1. Which of the following best describes the amount of job safety?

a) Firms have no incentive to provide a safe environment, so there is too little safety

b) Only unionized firms can negotiate for a safe environment, so they have safe jobs while nonunion workers must work in unsafe environments

c) Firms have some incentive to provide safety, but imperfect information and labor immobility lead safety to be over-provided

d) Firms have some incentive to provide safety, but imperfect information and labor immobility lead safety to be under-provided

2. A union's bargaining power will most likely increase if:

a) its strike fund, which makes payments to union members during a strike, has just been enriched.

b) its strike fund, which makes payments to union members during a strike, has just been depleted.

c) management has just purchased strike insurance, which will make payments to the firm to replace lost profits if there is a strike.

d) management threatens a lockout.

3. If both the demand and supply of college graduates shift to the right, then the equilibrium wage would ____________ and the number of college graduates would _____________.

a) increase, change ambiguously

b) change ambiguously, increase

c) decrease, change ambiguously

d) change ambiguously, decrease

4. For education to serve as a signal

a) education must increase productivity.

b) productivity and educational costs must be negatively related.

c) productivity and educational costs must be unrelated.

d) the acquisition of education must not increase wages.

5. A compensating wage differential is

a) an extra wage that compensates workers for undesirable working conditions.

b) an extra wage that is above the equilibrium wage.

c) an extra wage that will make all workers accept undesirable working conditions.

d) an extra wage that implies that firms are no longer maximizing profits.

6. A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?

a) frictional

b) occupational

c) regional

d) cyclical

7. Lawyers work in pleasant surroundings at low risk of injury, but the generally receive higher pay than construction workers. This is because

a) construction workers don't receive a compensating wage differential for their risk of injury and less pleasant surroundings.

b) lawyers and construction workers are not comparable due to different preferences.

c) lawyers and construction workers are not comparable due to different education levels.

d) lawyers' work must be considered unpleasant by many worker

8. Firm A's isoprofit curves are flatter than firm B. Therefore,

a) firm A will be willing to pay a larger compensating differential than firm B.

b) firm B will be willing to pay a larger compensating differential than firm A.

c) both firms will pay the same compensating differential, but firm B will have higher profits than firm A

d) risk is more costly to reduce in firm A than firm B.

9. The manager of Mel's Diner feels that most of his waiters are rude to customers and dont hustle enough. He proposes that all tips should be placed in one pot and divided on the basis of the number of customers served. This plan is likely to ________ hustle and ________ rudeness.

a) increase; decrease

b) increase; increase

c) decrease; decrease

d) decrease; increase

10. Which of the following can NOT explain differences in earnings of men and women?

a) experience

b) occupation

c) unobservable characteristics

d) income maximization by all workers

11. Which of the following does NOT explain why firms and employees may prefer layoffs to wage reductions?

a) Employees may possess firm-specific training.

b) Employees may possess general training.

c) Firms may have implicitly promised a wage path to their employees.

d) Experienced workers may prefer a certain income stream to an uncertain income stream.

12. A negative compensating differential for a risky job can result if:

a) firms have market power and exploit workers.

b) some workers like risk and the demand for labor in risky jobs is relatively small.

c) supply of workers who dislike risky jobs is relatively large relative to the demand.

d) workers are fully informed about the risks on the job.

13. A promotion tournament is

a) a process to assure the most productive worker is paid his or her marginal product.

b) a process to help a corporation get rid of deadwood.

c) a way to insure that all diligent workers get big rewards.

d) a process to motivate several workers to try and win one high-paying job.

14. The schooling model predicts that the level of schooling differs between individuals because of differences in:

a) ability.

b) the rate of discount.

c) both (a) and (a).

d) neither (a) nor (b).

15. Workers with relatively high levels of natural ability are quite likely to attend college. This can cause _____________ bias when estimating educational returns because ______________ .

a) an upward, ability increases earnings

b) a downward, ability increases earnings

c) an upward, other benefits of college are ignored

d) a downward, other benefits of college are ignored

16. Which of the following types of pay is NOT linked to output?

a) commissions

b) profit sharing

c) hourly wages

d) piece-rate pay

17. The hedonic wage function:

a) summarizes the relationship between the minimum wage employees require to work and their value of leisure.

b) summarizes the relationship between the maximum wage an employer is willing to pay and the amount of capital rented.

c) summarizes the relationship between the wage workers get paid and job characteristics.

d) none of the above.

18. Employer discrimination implies that

a) some employers give up profits to avoid hiring one group.

b) if the group discriminated against is small, there will be a wage differential in the market.

c) there will be no market wage differential.

d) co-workers and customers prefer one group of workers over another.

19. Which of these is NOT an implication of the model of job search?

a) Virtually all individuals will be underemployed.

b) Workers with identical skill levels will generally receive different wages if their reservation wages differ.

c) If the cost of being unemployed falls, a persons reservation wage will fall.

d) Search unemployment is a rational strategy in a world of imperfect information.

20. If one sector of the economy becomes unionized and there is a spillover effect then

a) wages will increase in both sectors.

b) wages will increase in the unionized sector, but may either increase or decrease in the non-union sector.

c) wages will stay unchanged in both sectors.

d) wages will increase in the unionized sector, but decrease in the non-unionized sector.

21.Suppose an employer receives job applications from a blue worker and a green worker

with identical education and experience qualifications. If the employer has experienced more frequent quits by blue workers in the past, the employer may offer the job to the green worker. This would be an example of

a) statistical discrimination.

b) monopsony wage discrimination

c) preference-based employer discrimination.

d) preference-based employee discrimination.

22. A "right-to-work" law is a state law that

a) invalidates the federal minimum wage law.

b) outlaws unions.

c) allows workers to opt out of joining unions and paying union dues.

d) requires companies bidding on government contracts to pay "prevailing" union wages.

23. Compared to dangerous industries, safe industries have

a) flatter iso-profit curves.

b) steeper iso-profit curves.

c) more convex iso-profit curves.

d) more concave iso-profit curves.

24. If an employer believes that a test is more informative for White workers than the rest of the population, then

a) if a Black and a White worker obtain the same low test score, the Black worker earns a lower wage.

b) if a Black and a White worker obtain the same high test score, the Black worker earns a higher wage.

c) All firms are equally profitable regardless of employer prejudice.

d) Employment is completely integrated despite discrimination.

25. Tournaments use which type of rankings?

a) cardinal

b) ordinal

c) binary

d) random

26. The costs associated with moving do NOT include

a) the psychic costs of moving away from friends and family.

b) the costs of assimilating to the destination country.

c) the direct pecuniary costs.

d) the risk-return trade-off.

27. The OSHA may improve well-being if

a) there is a reduction in unemployment.

b) structural transformation increases the number of manufacturing jobs.

c) workers are poorly informed about the true risk of injury.

d) workers are properly informed about the true risk of injury.

28.The monopoly union model assumes that

a) the employer sets the wage, and then the union chooses the employment level.

b) the union sets the wage, and then the employer chooses the employment level.

c) the employer and the union bargain over both the wage and the employment level.

d) None of the above.

29. In the cobweb model of labor markets, a sudden increase in demand for workers causes

a) rapid convergence to the new long-run equilibrium wage and employment level.

b) sequence of "booms" and "busts."

c) permanent excess demand due to rigid wages.

d) a sudden drop in the wage.

30. If unemployed workers do not have the skills to fill the available jobs, this is called

a) frictional unemployment.

b) seasonal unemployment.

c) structural unemployment.

d) cyclical unemployment.

31. Which of the following is not typically given as a reason for job search?

a) Workers are heterogeneous.

b) Information is imperfect.

c) Firms' compensation packages differ from one another.

d) Firms are homogeneous.

32. Unions may reduce economic efficiency by:

a) providing a "voice" mechanism.

b) insisting promotions be based on ability rather than seniority.

c) imposing restrictive work rules.

d) reducing worker turnover.

33. Unemployment insurance creates an incentive for unemployed workers to:

a) avoid jobs prone to seasonal unemployment.

b) reduce effort at job search.

c) set a lower reservation wage in their job search.

d) join unions.