Question 1

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $15 per day?

Accepted Answer

A)  3
B)  5
C)  6
D)  4E) A) and D)
F) B) and D)

Question 2

The consumer price index is 132 in Year 1 and 125 in Year 2. The nominal wage rate is $31 in Year 1 and $30 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

Accepted Answer

A)  -5.3 percent
B)  6 percent
C)  -3.2 percent
D)  2.1 percentE) C) and D)
F) A) and C)

Question 3

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $300 and three workers are employed per day, the price of a unit of output must be

Accepted Answer

A)  60.
B)  15.
C)  10.
D)  20.E) B) and D)
F) B) and C)

Question 4

Describe the current status of unions in the United States and the major union organizations.

Accepted Answer

The Bureau of Labor Statistics estimates...

Question 5

In considering real-world situations, we must recognize the fact that by "wages" in this chapter, we mean the following, except the

Accepted Answer

A)  total price that employers pay to obtain labor.
B)  total income earned by households.
C)  total compensation of workers.
D)  total of direct payments and fringe benefits to workers.E) B) and C)
F) A) and C)

Question 6

If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will

Accepted Answer

A)  decrease by 6 percent.
B)  decrease by 4 percent.
C)  decrease by 2 percent.
D)  increase by 2 percent.E) None of the above
F) B) and D)

Question 7

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Accepted Answer

A) True 
 B)False

Question 8

The long-run trend of real wages

Accepted Answer

A)  cannot be determined from available data on nominal wages and the price level.
B)  has been downward because the price level has risen faster than nominal wages.
C)  has been upward.
D)  has been downward because labor's share of the domestic income has fallen.E) A) and B)
F) All of the above

Question 9

Refer to the given data. If the market wage rate is $8 and the firm hires its profit-maximizing number of workers, the firm's total wage bill (payment) will be

Accepted Answer

A)  $24.
B)  $32.
C)  $16.
D)  $40.E) C) and D)
F) None of the above

Question 10

The table shows labor demand data on the left and labor supply data on the right. What will be the profit-maximizing wage rate?

Accepted Answer

A)  $6
B)  $5
C)  $4
D)  $3E) None of the above
F) C) and D)

Question 11

Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

Accepted Answer

A) True 
 B)False

Question 12

The graph represents the supply and demand for labor in a purely competitive market. The price of labor that an individual firm in this market would take as given is

Accepted Answer

A)  0a.
B)  0c.
C)  higher than 0a.
D)  higher than 0c.E) C) and D)
F) A) and B)

Question 13

Seven of the 50 states account for approximately half of all union members in the United States.

Accepted Answer

A) True 
 B)False

Question 14

Nominal wage measures the purchasing power of a given amount of real wage.

Accepted Answer

A) True 
 B)False

Question 15

If the nominal wages of carpenters rose by 5 percent in 2019 and the price level increased by 3 percent, then the real wages of carpenters

Accepted Answer

A)  decreased by 2 percent.
B)  increased by 2 percent.
C)  increased by 3 percent.
D)  increased by 8 percent.E) A) and C)
F) A) and D)

Question 16

The supply curve of labor faced by an individual firm in a purely competitive labor market is horizontal.

Accepted Answer

A) True 
 B)False

Question 17

Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be

Accepted Answer

A)  $10.
B)  $20.
C)  $22.
D)  $28.E) A) and B)
F) A) and C)

Question 18

A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal demand curve for its product in the output market.

Accepted Answer

A) True 
 B)False

Question 19

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table.  If the wage rate decreases from $17.50 to $16.50, by how much will the firm expand employment?

Accepted Answer

A)  3 workers
B)  2 workers
C)  1 worker
D)  0 workersE) All of the above
F) None of the above

Question 20

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

Accepted Answer

A) True 
 B)False

Exam 17: Wage Determination

Describe the current status of unions in the United States and the major union organizations.

Correct AnswerverifiedThe Bureau of Labor Statistics estimates...View AnswerShow Answer

Seven of the 50 states account for approximately half of all union members in the United States.

Correct AnswerverifiedShow Answer

The consumer price index is 132 in Year 1 and 125 in Year 2. The nominal wage rate is $31 in Year 1 and $30 in Year 2. What is the approximate percentage change in the real wage rate from Year 1 to Year 2?

Correct AnswerverifiedShow Answer

If the nominal wages of carpenters rose by 5 percent in 2019 and the price level increased by 3 percent, then the real wages of carpenters

Correct AnswerverifiedShow Answer

The table shows labor demand data on the left and labor supply data on the right. What will be the profit-maximizing wage rate?

Correct AnswerverifiedShow Answer

If the price level rises by 4 percent in a year and nominal wages increase by 2 percent, then real wages will

Correct AnswerverifiedShow Answer

The supply curve of labor faced by an individual firm in a purely competitive labor market is horizontal.

Correct AnswerverifiedShow Answer

Piece-rates may not be appropriate pay in some situations because they might reduce product quality.

Correct AnswerverifiedShow Answer

Refer to the given data. At the profit-maximizing level of employment, this firm's total labor cost will be

Correct AnswerverifiedShow Answer

A firm's labor input, total output of labor, and product price schedules are given in the table. Labor is the only variable input. How many workers will the profit-maximizing firm hire if the wage rate is $15 per day?

Correct AnswerverifiedShow Answer

Nominal wage measures the purchasing power of a given amount of real wage.

Correct AnswerverifiedShow Answer

A monopsonist in equilibrium will hire labor at a level where MRP = MRC > W.

Correct AnswerverifiedShow Answer

The graph represents the supply and demand for labor in a purely competitive market. The price of labor that an individual firm in this market would take as given is

Correct AnswerverifiedShow Answer

Given the table for a competitive firm that is maximizing profits, if the marginal revenue product of the last worker hired is $300 and three workers are employed per day, the price of a unit of output must be

Correct AnswerverifiedShow Answer

A monopsonist faces an upsloping supply curve of labor, but it could face a horizontal demand curve for its product in the output market.

Correct AnswerverifiedShow Answer

Restricting the supply of labor is a means of increasing wage rates more commonly used by industrial unions than craft unions.

Correct AnswerverifiedShow Answer

Refer to the given data. If the market wage rate is $8 and the firm hires its profit-maximizing number of workers, the firm's total wage bill (payment) will be

Correct AnswerverifiedShow Answer

In considering real-world situations, we must recognize the fact that by "wages" in this chapter, we mean the following, except the

Correct AnswerverifiedShow Answer

The long-run trend of real wages

Correct AnswerverifiedShow Answer

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table. If the wage rate decreases from $17.50 to $16.50, by how much will the firm expand employment?

Correct AnswerverifiedShow Answer

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The Bureau of Labor Statistics estimates...
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