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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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
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: 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
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
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: 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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Understand Difficulty: 02 Medium
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.
AACSB: KnowledgeApplication
Blooms: Understand Difficulty: 02 Medium
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
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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.
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
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
AACSB: KnowledgeApplication Accessibility: Keyboard Navigation
Blooms: Remember Difficulty: 01 Easy
LearningObjective: 17-07 List the major causes of wage differentials.