Chapter 28 and 29 Practice Test (13: Labor Markets)

If MFC > MRP_L, the firm should

do to what to their workers?

reduce the number of workers

If the supply of labor to a firm is perfectly elastic at the going wage rate established by the forces of supply and demand then

the firm is what in terms of price?

a price taker

The supply of labor to an industry will decrease when

the price of leisure falls.

the income effect dominates the substitution effect.

the demand for labor falls in the industry.

workers receive better employment opportunities in other industries.

workers receive better employment opportunities in other industries.

When hiring additional workers, a firm operating in a perfectly competitive labor market will

be able to hire additional workers without offering higher wages.

Discuss the significant laws passed since the Great Depression that affect labor-management relations.

Fair Labor Standards Act (1938),  National Labor Relations Act (Wagner Act, 1935)

Which of the following is one of the reasons for declining union membership in the United States?

Much of the unskilled, nonunionized work in the United States is done by immigrant workers who are undocumented.

A strikebreaker is

 a temporary worker hired by a company to replace a union member who is striking.

Refer the above figure. An increase in labor productivity is likely to stimulate and shift the labor demand curve to

the right and hence increase union wages per year.

Suppose union workers are earning more than similarly qualified nonunion workers. From this, we can conclude that

Any of these are possible and we cannot tell which without having more information.

Which of the following best describes the effects of unions in the United States today?

The average union worker works fewer hours and earns a lower annual income than the average nonunion worker.

For a monopsonist, the marginal factor cost curve will be above the supply of labor curve. The marginal factor cost curve is above the supply curve because

the monopsonist will have to pay all workers a higher wage rate than the current wage rate if it wants to hire more workers.

A monopsonist finds its profit maximizing quantity of labor employed at the point at which

marginal revenue product equals marginal factor cost.