Question 1

If the cost of monitoring worker effort is high, then a firm can encourage workers to work hard by paying an efficiency wage because

Accepted Answer

A)   Paying an efficiency wage means a firm can monitor its workers more cheaply.
B)   The efficiency wage will encourage workers to monitor each other's effort and report shirking to the employer.
C)   Efficiency wages guarantee efficiency.
D)   The efficiency wage will raise the cost to workers of losing their jobs, even though there may be a low risk of being dismissed for shirking.E) None of the above
F) A) and C)

Question 2

Firms may voluntarily pay wages above the level that balances the supply and demand for workers because the higher wage improves the average quality of workers that apply for employment.

Accepted Answer

A) True 
 B)False

Question 3

Consider two labour markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labour markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

Accepted Answer

A)   Rise in both markets.
B)   Fall in both markets
C)   Rise for the union jobs, but remain unchanged for the non-union jobs.
D)   Rise for the union jobs and fall for the non-union jobs.E) A) and D)
F) B) and C)

Question 4

Unions attempt to raise wage rates for their members by

Accepted Answer

A)   Reducing the supply of the product their members produce.
B)   Lowering barriers to entry so their members have greater opportunities.
C)   Reducing the demand for labour so there are fewer non-union competitors.
D)   Negotiating a higher wage rate through collective bargaining.E) A) and B)
F) All of the above

Question 5

A minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a cost of unemployment to the economy?

Accepted Answer

A)   The opportunity cost of unemployment.
B)   The tax and benefits effect.
C)   The reverse multiplier effect.
D)   All of the above.E) A) and D)
F) None of the above

Question 7

Most spells of unemployment are short, and most unemployment observed at any given time is long term. How can this be?

Accepted Answer

Most unemployed people in the economy ar...

Question 8

Unions may increase efficiency in some circumstances because they decrease the cost of bargaining between labour and management.

Accepted Answer

A) True 
 B)False

Question 9

Unemployment insurance

Accepted Answer

A)   Tends to increase unemployment by decreasing the cost of being unemployed.
B)   Tends to decrease unemployment by providing limited resources to the unemployed.
C)   Increases the hardships associated with unemployment.
D)   Increases the amount of job security demanded by employees.E) A) and D)
F) B) and C)

Question 10

Which of the following government policies would fail to lower the unemployment rate?

Accepted Answer

A)   Establishing worker training programs
B)   Establishing right-to-work laws
C)   Reducing unemployment benefits
D)   Establishing employment agencies
E)   Raising the minimum wageF) C) and D)
G) A) and B)

Question 11

A reservation wage is the

Accepted Answer

A)   Maximum wage the firm is willing to pay.
B)   Tip necessary to get a waiter to reserve a table.
C)   Minimum wage the worker is willing to accept.
D)   Competitive equilibrium wage.E) B) and D)
F) A) and B)

Question 12

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?

Accepted Answer

A)   Structural unemployment
B)   Cyclical unemployment
C)   Frictional unemployment
D)   None of these answersE) B) and C)
F) C) and D)

Question 13

Teenage unemployment is higher than unemployment of people ages 20 and over. Explain why economists would attribute at least part of this difference to minimum-wage laws.

Accepted Answer

People who are experienced and educated ...

Question 14

Unions tend to increase the disparity in pay between insiders and outsiders by

Accepted Answer

A)   Increasing the wage in the unionized sector, which may create a decrease in the supply of workers in the non-unionized sector.
B)   Increasing the demand for workers in the unionized sector.
C)   Decreasing the demand for workers in the unionized sector.
D)   Increasing the wage in the unionized sector, which may create an increase in the supply of workers in the non-unionized sector.E) B) and C)
F) A) and D)

Question 15

Which of the following statements about efficiency wage theory is true?

Accepted Answer

A)   Paying above the competitive equilibrium wage tends to cause workers to shirk their responsibilities.
B)   Firms do not have a choice about whether they pay efficiency wages or not because law does determine these wages.
C)   Paying the lowest possible wage is always the most efficient (profitable) .
D)   Paying above the competitive equilibrium wage may improve worker health, lower worker turnover, improve worker quality, and increase worker effort.E) B) and C)
F) A) and D)

Question 16

Table 2. The figures in the table below are taken from the statistics office in a fictional country called Exland.   Number of workers employed 8,400 Frictional unemployment 250 Structural unemployment 350 Cyclical unemployment 600 Discouraged workers 400 Adult population 12,000\begin{array}{|l|r|}\hline 	ext { Number of workers employed } & 8,400 \\hline 	ext { Frictional unemployment } & 250 \\hline 	ext { Structural unemployment } & 350 \\hline 	ext { Cyclical unemployment } & 600 \\hline 	ext { Discouraged workers } & 400 \\hline 	ext { Adult population } & 12,000 \\hline\end{array} Number of workers employed  Frictional unemployment  Structural unemployment  Cyclical unemployment  Discouraged workers  Adult population ​8,40025035060040012,000​​ 
Refer to table 2. What is the labour force participation rate in Exland?

Accepted Answer

A)   12.5 per cent.
B)   25 per cent.
C)   60 per cent.
D)   80 per cent. E) A) and C)
F) A) and B)

Question 17

If the market for day care workers is in equilibrium at €5.00 per hour as shown in this diagram, a minimum wage of €8.00 per hour will increase unemployment by

Accepted Answer

A)   300 workers.
B)   500 workers.
C)   600 workers.
D)   No workers.E) A) and C)
F) B) and C)

Question 18

Which of the following is an example of a reason why firms might pay efficiency wages? At equilibrium wages:

Accepted Answer

A)   Workers sleep when the boss is not looking because workers are not deeply concerned about being fired.
B)   Workers often quit to find better jobs.
C)   Only minimally qualified workers apply for the job.
D)   Workers cannot afford a healthy diet so they fall asleep at work due to a lack of energy.
E)   All of these answersF) B) and D)
G) D) and E)

Question 19

Suppose that there is an excess supply of economics professors. Should universities necessarily reduce salaries? What does standard economic theory suggest? What does efficiency-wage theory suggest?

Accepted Answer

Standard economic theory suggests that i...

Question 20

The labour-force participation rate is computed as

Accepted Answer

A)   (Employed divided by Adult Population)  x 100.
B)   (Employed divided by Labour Force)  x 100.
C)   (Labour Force divided by Adult Population)  x 100.
D)   (Adult Population divided by Labour Force)  x 100.E) B) and D)
F) All of the above

Exam 23: Unemployment

If the market for day care workers is in equilibrium at €5.00 per hour as shown in this diagram, a minimum wage of €8.00 per hour will increase unemployment by

Correct Answer
verified

Which of the following is an example of a reason why firms might pay efficiency wages? At equilibrium wages:

Correct Answer
verified

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?

Correct Answer
verified

Consider two labour markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labour markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

Correct Answer
verified

Which of the following statements about efficiency wage theory is true?

Correct Answer
verified

Teenage unemployment is higher than unemployment of people ages 20 and over. Explain why economists would attribute at least part of this difference to minimum-wage laws.

Correct Answer
verified
People who are experienced and educated ...
View Answer

Unions tend to increase the disparity in pay between insiders and outsiders by

Correct Answer
verified

Most spells of unemployment are short, and most unemployment observed at any given time is long term. How can this be?

Correct Answer
verified
Most unemployed people in the economy ar...
View Answer

Unions may increase efficiency in some circumstances because they decrease the cost of bargaining between labour and management.

Correct Answer
verified

Unions attempt to raise wage rates for their members by

Correct Answer
verified

Which of the following government policies would fail to lower the unemployment rate?

Correct Answer
verified

Suppose that there is an excess supply of economics professors. Should universities necessarily reduce salaries? What does standard economic theory suggest? What does efficiency-wage theory suggest?

Correct Answer
verified
Standard economic theory suggests that i...
View Answer

The labour-force participation rate is computed as

Correct Answer
verified

If the cost of monitoring worker effort is high, then a firm can encourage workers to work hard by paying an efficiency wage because

Correct Answer
verified

Unemployment insurance

Correct Answer
verified

Which of the following is a cost of unemployment to the economy?

Correct Answer
verified

A minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers.

Correct Answer
verified

Firms may voluntarily pay wages above the level that balances the supply and demand for workers because the higher wage improves the average quality of workers that apply for employment.

Correct Answer
verified

Correct Answer
verified

A reservation wage is the

Correct Answer
verified

Exam 23: Unemployment

If the market for day care workers is in equilibrium at €5.00 per hour as shown in this diagram, a minimum wage of €8.00 per hour will increase unemployment by

Correct AnswerverifiedShow Answer

Which of the following is an example of a reason why firms might pay efficiency wages? At equilibrium wages:

Correct AnswerverifiedShow Answer

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?

Correct AnswerverifiedShow Answer

Consider two labour markets in which jobs are equally attractive in all respects other than the wage rate. All workers are equally able to do either job. Initially, both labour markets are perfectly competitive. If a union organizes workers in one of the markets, then the wage rates will tend to

Correct AnswerverifiedShow Answer

Which of the following statements about efficiency wage theory is true?

Correct AnswerverifiedShow Answer

Teenage unemployment is higher than unemployment of people ages 20 and over. Explain why economists would attribute at least part of this difference to minimum-wage laws.

Correct AnswerverifiedPeople who are experienced and educated ...View AnswerShow Answer

Unions tend to increase the disparity in pay between insiders and outsiders by

Correct AnswerverifiedShow Answer

Most spells of unemployment are short, and most unemployment observed at any given time is long term. How can this be?

Correct AnswerverifiedMost unemployed people in the economy ar...View AnswerShow Answer

Unions may increase efficiency in some circumstances because they decrease the cost of bargaining between labour and management.

Correct AnswerverifiedShow Answer

Unions attempt to raise wage rates for their members by

Correct AnswerverifiedShow Answer

Which of the following government policies would fail to lower the unemployment rate?

Correct AnswerverifiedShow Answer

Suppose that there is an excess supply of economics professors. Should universities necessarily reduce salaries? What does standard economic theory suggest? What does efficiency-wage theory suggest?

Correct AnswerverifiedStandard economic theory suggests that i...View AnswerShow Answer

The labour-force participation rate is computed as

Correct AnswerverifiedShow Answer

If the cost of monitoring worker effort is high, then a firm can encourage workers to work hard by paying an efficiency wage because

Correct AnswerverifiedShow Answer

Unemployment insurance

Correct AnswerverifiedShow Answer

Which of the following is a cost of unemployment to the economy?

Correct AnswerverifiedShow Answer

A minimum wage is likely to have a greater impact on the market for skilled workers than on the market for unskilled workers.

Correct AnswerverifiedShow Answer

Firms may voluntarily pay wages above the level that balances the supply and demand for workers because the higher wage improves the average quality of workers that apply for employment.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A reservation wage is the

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
People who are experienced and educated ...
View Answer

Correct Answer
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Correct Answer
verified
Most unemployed people in the economy ar...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Standard economic theory suggests that i...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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