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1. Digital Study Guide, written by William Walstad
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After reading this chapter, you should be able to:

1. Explain why labor productivity and real hourly compensation track so closely over time.
2. Show how wage rates and employment levels are determined in competitive labor markets.
3. Demonstrate how monopsony (a market with a single employer) can reduce wages below competitive levels.
4. Discuss how unions increase wage rates and how minimum wage laws affect labor markets.
5. List the major causes of wage differentials.
6. Indentify the types, benefits, and costs of "pay-for-performance" plans.
7. (Appendix) Relate who belongs to U.S. unions, the basics of collective bargaining, and the economic effects of unions.