ECON 202 Midterm and Final Exam
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
77.
If thediagram were relevantto an individual firm, we couldconclude that the firm is
A. a pure competitor in hiring labor.
B. a monopsonist in hiring labor.
selling its productin an imperfectly competitive market.
selling its productin a purelycompetitive market.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
Type: Graph
78.
Refer tothediagram. The MRC curveliesabove the labor supplycurve because
any number of workers can be hired at the going equilibrium wage rate.
the firm must lower product price to increase its sales.
C. the higher wage neededto attract additional workers must also be paid to the workers already employed.
D. there is an inverserelationship betweenwage rate andthe amount of labor employed.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
Type: Graph
79.
Refer tothediagram. Assumingno union or relevantminimum wage,thefirm represented will hire
A. Q2 workers and pay a W4 wage rate.
B. Q2 workers and pay a W1 wage rate.
Q3 workers and pay a W2 wage rate.
Q4 workers and pay a W1 wage rate.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
Type: Graph
80.
Refer tothediagram. An industrial (inclusive) union could increase employment in this labor market
A. by negotiating any wage rate between W1 and W4.
by negotiating a wage rate greater than W4.
only if it accepteda wage rate below W1.
only if it couldshift the labor demand curve rightward.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
Type: Graph
81.
Refer tothediagram. An industrial union couldmaximize employment by negotiating a wage rate of
W4.
W3.
C. W2.
D. W1.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-03 Demonstrate how monopsonya market with a single employer can reduce wages below competitive levels.
Test Bank: I Topic: MonopsonyModel
Type: Graph
Which of the following tactics is most associated with the demand-enhancement union model?
A. reducing theprice of inputs that aresubstitutes for union workers
B. lobbying for increasesin public expenditures on the product it is producing
restricting the number of workers allowedto work in the industry
increasing theprice of products that arecomplements for the one it is producing
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Inclusive unionismis practiced mostly by
professional andsemiprofessional employees.
small unions consisting of skilled workers, such as the bricklayers.
C. industrial unions.
D. craft unions.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
84.
Refer tothediagram. If this labor market is purely competitive,thewage rate and level of employment respectively will be
D andE.
C andE.
C. B andG.
D. B andF.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
85.
Refer tothediagram. If this labor market is monopsonistic,the wage rate and level of employment will be
B andE, respectively.
C andF, respectively.
B andG, respectively.
D. A andF, respectively.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
86.
Refer tothediagram. Assume that an inclusiveunion is formed tobargain with the monopsonisticemployer of the question.To what level can this union increase the wage rate without causing thenumber of jobs to decline below that which the monopsonist wouldotherwise have provided?
D minus A
D
C. C
D. B
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
87.
Refer tothediagram. If an inclusive union seeksto maximize the number of jobs available for its members, what wage rate will it seek toimpose on the monopsonist?
D minus A
F
C
D. B
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
A craft union attemptsto increase wage rates by
equating the MRP and the MRC curves.
B. shifting the labor supplycurve to the left.
shifting the labor supplycurve to the right.
shifting the MRP curve to the right.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Occupational licensing has much the same effect as
inclusive unionism.
B. exclusive unionism.
bilateral monopoly.
monopsony.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Occupational licensing
functions essentially the same as inclusiveunionism.
attracts large numbers of workers andtherefore depresses wages.
C. often restricts occupational entry and raises the incomes of license holders.
D. has been declared illegal in the majority of states.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
If an exclusiveunion is successful in restricting the supply of labor, the
wage rate will rise.
quantity of labor demanded will rise.
number of job opportunities in the firm or industrywill increase.
demand for labor curve will shift leftward.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
If an industrial union is formedto bargain with a monopsonisticemployer, then in this labor market,
the resulting wage rate will always be above the competitive level.
B. employment may either increaseor decrease.
employment will increase.
employment will decrease.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
The electricians' union is a goodexample of
exclusive unionism.
an industrial union.
how unions can simultaneously increase wage rates and employment by increasing the demandforlabor.
inclusive unionism.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Labor unions may attempt toraise wage rates by
increasing thesupply of labor.
B. forcing employers, under the threat of a strike, to pay above-equilibrium wage rates.
decreasing the demand for labor.
increasing the price ofcomplementary resources.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Construction workersfrequently sponsor politicallobbying in support of greater public spending on highways andpublic buildings. One reasonfor this is to
restrict the supplyof construction workers.
increase the elasticityof demand for construction workers.
C. increase the demand for construction workers.
D. increase the price of substitute inputs.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Unions often oppose increases in the prices of complementary inputs. (For example, truck drivers may oppose increases in taxes on diesel fuel.) They do this because increases in the prices of complementary inputs might
increase the supplyof competing labor throughthe output effect.
increase the supplyof competing labor through the substitution effect.
C. decreasethe demand for union labor throughthe output effect.
D. decreasethe demand for union labor throughthe substitution effect.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Craft unions
attempt toorganize workers at all skill levels in a firm or industry.
have been declared illegal by federal legislation.
C. only organize workerswho have a particular set of skills.
D. attempt to increase the supplyof their particular type of labor.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Labor unions are restrained in their wage demands because
A. legislationlimits annual increases in nominal wages to 6 percent.
B. the labor demand curve is downsloping.
marginal wage cost curves lie above labor supply curvesinmost labor markets.
most unions deal with monopsonists whohavesuperior bargaining power.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
99.
A shift in union labor demand from D1 toD2 in the diagram might be the result of
A. a refusal by union membersto buy theproduct they areproducing.
B. an increase in tariffs on products competingwith those produced by relevant union workers.
increases in the prices of complementary inputs.
a strike (work stoppage) by theunion.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
A union might increase the demandforthe labor services of its members by
A. decreasing thedemand for the productit is producing.
B. decreasingthe prices of complementary inputs.
decreasing the prices of substitute inputs.
increasing theprices of complementary inputs.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Authoritative estimates suggest that currently union workerson the average
achieve nowage advantage over nonunionworkers in the same occupation.
realize a 5 percent wage advantage over nonunionworkers in the same occupation.
realize a 20–30 percent wage advantage over nonunion workers in the same occupation.
D. realizea 15 percent wage advantageover nonunion workers in the same occupation.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
In a labor market characterizedbybilateral monopoly, thewage rate will
A. be logicallyindeterminate.
be established at the level desired bythe union.
be established at the level desired bythe employer.
always be established at the competitive level.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.
Test Bank: I Topic: BilateralMonopoly Model
If a singlelarge employer bargainswith an inclusiveunion, the resulting labor market model can best be described as
a cartel.
countervailing power.
C. a bilateral monopoly.
D. an internal labor market.
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Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.
Test Bank: I Topic: BilateralMonopoly Model
Bilateral monopolyoccurs where
A. a monopsonistic employer bargains with an inclusive union.
a monopsonistic employer bargainswith an exclusive union.
a craft union bargainswith a purely competitiveemployer.
an industrial union bargains with a purely competitive employer.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.
Test Bank: I Topic: BilateralMonopoly Model
105.
Refer tothelabor market diagrams.A monopsonistic labor market is represented by Figure
5.
4.
C. 3.
D. 2.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
106.
Refer tothe labor market diagrams. The tactics of exclusive unionism are portrayed in Figure
4.
3.
2.
D. 1.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
107.
Refer tothe labor market diagrams. The tactics of inclusiveunionism are shown in Figure(s)
5 only.
3 only.
C. 4 and 5.
D. 1 and 2.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
108.
Refer tothe labor market diagrams. The case of bilateral monopoly is represented by Figure
A. 5.
4.
2.
1.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.
Test Bank: I Topic: BilateralMonopoly Model
Type: Graph
109.
Refer tothe labor market diagrams. The economic impact of occupational licensing can best be demonstrated through Figure
4.
3.
2.
D. 1.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
110.
Refer tothelabor market diagram, where D is the labordemand curve, S is the labor supply curve,and MRC is the marginal resource(labor) cost curve. If this were a purely competitive labor market, the equilibrium wage rate and level of employment would be
$5 and 3, respectively.
$6 and 4, respectively.
C. $7and 5, respectively.
D. $8and 3, respectively.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
111.
Refer tothe labor market diagram, where D is the labor demandcurve, S is the labor supplycurve, and MRC is the marginal resource (labor) cost curve. If this were a monopsonistic labor market, the equilibrium wage rate and levelof employment would be
A. $5and 3, respectively.
$6 and 4, respectively.
$7 and 5, respectively.
$8 and 3, respectively.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
112.
Refer tothelabor market diagram, where D is the labordemand curve, S is the labor supply curve,andMRC is the marginalresource (labor)cost curve. If an inclusiveunion was formed and was able to get the monopsonist to agree to a $7wage rate, then the monopsonist would
reduce employment from 5 to 3 workers.
reduce employment from 5 to 2 workers.
C. increase employment from 3 to 5 workers.
D. not alter its level of employment.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
113.
Refer tothelabor market diagram, where D is the labordemand curve, S is the labor supply curve,andMRC is the marginalresource (labor)cost curve. If an inclusiveunion was able to get the monopsonist to pay a $6 wage rate, then
the supply curve would be perfectlyelastic for the first four workers,but the MRC curve would beunaffected.
the supply curve would be perfectly elasticfor all workers and the MRC curve would coincidewith it.
C. the supply curve would be perfectlyelastic for the first four workers andtheMRC would be $6 for the first four workers.
D. eight workers would be hired.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
114.
Refer tothelabor market diagram, where D is the labordemand curve, S is the labor supply curve,andMRC is the marginalresource (labor)cost curve. An inclusive union could increase thelevel of employment above that which the monopsonist would provide if it could get the monopsonist to agree toanywage rate
A. below $7.
B. between $5 and $8.
above $5.
above $8.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
LearningObjective: 17-04 Discuss how unions increase wage rates by pursuingthe demand-enhancement model, the craft union model, or the industrial union model.
Test Bank: I Topic: Three Union Models
Type: Graph
Minimum-wage legislation is less likely to have adverse effectson employment when the
A. affected labor market is monopsonistic.
economy has high unemployment.
derived demand for labor is shifting tothe left.
demand for labor is relatively elastic.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.
Test Bank: I Topic: The Minimum-Wage Controversy
Critics of minimum-wage legislation argue that it
A. keeps inefficient producers in business.
B. reducesemployment.
undermines incentives towork.
is deflationary.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.
Test Bank: I Topic: The Minimum-Wage Controversy
Many economists are critical of the minimum wage because they believe that it
A. hurts the efforts of labor unions.
B. reducesthe number of available job opportunities.
conflicts with policies designedto equalize the distribution of income.
causes labor shortages in affected markets.
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Blooms: Understand Difficulty: 02 Medium
Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.
Test Bank: I Topic: The Minimum-Wage Controversy
Unions might supporta higher minimumwage because
their constitutions obligate them to do so.