ECON 202 EXAM STUDY GUIDE
Test Bank: I Topic: Labor Unions and Their Impacts
Which of the following might be expectedto increase union membership?
A. increased labor force participation by women and young people
B. decreased imports of manufactured goods
increased substitution of capital for labor in theproduction process
continued growthof service-related industries
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Suppose that under its collective bargaining agreement, the ABC Corporation can hire nonunionworkers, but such workers must join the union within30 days. This agreementembodies
an open shop.
a closed shop.
C. a union shop.
D. an agency shop.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
The XYZ Corporation's collective bargaining agreement indicates that it may hire either union or nonunion workersand that the latter are under no obligation to join theunion. This agreementembodies
A. an open shop.
a closed shop.
a union shop.
an agency shop.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
State right-to-work laws
permit employers tohire nonunion workersonly if union labor is unavailable.
prohibit employersfrom discriminating against minority groups in hiring workers.
prohibit unions from discriminating against minority groups in recruiting members.
D. make compulsory union membership(for example, a union shop) illegal.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
The Overnight Construction Company has just signed a collective bargaining contract in whichit agrees that all workers it hires must be union members in goodstanding at the time they are hired.This provision reflects
preferential hiring.
a maintenance-of-membership shop.
a union shop.
D. a closed shop.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
State right-to-work laws
have been enactedbyover one-half of thestates in the nation.
make yellow dog contracts illegal.
allow for union shops while prohibiting closed shops.
D. make union andagency shops illegal.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Under an agency shop agreement, firms can hire
only union workers.
nonunion workers, but these workersmust join the union withina specified period, say, 30 days.
C. nonunion workers,but these workers must join theunion within a specified period,pay union dues, or donate an equivalent amount tocharity.
D. only nonunion workers.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Suppose SteveStone takes a job with ZemoManufacturing, whose labor contract with its unions has an agency shop clause (30 days). Steve
must join the union within30 days.
can decide against joining theunion and place theunion dues in a retirement account.
can decide against joining theunion but then will not receive any union-negotiatedwage increases.
D. can decide against joining the union but nevertheless will have to pay union dues or donate an equivalent amount to an approved charity.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Unions prefer
open shops to agency shops.
agency shops to closed shops.
agency shops tounion shops.
D. union shops toagency shops.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Which of the followingis illegal under federallabor law?
A. closed shops
agency shops
union shops
state right-to-work laws
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
In a labordispute in which the existing contract has expired, a
A. firm can legallylock up unrulyworkers.
B. firm can legallylock out union workers.
union can legally restrictcustomer access to the firm.
union can legally restrictphysical access bymanagement tothefirm.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Which of the following bargaining tactics is illegal?
a lockout
a strike
C. refusal tomeet with union representatives
D. hiring strikebreakers
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Private-sector strikes andlockouts typically end because
the federal government intervenes with a back-to-work order.
the parties eventually tire of bickering.
C. they are costly in terms of lost profitsand lost wage income.
D. the parties rely heavily on outside arbitration.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Collective bargaining occurs under a frameworkof rules established in the
Sherman Act.
Clayton Act.
C. National Labor Relations Act.
D. Employer-EmployeeDispute Act.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
A major functionof the National Labor RelationsBoard is to
monitor potentially inflationary increases in wages.
provide compulsoryarbitration so that strikesand lockouts do not occur.
set annual wage increases on an industry-by-industry basis.
D. investigate andrule on charges of unfair labor practicesby either management or unions.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Which of the following is correct?
The federal government can delay any strike for 80 days.
About 3 percent of total work time is lost in the United States because of strikes.
Work time lost may overstate the cost of a strike if the work stoppage disrupts production in related industries.
D. Work time lost may overstate the cost of a strike if nonstruckfirms increase their production.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Those whofeel that unions positively affect productivity andefficiency argue that unions are
A. "voice mechanisms"that reduce labor turnover.
"exit mechanisms"that reduce labor turnover.
"voice mechanisms"that accelerate labor turnover.
"exit mechanisms"that accelerate labor turnover.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
By reducing labor turnover, unions may increase productivity because alower turnover rate
A. results in a less-experienced workforce.
B. increases the incentivefor firms toprovide training to their workers.
allows firms to employ a greaternumber of younger,more energetic workers.
increases the incentive for firms tosubstitute labor for capital in the production process.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Some economists claim that unions reduce economicefficiency by
providing a voice mechanism for workers.
insisting that promotions be based on ability rather than seniority.
C. imposing restrictions on the kinds of jobs workers may perform.
D. increasing worker turnover.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Unions may increase productivity by
providing an exit mechanism for workers.
increasing worker turnoverso that younger workers are more likelyto be employed.
reducing theamount of capital used per worker.
D. providinga voice mechanismfor workers.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Featherbedding refers to
A. a situationin which a union forces an employer tohire union workersin preference tononunion workers.
B. the requirement that unneeded workers be retained on a job.
the refusal by one union tohandle or transportgoods produced by workers in another union.
disputes among two or more unions as to whichwill perform certain jobs.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Available research suggests that the union wage advantagediminishes the national output by
15 percent.
8 percent.
3 percent.
D. less than 1 percent.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
Suppose a worker feels unhappy with his job andconsequently quits. This illustrates
the voice mechanism.
featherbedding.
C. the exit mechanism.
D. blacklisting.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-09 (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economiceffects of unions.
Test Bank: I Topic: Labor Unions and Their Impacts
218.
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LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: I Topic: Market Equilibrium
Allocative efficiency is concerned with
A. producing the combination of goods most desired by society.
achieving the full employment of all available resources.
producing everygood with the least-cost combination of inputs.
reducing the concavity of the production possibilities curve.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: I Topic: Market Equilibrium
Allocative efficiency involves determining
which output mix will result in themostrapid rate of economic growth.
which production possibilities curve reflects the lowest opportunity costs.
C. the mix of output that will maximizesociety's satisfaction.
D. the optimal rate of technological progress.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-04 Relate how supply and demand interactto determine market equilibrium.
Test Bank: I Topic: Market Equilibrium
The equilibrium price and quantityin a market usuallyproduce allocative efficiency because
A. all consumers whowantthe good aresatisfied.
B. marginal benefit andmarginal cost are equal at that point.
equilibrium ensures an equitabledistribution of output.
the excess of goods produced at equilibrium guarantees that all will have enough.
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Blooms: Understand Difficulty: 02 Medium
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
In the foreign exchange market,ifAmericans significantly increase their investments in securities in Britishfinancial markets,oneeffect is that the dollar will tend to depreciate against the pound.
TRUE
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 03-05 Explain how changes in supply and demand affect equilibrium prices and quantities.
Test Bank: II Topic: Changes in Supply, Demand, and Equilibrium
If the organizers of a major sports event set the ticket price above theequilibrium level,thenscalping will develop ina secondary market for tickets.
FALSE
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Blooms: Remember Difficulty: 01 Easy
LearningObjective: 03-06 Identifywhat government-set prices are and how they can cause product surpluses and shortages.
Test Bank: II Topic: Application: Government-Set Prices
The presence of ticket scalpers in popular events likeconcerts will hurt consumers who buy from the scalpers.
FALSE
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Blooms: Remember Difficulty: 01 Easy
LearningObjective: 03-06 Identifywhat government-set prices are and how they can cause product surpluses and shortages.
Test Bank: II Topic: Application: Government-Set Prices
In cases where sellers have a fixed number of units of a product to sell, thesupply curve will be horizontal.
FALSE
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Blooms: Remember Difficulty: 01 Easy
LearningObjective: 03-06 Identifywhat government-set prices are and how they can cause product surpluses and shortages.
Test Bank: II Topic: Application: Government-Set Prices
In cases where the supply curve is vertical, any change in demandwillcause only a change in price but no change in quantity.
TRUE
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Blooms: Remember Difficulty: 01 Easy
LearningObjective: 03-06 Identifywhat government-set prices are and how they can cause product surpluses and shortages.
Test Bank: II Topic: Application: Government-Set Prices
Chapter 03 Demand, Supply, and Market Equilibrium Answer Key
Multiple Choice Questions
A market
reflects upsloping demandand downsloping supply curves.
entails theexchange of goods, but not services.
C. is an institution that brings together buyers and sellers.
D. always requires face-to-facecontact between buyer and seller.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-01 Characterize and give examplesof markets.
Test Bank: I Topic: Markets
Markets, viewed from the perspective of the supplyand demand model,
A. assume many buyers andmanysellers of a standardizedproduct.
assume market power so thatbuyers and sellers bargain with one another.
do not exist in the real-world economy.
are approximated by markets in which a single seller determines price.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-01 Characterize and give examplesof markets.
Test Bank: I Topic: Markets
The law of demand states that, other things equal,
A. priceandquantity demanded are inversely related.
the largerthe number of buyers in a market, the lower will be productprice.
price and quantity demanded are directly related.
consumers will buy more of a productat high prices than at low prices.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Graphically, the market demand curve is
steeper than any individual demandcurve that is part of it.
greater than the sum of the individual demand curves.
C. the horizontal sum of individual demand curves.
D. the verticalsum of individual demand curves.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
The demandcurve shows the relationship between
money income andquantity demanded.
price and production costs.
C. priceandquantity demanded.
D. consumer tastes and quantity demanded.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Economists use the term "demand" to refer to
a particular price-quantity combination on a stable demand curve.
the total amount spent on a particular commodity over a fixed time period.
an upslopingline on a graph that relates consumer purchases andproduct price.
D. aschedule of various combinations of market prices and amounts/quantities demanded.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
The relationship between quantity supplied and priceis , and therelationship between quantity demanded and price is .
A. direct; inverse
inverse; direct
inverse; inverse
direct; direct
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LearningObjective: 03-02 Describedemand and explain how it can change. LearningObjective: 03-03 Describesupply and explain how it can change.
Test Bank: I Topic: Demand Topic: Supply
When the price ofa product increases, a consumer is able to buy less of it with a given money income.This describes the
cost effect.
inflationary effect.
C. income effect.
D. substitution effect.
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LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
A demand curve
A. shows the relationship between price and quantity supplied.
B. indicates thequantity demanded at each price in a series of prices.
graphs as an upsloping line.
shows the relationship between income and spending.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
An increase in the price ofa product will reduce the amount of it purchased because
the higher price will signal to consumers that thegood is of low quality.
the higher pricemeans that real incomes have risen.
C. consumers will substitute other products for the one whose price has risen.
D. consumers substitute relatively high-pricedforrelatively low-pricedproducts.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
When the price ofa product rises, consumers with a given money income shift their purchases toother products whose prices are now relatively lower. This statement describes
an inferiorgood.
the rationing function of prices.
C. the substitution effect.
D. the income effect.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
When the price ofa product falls, the purchasingpower of our money income rises and thus permits consumersto purchase more of theproduct. This statement describes
an inferiorgood.
the rationing function of prices.
the substitution effect.
D. the income effect.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Because successive units of a goodproduce less and less additional satisfaction, the price must fall toencourage a buyer to purchase more units of the good. This statementis most consistentwith which explanation for thelawof demand?
A. diminishing marginal utility
the rationing function of prices
the substitution effect
the income effect
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Topic: Demand
According to the concept of diminishing marginal utility,consumers will purchase more of a good when the price falls because
substitutes are relatively more expensive.
consumers’ real income has increased.
C. the marginal benefit of additional units of the goodnowoutweigh the marginal cost.
D. the goodis now perceived as having higher quality.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
15.
(Advanced analysis) The equationfor the demand curve in the below diagram
is P = 70 - Q.
is P =35 - 2Q.
C. is P= 35 - .5Q.
D. cannot be determined from the information given.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
The construction of demand and supplycurves assumes that theprimary variable influencing decisions to produce and purchase goods is
A. price.
expectations.
preferences.
incomes.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
One reasonthat the quantitydemanded of a good increases when its price falls is that the
price decline shifts thesupply curve tothe left.
lower priceshifts the demand curve to the left.
lower priceshifts the demand curve to the right.
D. lower price increases the real incomesof buyers, enablingthem to buy more.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 03-02 Describedemand and explain how it can change.
Test Bank: I Topic: Demand
Steve went to his favorite hamburger restaurant with $3, expecting tobuya $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Stevebought two hamburgers and a soda. Steve'sresponse to the decrease in the price of hamburgers is
best explainedby
A. the substitution effect.
B. the income effect.
the price effect.
a rightwardshift in the demandcurve for hamburgers.