues.
C) encouraging older workers to take early retirement.
D) having more intensive membership drives to ensure a larger proportion of workers are
covered by the union contract.
37) If a union is successful in negotiating a wage rate which is above the market clearing wage, then
which of the following would not occur?
A) The higher wages attract more workers leading to a shortage of jobs.
B) Management may replace part of the workforce with machinery.
C) To handle the surplus of labor the union will form a closed shop.
D) The union may shift the supply of labor curve by developing methods to ration jobs.
38) The leadership of unions must recognize that they face
A) an economic system that is hostile to the interests of workers.
B) a no win situation whenever they think a strike is necessary.
C) a fundamental trade off between higher wages for members and higher taxes for
members.
D) a fundamental trade off between higher wages for members and fewer jobs for members.
39) A union that pursued a policy of restricting entry over time into the union would
A) see real wages hold constant over time at whatever premium they could get initially.
B) also have to negotiate to be sure that all the members were able to find jobs.
C) generate rising real wages for its membership over time as long as demand for union
workers increased over time.
D) fail to obtain benefits for their workers in excess of what the workers would get under
open markets.
40) Which of the following is not a wage or employment strategy that a union would follow?
A) Set a maximum wage rate such that a shortage of workers will result.
B) Set a wage rate such that all workers that want to find a job can find a job.
C) Set a wage rate that will maximize the income of its members.
D) Set a wage rate that will maximize the income of only some of its members.
41) If the union wants to follow the strategy of maximizing member s income, wages should be set
A) above the market clearing wage rate.
B) such that all that wanted to work could work.
C) at the market clearing wage rate.
D) at the point at which the price elasticity of demand equals 1.
42) If the goal of the union is to maximize member income, then
A) a wage rate will be set in the inelastic portion of the demand curve.
B) a wage rate will be set at the point at which the elasticity of demand equals 1 and marginal
revenue is positive.
C) a wage rate will be set at the point at which marginal revenue equal zero.
D) the supply of labor must be inelastic.
43) Refer to the above figure. If the union wants to maximize the total income of its members who
work, it will set wages at
A) W1. B) W2. C) W3. D) W4.
44) Refer to the above figure. Suppose there are L4workers in the union, and the union wants all of
its workers to have a job. It will set the wage rate at
A) W1. B) W2. C) W3. D) W4.
45) Refer the above figure. An increase in labor productivity is likely to stimulate and shift the
labor demand curve to
A) the right and hence increase union wages per year.
B) to the left and hence increase union wages per year.
C) the right and hence lower union wages per year.
D) None of the above is likely to happen.
46) Refer the above figure. Suppose the union sets the wage rate that will maximize the total income
for the members who work. The total wages will be
A) W1iL4O. B) W2aL3O. C) W3
b
L2O. D) W3
b
hW1.
47) Refer to the above figure. Suppose there are L4workers in the union. If the union wants to set a
wage rate of W3, it must
A) determine which of its members will earn W3and which will earn W1.
B) accept that L4L2members will not be able to find work in the industry.
C) accept that L3L2workers will have to get a lower wage equal to W2and L4L3
workers will have to get a wage of W1.
D) determine the most efficient way to get the firms to accept the wage and hire all L4
workers.
48) A union can achieve higher wages without accepting lower levels of employment of members
by
A) striking.
B) increasing the productivity of its members.
C) increasing the amounts of imports.
D) increasing the difficulty of its apprenticeship program.
49) A union can achieve higher wages without accepting lower levels of employment of members
by
A) promoting right to work laws.
B) increasing the demand for substitute products made by non union labor.
C) increasing conflicts with management.
D)
b
eginning a campaign against buying foreign imports.
50) Unions tend to want import restrictions because
A) imports are usually of inferior quality.
B) they can increase the wages for union workers by increasing the productivity of union
workers when the workers aren t worried about foreign competition.
C) the restrictions also reduce the number of immigrants that can enter the country and
decrease the supply of nonunion labor.
D) the restrictions decrease the demand for non union made goods, increasing the demand
for union made goods.
51) The primary purpose of a strike by labor unions is to
A) force the firm out of business.
B) extract from the firm better and improved conditions of work or contract terms.
C) secure a larger market share for the firm.
D) ensure they get paid for striking.
52) Strikebreakers
A) can reduce the bargaining power of a union.
B) can strengthen the bargaining power of a union.
C) make a union negotiation invalid.
D) make a strike permanent.
53) The figure illustrates all of the following EXCEPT
A) if the union establishes by collective bargaining a wage rate that exceeds equilibrium at
point Wuan excess quantity of labor will be supplied.
B) if the union establishes by collective bargaining a wage rate that exceeds equilibrium, an
excess quantity of labor will be demanded.
C) there is a trade off union leadership faces: Higher wages inevitably mean a reduction in
total employment a smaller number of positions.
D) at higher wages, more workers will seek to enter the industry, thereby adding to the
surplus of workers where QSis greater then QD.
54) Which of the following is NOT a union wage and employment strategy?
A) ensuring employment for all members of a union
B) maximizing aggregate income of workers
C) maximizing wage rates for some workers
D) minimizing the adjusted gross income of non members
55) The ultimate bargaining tool for unions is
A) the strike. B) labor s Magna Carta.
C) the Taft Hartley Act. D) the sympathy strike.