Question 1

Consider the case of Eastover Coal Mining Company, operating its mine in the small, isolated town of Eastover, Kentucky. The data in the table describe the firm, where MPL = marginal product of labor and MRCL = marginal resource cost of labor. If the firm sells its coal in a purely competitive market for $10 per ton, how many laborers should it hire?   Nuriber of  MPL (Tons of  MRGL  Labores  Coal)  110$2027303555449053.5120\begin{array} { | c | c | c| } \hline	ext { Nuriber of } & 	ext { MPL (Tons of } & 	ext { MRGL } \	ext { Labores } & 	ext { Coal)  } & \\hline 1 & 10 & \$ 20 \\hline 2 & 7 & 30 \\hline 3 & 5 & 55 \\hline 4 & 4 & 90 \\hline 5 & 3.5 & 120\\hline\end{array} Nuriber of  Labores 12345​ MPL (Tons of  Coal)  107543.5​ MRGL $20305590120​​

Accepted Answer

A)   2
B)   3
C)   4
D)   5 E) B) and C)
F) A) and D)

Question 2

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Accepted Answer

A)   wage rate or price of labor.
B)   price of the product.
C)   marginal cost of one extra unit of output.
D)   average cost of each unit of output.E) All of the above
F) C) and D)

Question 3

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until

Accepted Answer

A)   marginal revenue product is zero.
B)   marginal revenue product exceeds marginal resource (labor)  cost by the greatest amount.
C)   marginal resource cost is zero.
D)   marginal revenue product equals marginal resource (labor)  cost.E) A) and D)
F) A) and C)

Question 4

Suppose two workers can harvest $46 worth of apples per day and three workers can harvest $60 worth. On the basis of this information, we can say that the

Accepted Answer

A)   marginal product of each of the first two workers is 23.
B)   marginal revenue product of each of the first two workers is $23.
C)   marginal revenue product of the third worker is $14.
D)   third worker should not be hired.E) A) and D)
F) None of the above

Question 5

Education is a form of human capital, and it helps explain wage differentials.

Accepted Answer

A) True 
 B)False

Question 6

The principal-agent problem arises primarily because

Accepted Answer

A)   principals and agents share a common interest, leading to free-rider problems.
B)   principals and agents are in an adversarial role, sharing no common interests.
C)   principals pursue some of their own objectives, which may conflict with the objectives of the agents.
D)   agents pursue some of their own objectives, which may conflict with the objectives of the principals.E) A) and B)
F) All of the above

Question 7

Many economists are critical of the minimum wage because they believe that it

Accepted Answer

A)   hurts the efforts of labor unions.
B)   reduces the number of available job opportunities.
C)   conflicts with policies designed to equalize the distribution of income.
D)   causes labor shortages in affected markets.E) All of the above
F) B) and D)

Question 8

A labor union may engage in a lockout if the collective bargaining process breaks down.

Accepted Answer

A) True 
 B)False

Question 9

A bilateral monopoly case is a situation where two monopolists in two countries are selling competing products in the world market.

Accepted Answer

A) True 
 B)False

Question 10

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Accepted Answer

A)   results in a less-experienced workforce.
B)   increases the incentive for firms to provide training to their workers.
C)   allows firms to employ a greater number of younger, more energetic workers.
D)   increases the incentive for firms to substitute labor for capital in the production process.E) A) and B)
F) B) and D)

Question 11

U.S. union membership has declined substantially in recent years. Which of the following is not usually cited as a causal factor?

Accepted Answer

A)   Most nonunion workers are in manufacturing industries.
B)   Import competition has reduced or restrained the growth of employment in some highly unionized industries.
C)   Some industries and firms have migrated to the less-unionized South.
D)   Managerial opposition to unions has intensified.E) None of the above
F) B) and C)

Question 12

The individual firm in a purely competitive labor market faces

Accepted Answer

A)   a perfectly elastic labor supply curve and a downsloping labor demand curve.
B)   a perfectly elastic labor demand curve and an upsloping labor supply curve.
C)   labor demand and labor supply curves both of which are perfectly elastic.
D)   a downsloping labor demand curve and an upsloping labor supply curve.E) A) and C)
F) A) and B)

Question 13

One clear effect of labor unions is an increase in the wage rates of their members.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?

Accepted Answer

A)   movement of labor from lower-wage to higher-wage jobs
B)   readily available information about job opportunities and pay
C)   principal-agent problems
D)   discriminationE) A) and D)
F) None of the above

Question 15

Which of the following is illegal under federal labor law?

Accepted Answer

A)   closed shops
B)   agency shops
C)   union shops
D)   state right-to-work lawsE) C) and D)
F) B) and D)

Question 16

Labor unions are restrained in their wage demands because

Accepted Answer

A)   legislation limits annual increases in nominal wages to 6 percent.
B)   the labor demand curve is downsloping.
C)   marginal wage cost curves lie above labor supply curves in most labor markets.
D)   most unions deal with monopsonists who have superior bargaining power.E) A) and B)
F) None of the above

Question 17

In monopsony situations, a minimum wage might increase wage and employment levels.

Accepted Answer

A) True 
 B)False

Question 18

If an employer has to raise the wage rate of workers in order to employ more labor, then the marginal labor cost curve of the employer

Accepted Answer

A)   lies above the supply curve of labor.
B)   is the supply curve of labor that it faces.
C)   lies below the supply curve of labor.
D)   is a downward-sloping curve.E) All of the above
F) A) and B)

Question 19

Suppose Steve Stone takes a job with Zemo Manufacturing, whose labor contract with its unions has an agency shop clause (30 days) . Steve

Accepted Answer

A)   must join the union within 30 days.
B)   can decide against joining the union and place the union dues in a retirement account.
C)   can decide against joining the union but then will not receive any union-negotiated wage 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.E) A) and B)
F) None of the above

Question 20

Which union status allows the firm to hire nonunion workers, provided that these workers would join the union within a specified period or lose their jobs?

Accepted Answer

A)   open shop
B)   agency shop
C)   union shop
D)   closed shopE) A) and B)
F) A) and C)

Exam 17: Wage Determination

U.S. union membership has declined substantially in recent years. Which of the following is not usually cited as a causal factor?

Correct Answer
verified

If an employer has to raise the wage rate of workers in order to employ more labor, then the marginal labor cost curve of the employer

Correct Answer
verified

Suppose Steve Stone takes a job with Zemo Manufacturing, whose labor contract with its unions has an agency shop clause (30 days) . Steve

Correct Answer
verified

Which union status allows the firm to hire nonunion workers, provided that these workers would join the union within a specified period or lose their jobs?

Correct Answer
verified

Correct Answer
verified

One clear effect of labor unions is an increase in the wage rates of their members.

Correct Answer
verified

The principal-agent problem arises primarily because

Correct Answer
verified

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until

Correct Answer
verified

Which of the following is illegal under federal labor law?

Correct Answer
verified

A bilateral monopoly case is a situation where two monopolists in two countries are selling competing products in the world market.

Correct Answer
verified

The individual firm in a purely competitive labor market faces

Correct Answer
verified

Labor unions are restrained in their wage demands because

Correct Answer
verified

Suppose two workers can harvest $46 worth of apples per day and three workers can harvest $60 worth. On the basis of this information, we can say that the

Correct Answer
verified

A labor union may engage in a lockout if the collective bargaining process breaks down.

Correct Answer
verified

Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?

Correct Answer
verified

In monopsony situations, a minimum wage might increase wage and employment levels.

Correct Answer
verified

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Correct Answer
verified

Many economists are critical of the minimum wage because they believe that it

Correct Answer
verified

Education is a form of human capital, and it helps explain wage differentials.

Correct Answer
verified

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Correct Answer
verified

Exam 17: Wage Determination

U.S. union membership has declined substantially in recent years. Which of the following is not usually cited as a causal factor?

Correct AnswerverifiedShow Answer

If an employer has to raise the wage rate of workers in order to employ more labor, then the marginal labor cost curve of the employer

Correct AnswerverifiedShow Answer

Suppose Steve Stone takes a job with Zemo Manufacturing, whose labor contract with its unions has an agency shop clause (30 days) . Steve

Correct AnswerverifiedShow Answer

Which union status allows the firm to hire nonunion workers, provided that these workers would join the union within a specified period or lose their jobs?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

One clear effect of labor unions is an increase in the wage rates of their members.

Correct AnswerverifiedShow Answer

The principal-agent problem arises primarily because

Correct AnswerverifiedShow Answer

A firm that is hiring labor in a purely competitive labor market and selling its product in a purely competitive product market will maximize its profit by hiring labor until

Correct AnswerverifiedShow Answer

Which of the following is illegal under federal labor law?

Correct AnswerverifiedShow Answer

A bilateral monopoly case is a situation where two monopolists in two countries are selling competing products in the world market.

Correct AnswerverifiedShow Answer

The individual firm in a purely competitive labor market faces

Correct AnswerverifiedShow Answer

Labor unions are restrained in their wage demands because

Correct AnswerverifiedShow Answer

Suppose two workers can harvest $46 worth of apples per day and three workers can harvest $60 worth. On the basis of this information, we can say that the

Correct AnswerverifiedShow Answer

A labor union may engage in a lockout if the collective bargaining process breaks down.

Correct AnswerverifiedShow Answer

Which of the following is a market imperfection that might explain persistent wage differentials within an occupation?

Correct AnswerverifiedShow Answer

In monopsony situations, a minimum wage might increase wage and employment levels.

Correct AnswerverifiedShow Answer

In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal revenue product of labor equals the

Correct AnswerverifiedShow Answer

Many economists are critical of the minimum wage because they believe that it

Correct AnswerverifiedShow Answer

Education is a form of human capital, and it helps explain wage differentials.

Correct AnswerverifiedShow Answer

By reducing labor turnover, unions may increase productivity because a lower turnover rate

Correct AnswerverifiedShow Answer

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