Economics (McConnell) AP Edition, 19th Edition

Chapter 13: Wage Determination (+ Appendix)

Quiz

1
A firm can hire 10 workers at a wage rate of $12 per hour but must pay $13 to all of its employees to attract an 11th worker. The marginal resource (labor) cost of the 11th worker is:
A)$13
B)$20
C)$23
D)$143
2
A firm hiring from a purely competitive labor market sells its output for $5 and pays a wage of $12. Its marginal resource cost is:
A)$5
B)$7
C)$12
D)$60
3
Answer the next question on the basis of the following diagram:

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Refer to the diagram. The competitive wage and monopsony wage, respectively, are:
A)W2 and W1
B)W1 and W4
C)W1 and W5
D)W2 and W4
4
Which of the following best exemplifies the creation of human capital?
A)Ford Motor Company increases its wages in an attempt to hire better quality workers
B)A carpenter buys a new and improved set of tools
C)A nurse attends a continuing education seminar
D)A homemaker reenters the labor force once her last child enters school
5
Use the following data for the next question.

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Refer to the table. The first three columns contain data on the firm's product demand and labor productivity, while the last two columns constitute the firm's labor supply schedule. The data suggest this firm:
A)sells its output in a purely competitive market
B)is a monopsonist
C)faces a perfectly elastic labor supply curve
D)obtains its labor in a purely competitive labor market
6
Use the following diagram of a monopsonist to answer the next question.

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Refer to the diagram. If an inclusive union were to bargain with this employer:
A)the wage could not increase above $B
B)employment would fall to F
C)the wage would rise to $C
D)employment may increase to as much as G
7
Suppose all workers are identical, but there are fewer prospects for advancement at firm X than at firm Y. In all other aspects, the firms offer the same job characteristics. We would expect:
A)starting wages at X to exceed those at Y
B)starting wages at Y to exceed those at X
C)wages of similarly aged workers will always be less at X than at Y
D)no difference in wages at X and Y
8
Which two models are most similar in their effects on labor markets?
A)bilateral monopoly and exclusive unionism
B)occupational licensure and exclusive unionism
C)oligopoly and inclusive unionism
D)monopsony and inclusive unionism
9
Under what circumstances might an increase in the minimum wage increase employment in a low-wage market?
A)The firm has substantial monopsony power
B)The firm has substantial monopoly power
C)Substitute resources are widely available
D)Labor and product markets are purely competitive
10
Which best exemplifies the principal-agent problem as it arises in the employer-employee relationship?
A)Only the most educated workers are selected to receive on-the-job training
B)A worker books his next business trip on United Airlines so she can obtain frequent-flier miles, even though Southwest Airlines would cost her employer less money
C)A firm negotiates with the union to cut wages in response to falling product demand
D)A worker enrolls in her firm's employee stock ownership plan as a way to boost her annual compensation
McConnell Economics Nineteenth Edition Large Cover Image
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