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ECON EXAM STUDY GUIDE

Test Bank: II Topic: Three Union Models

Strict occupational licensing requirements are favored by a(n)


A. demand-enhancing union.

B. craft union.

inclusive union.

industrial union.


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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: II Topic: Three Union Models


Suppose a powerfullabor union negotiatesa wage for its membersabove the equilibrium wage rate in a nonunionizedmarket. A likely result of this is that


the union will have difficultyrecruiting new members.

union members will be able toworkmore overtime than before.

this firm will make upforthe higher wage rate by expandingoutput.

D. not everyone whowants to work at the new wage will be able tofind jobs.


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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.

Test Bank: II Topic: Three Union Models


A decrease in the supply curve of nurses could be accounted for by all of the following except a(n)


increase in the rewards availableinother comparable occupations.

increase in the training requirements for nurses.

reduction in the number of nursingschools.

D. cut in the wages of nurses.


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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.

Test Bank: II Topic: Three Union Models


The wages of plumbers are likely to increase when


A. licensing standards for the occupation are increased.

there is an increase in the cost of plumbing supplies.

the length of the trainingperiod for plumbers is decreased.

more do-it-yourself home improvement centers open across the nation.


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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.

Test Bank: II Topic: Three Union Models

321.




Refer tothegraphs. If union workers decide to take more leisure, while the prices of the products produced by union workersincrease, this situation is depicted ingraph


A.

B.

C. C.

D. D.


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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: II Topic: Three Union Models


322.




Refer tothe graphs.The formation of an exclusive or craft union, with no change in demand, is depicted by situation


A. A.

B. B.

C.

D.


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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: II Topic: Three Union Models

323.




Refer tothegraphs. If union workers decide to take more leisure, while the prices of the products produced by union workersdecrease, this situationis depicted in graph


A.

B.

C.

D. D.


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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: II Topic: Three Union Models


An industry would belikely to lay off workers following


an increase in the price of the firm's product.

an increase in the marginalrevenue product of labor.

the imposition of a new minimum wage below the current equilibrium wage.

D. anindustrial union’s push of wages abovetheMRP of labor.


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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.

Test Bank: II Topic: Three Union Models


Exclusive unionism has the economic effect of


strengthening the bargaining positionof an industrial union.

weakening the bargaining positionof a craft union.

C. decreasing the supply of labor.

D. increasing thedemand for labor.


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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.

Test Bank: II Topic: Three Union Models

326.






Refer tothegraph, which shows the supply anddemand for unionized manufacturing workers. The initial equilibrium point is point 1. There is an increase in the demand for manufactured goods, while at the same time health benefits for unionized manufacturing workers also increase. Which point would represent the new equilibrium?



A. 3

B. 4

5

6


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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: II Topic: Three Union Models


327.






Refer tothegraph, which shows the supply anddemand for unionized manufacturing workers. The initial equilibrium point is point 1. Thewages paid in comparable nonunion occupations increasesignificantly, while at the same time the price of manufactured goods increases. Which point would represent the new equilibrium?



A. 2

B. 3

4

5


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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.

Test Bank: II Topic: Three Union Models

If there is a decrease in the demandforunion electrical workers and at the same time there is a drastic cutback in the numbers of electricians trained by the union,then the


wages of electricians are likely to increase and the quantity employed will decrease.

wages of electricians are likely to increase and the quantityemployed will increase.

quantity employed will increase, but the effect on wages is indeterminate.

D. quantity employedwilldecrease, but the effect on wages is indeterminate.


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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.

Test Bank: II Topic: Three Union Models


A bilateral monopoly situation is onewhere a


single firm is a monopolistin two different markets.

market is effectively split betweentwo exclusive monopolies.

C. monopolistic seller faces a monopsonistic buyer.

D. firm is a monopoly in the product market and a monopsony in the labor market.


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LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.

Test Bank: II Topic: BilateralMonopoly Model


When the monopsony model is combined with the inclusive union model, the result is a case of


occupational licensing.

noncompeting groups.

C. bilateral monopoly.

D. institutional immobility.


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LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.

Test Bank: II Topic: BilateralMonopoly Model


331.

























Refer tothegraph. A monopsonist will set the wage at




Wc.

Wu.

C. Wm

D. a rate that cannotbe determined from the graph.


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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: II Topic: BilateralMonopoly Model

332.






Refer tothegraph. An inclusiveunion or an industrialunion will set the wage rate at



A. Wc.

B. Wu.

Wm.

a rate that cannotbe determined from the graph.


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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: II Topic: BilateralMonopoly Model


333.






Refer tothegraph. If a monopsonist bargains with an inclusive union, as shown,thewage rate will be



Wc.

Wu.

Wm.

D. indeterminate in the graph.


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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: II Topic: BilateralMonopoly Model

A bilateral monopoly is a situation where a firm is


A. a monopolyin its productmarket and is a monopsony in its labor market.

B. the only employer of a resource andis acquiring that resourcefrom a single supplier.

one of only two firms that produce a particular product.

the only buyer of a resource and also the only seller of a product.


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LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.

Test Bank: II Topic: BilateralMonopoly Model


Under conditions of imperfectcompetition in the labor market, union effortsto increase wages


will necessarily cause unemployment.

will necessarily reduce unemployment.

will strengthen the monopoly power of management.

D. may either increase or decrease thelevel of employment.


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LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.

Test Bank: II Topic: BilateralMonopoly Model


The equilibrium wage rate in a bilateral monopoly labor marketis


determined by themonopoly supplier of labor.

determined solely by employers.

C. logically indeterminate within a certain range.

D. largelyset by government regulators.


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LearningObjective: 17-05 Explain why wages and employment are determined by collective bargaining in a situationof bilateral monopoly.

Test Bank: II Topic: BilateralMonopoly Model


Critics of the minimum wage argue that an increase in the minimumwage rate above the equilibrium rate of a purely competitive labor market would


A. increase unemployment in the labor market.

increase firms' demand for labor.

decrease the supplyof labor.

cause firms tosubstitute labor for capital.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


Critics contend that imposing a minimumwage higher than the equilibrium wage in a competitive industry would


A. decreasethe number of workers employedinthat industry.

decrease the quantity of labor supplied to that industry.

increase the demand for labor in the industry.

increase employment in that industry.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


The minimum wage in the U.S. is


A. set at the federal level, andallstates abide by that level.

B. set at the federal level,but many states set their own minimums that are higher than the federal level.

set at the federal level,but many states set their own minimums that are lower than the federal level.

set at the statelevel, not by the federal government.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy

340.






In the graph, unemployment created by the minimum wage is



A. B A.

B – 0.

B E.

0.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


341.





In the labor market shown in the graph, if a minimumwage level is set at Wm, it will cause



employment toincrease from A to B.

employment to decrease from C to B.

C. employment to decrease from B to A.

D. AC workers tobehired.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy

342.





In the labor market shown in the graph, if the demand for labor increases so that the equilibrium wage rate goes above the minimumwage, Wm,then the minimum-wage law will



cause higher unemployment.

cause lower unemployment.

cause labor supplyto decrease.

D. become ineffective in the market.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


343.






If a minimumwage is set at W, what will happen to employment in the monopsonistic labor marketshown in the diagram?



A. Employment will decrease.

B. Employment will increase.

Employment will stay the same.

Employment may increase, but usuallyit tends tostay the same.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy

344.






Relevant economic data for Company Town Mining, Inc.,is shown in the graph. The labor force (including those not now working) of CompanyTown organizes anddemands a minimumwage, W, for all workers.If Company Town, Inc., accepts the offer,itwill



A. pay lower wages.

B. hire more workers.

hire fewer workers.

hire the same number of workers.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


345.






Senator Approxmire opposesa proposal requiring that the monopsonist pay a minimum wage of at least Wmin, stating, "Even if the labor market is monopsonistic, economic theory unambiguously demonstrates that imposing a minimumwage causes employment to fall." Senator Approxmire is



correct, because the law of demandstates that as the wage rises, the firm demands less labor.

incorrect, because the monopsonist would offer a wage of WA, whichis higher than Wmin, and maintainits employment at L1.

C. incorrect, because the monopsonist's effective MRC curve becomes ABCD, which means that it will choosetohire more workers, from L1 to L2, following the imposition of the minimum wage.

D. correct, because the graph indicates that at the wage of Wmin, the monopsonist would not make a profit from hiringlabor and so would not hire any at all.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy

346.






Consider a companytown where the ABC Corporation is the only employer. Assume ABC sells its output in a purelycompetitive market.The city council is considering a proposal to lower the minimum wage from its current level of W2 toW1, as shown in the graph. Given the marginal revenue product of labor (MRP), labor supply(SL), and marginalcost of labor (MRC) curves, this policywould



A. increase employment from L1 to L2.

increase employmentfrom L1 to L3.

reduce employment from L4 to L3.

reduce employment from L1 to L0.


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Learning Objective: 17-06 Discuss how minimum wage laws affect labor markets.

Test Bank: II Topic: The Minimum-Wage Controversy


According tothe U.S.Bureau of Labor Statistics data on wage differentials, which of the followingprofessions paid the highest averageannual wage in 2014?


A. surgeons

financial managers

petroleum engineers

law professors


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Wage differentials occur for all the followingreasons except


A. homogeneous workers.

labor market imperfections.

noncompeting groups of workers.

compensating differencesto offset nonmonetary differences in jobs.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Equilibrium price differentials for productive resources


A. tend to be self-eliminating.

B. may be causedbydifferences in the qualityof those resources.

are eliminated when the allocation of resources is in a state of equilibrium.

are unrelated todifferences in nonmonetary benefits.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials

Why do skilled workers generallyearn more than unskilled workers?


A. The demandforunskilled labor is more inelastic than the demandforskilled labor.

B. Skilled labor has higher marginalrevenue products than unskilledlabor.

The demand for unskilledlabor is greater than thedemand for skilled labor.

The supply of skilled labor is greater than the supply of unskilledlabor.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


A college graduate whoworks at a firm is alsoworking part-time on a master'sdegree in business andexpects to be paid a higher wage after earningthe degree. The basic reasonfor this wage differential is


efficiency wages.

compensating differences.

C. investment in human capital.

D. nonmonetary aspects of work.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


The major reasonthat presidents of major corporations receive an average salaryof over $1 million a year, while police officers receive an average salary of about $56,000 a year, can best be explained by


discrimination.

lack of job information.

compensating differences.

D. noncompeting labor groups.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


The reasonthat unskilled construction workers typicallyreceive higher wages than retail sales clerks is best explained by


discrimination.

geographic immobility.

C. compensating differences.

D. noncompeting labor groups.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


The lack of jobinformation for workers would be an example of which explanation for wage differentials among workers?


noncompeting groups

compensating differences

C. market imperfections

D. principal-agent problems


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Discrimination that results in minorities being paid less than whites for identical work would be an example of whichexplanation for wage differentials?


noncompeting groups

compensating differences

C. market imperfections

D. principal-agent problems


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials

Nonmonetary considerations tendto be most important in the allocation of


land resources.

capital resources.

C. labor resources.

D. natural resources.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Other things being equal, the wages of clerical workers would tend to decrease if there was an increase in


the marginal revenue product of clerical workers.

the minimum entry requirements for clerical work.

the period oftraining requiredfor clerical work.

D. nonmonetary benefits availableto clerical workers.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Geographic immobility in the labor force results in


homogeneous wage rates.

homogeneous unemployment rates.

local labor markets which reach equilibrium quickly andefficiently.

D. persistent wage andunemployment differentials among differentregions of the country.


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LearningObjective: 17-07 List the major causes of wage differentials.

Test Bank: II Topic: Wage Differentials


Which action taken by a worker would not be an investment in human capital?


enrolling in college

enrolling in trade school

purchasing exerciseequipment

D. purchasing stock in a pharmaceutical company


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Blooms: Remember Difficulty: 01 Easy

LearningObjective: 17-07 List the major causes of wage differentials.