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Multiple Choice Quiz
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1
Stella's nominal wage rose 2% during the year 2003, while the average price level rose 3%. Which of the following is true?
A)Stella's real wage has increased by 1%
B)Stella's nominal wage has increased by 1%
C)Stella's real wage has decreased by 1%
D)Stella's nominal wage has decreased by 1%
2
A perfectly competitive labour market is one in which
A)both firms and workers are wage takers
B)firms are wage takers, while workers negotiate wage contracts through a union
C)workers are wage takers, while large employers set market wages
D)workers are free to take whatever job they choose
3
In a purely competitive labour market, the supply of labour to an individual firm is:
A)perfectly inelastic
B)perfectly elastic
C)upward sloping
D)dependent on the wages paid
4
A monopsonist pays a wage rate which is
A)greater than the marginal revenue product of labour
B)equal to the marginal revenue product of labour
C)equal to the firm's marginal labour cost
D)less than the marginal revenue product of labour
5
Occupational licensing laws have the economic effect of
A)increasing the demand for labour
B)decreasing the supply of labour
C)increasing the supply of labour
D)weakening the bargaining position of a union
6
Inclusive or industrial unionism typically attempts to increase wage rates by
A)imposing an above-equilibrium wage rate on employers
B)increasing the demand for labour
C)decreasing the supply of labour
D)forming a bilateral monopoly
7
The major reason that major league baseball players receive an average salary of over $1 million a year and teachers receive an average salary of about $40,000 a year can best be explained in terms of
A)the relative supply of, and demand for, the skills required for each job
B)compensating differences
C)lack of labour force mobility
D)discrimination
8
The fact that unskilled construction workers typically receive higher wages than bank clerks is best explained in terms of
A)non-competing labour groups
B)compensating differences
C)geographic immobility
D)union restraints
9
Shirking can be considered to be a principal-agent problem because
A)work objectives of the principals (the workers) diverge from the profit objectives of the agent (the firm)
B)profit objectives of the principal (the firm) diverge from the work objectives of the agents (the workers)
C)the firm is operating in a monopsonistic labour market
D)the firm pays efficiency wages to workers in a labour market
10
One of the effects of a minimum wage is that
A)more workers will be hired
B)all low-income workers will be better off
C)it reduces employment at all wage levels
D)unemployed low-income workers may be worse off
11
The supply curve for labour in a purely competitive market is upward sloping because
A)opportunity costs are rising
B)the marginal resource cost is constant
C)the wage rate paid to workers falls
D)the marginal revenue product rises
12
Exclusive unionism seeks to raise the wages of its members by
A)lobbying government to increase the minimum wage
B)reducing the supply of labour with restrictive membership policies such as long apprenticeships
C)increasing demand for the product or service provided by its members
D)restricting membership to those earning above a certain level of income
13
A monopsonist hires
A)more workers than a perfectly competitive employer
B)the same number workers that would be hired by a perfectly competitive employer
C)it cannot be determined how many workers the monopsonist will hire without information on the supply and demand for workers
D)fewer workers than a perfectly competitive employer
14
In a bilateral monopoly situation,
A)the monopsonistic employer sets wages below market equilibrium rates.
B)the monopolistic supplier (union) sets wages above market equilibrium rates.
C)the wage paid to workers will depend on relative bargaining power of the union and the firm.
D)the competitive equilibrium wage rate will prevail.
15
There are both explicit and implicit costs to international movement of workers. As a result
A)the people who will migrate to higher wage areas are those who believe that the marginal benefit is greater than the marginal cost of migration.
B)the only people who will migrate to higher wage areas are those who believe that the marginal cost is greater than the marginal benefit of migration.
C)most workers will only migrate for a short period of time before returning home.
D)immigration is likely to be of greater harm than benefit to the receiving country.





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