QUESTION 1 Imagine that a firm employs 100 people, all union members, at a salary of $10 per hour If the union bargains the wage up to $12 per hour and forces the firm to keep all 100 employees, how would we depict this even in a supply and demand graph a Shift the labor supply curve outward to reflect the higher wage b Shift the firm's demand curve for labor outward c Move upward along the same demand curve for labor to a new equilibrium point d The firm's demand curve for labor will shift inward to reflect its disincentive to hire workers at the higher wage QUESTION 2 A factory employs a team of 10 workers Each of the 10 workers knows how much she can produce, but the factory has no way to measure the output of any individual worker, only the team as a whole This is a situation involving a adverse selection b asymmetric information c moral hazard d non price selection QUESTION 3 Mike buys homeowner's insurance, which protects him from the financial risk of having his possessions stolen If, as a result of having this insurance, Mike becomes less diligent about locking doors and closing windows, economists would say this is a situation involving a adverse selection b counter insurance behavior c asymmetric information d moral hazard QUESTION 4 Margaret owns a small accounting firm, and she needs to hire some additional help The market wage for accountants is $20 per hour According to the efficiency wage theory, Margaret should a pay new accountants $20 per hour in order to maximize economic efficiency b pay less than $20 per hour to her new accountants, so that she can avoid a situation of adverse selection c pay more than $20 per hour in order to attract more highly skilled accountants d hire accountants to the point where marginal social benefit equals marginal social cost QUESTION 5 A rise in the minimum wage will tend to the quantity demanded of labor and the quantity supplied of labor a decrease increase b increase decrease c decrease decrease d increase increase QUESTION 6 Which of the following statements is NOT a valid argument that critics might use against the minimum wage a A minimum wage will result in increased unemployment b Small business owners will be hurt by the additional labor cost imposed by the minimum wage c Unskilled workers will end up suffering more than skilled workers if a minimum wage is enacted d Because the minimum wage prevents businesses from substituting capital for labor, total output will fall QUESTION 7 Which of the following statements about unions is NOT true a Unions have a right to form by law b The National Labor Relations board oversees the activities of unions c Unions have fought successfully in many states for right to work laws d Unions typically demand higher wages and better working conditions for their members QUESTION 8 If unemployment insurance were restricted to two weeks of benefits, workers who lost their jobs due to unemployment would be liekly to suffer the most a structural b frictional c voluntary d contractionary QUESTION 9 Right to work laws a shift power away from firms by permitting the formation of unions b permit unions to bargain for no loss negotiations, i e , contracts in which the firms agree not to fire any union members without cause c give employers the right to disband labor unions d make it illegal for an employer to require union membership as a condition of employment QUESTION 10 Negotiations between labor union representatives and the management of a firm are called a strikes b collective bargaining c legally binding arbitration d feather bedding QUESTION 11 In general, a firm that pays the efficiency wage will demand workers a more, better qualified b fewer, better qualified c more, lesser qualified d fewer, lesser qualified QUESTION 12 Economists would expect that unemployment insurance would increase the unemployment rate a True b False QUESTION 13 According to Steven Tomlinson, which group of people is most likely to lose jobs when a minimum wage law is passed a poor minorities b upper middle class whites who own businesses c middle class teenagers d primarily union workers

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QUESTION 1 Imagine that a firm employs 100 people, all union members, at a salary of $10 per hour. If the union bargains the wage

QUESTION 1

Imagine that a firm employs 100 people, all union members, at a salary of $10 per hour. If the union bargains the wage up to $12 per hour and forces the firm to keep all 100 employees, how would we depict this even in a supply-and-demand graph?

a. Shift the labor supply curve outward to reflect the higher wage.

b. Shift the firm's demand curve for labor outward.

c. Move upward along the same demand curve for labor to a new equilibrium point.

d. The firm's demand curve for labor will shift inward to reflect its disincentive to hire workers at the higher wage.

QUESTION 2

A factory employs a team of 10 workers. Each of the 10 workers knows how much she can produce, but the factory has no way to measure the output of any individual worker, only the team as a whole. This is a situation involving

a. adverse selection.

b. asymmetric information.

c. moral hazard.

d. non-price selection.

QUESTION 3

Mike buys homeowner's insurance, which protects him from the financial risk of having his possessions stolen. If, as a result of having this insurance, Mike becomes less diligent about locking doors and closing windows, economists would say this is a situation involving

a. adverse selection.

b. counter-insurance behavior.

c. asymmetric information.

d. moral hazard.

QUESTION 4

Margaret owns a small accounting firm, and she needs to hire some additional help. The market wage for accountants is $20 per hour. According to the efficiency wage theory, Margaret should

a. pay new accountants $20 per hour in order to maximize economic efficiency.

b. pay less than $20 per hour to her new accountants, so that she can avoid a situation of adverse selection.

c. pay more than $20 per hour in order to attract more highly-skilled accountants.

d. hire accountants to the point where marginal social benefit equals marginal social cost.

QUESTION 5

A rise in the minimum wage will tend to _________ the quantity demanded of labor and __________ the quantity supplied of labor.

a. decrease; increase

b. increase; decrease

c. decrease; decrease

d. increase; increase

QUESTION 6

Which of the following statements is NOT a valid argument that critics might use against the minimum wage?

a. A minimum wage will result in increased unemployment.

b. Small business owners will be hurt by the additional labor cost imposed by the minimum wage.

c. Unskilled workers will end up suffering more than skilled workers if a minimum wage is enacted.

d. Because the minimum wage prevents businesses from substituting capital for labor, total output will fall.

QUESTION 7

Which of the following statements about unions is NOT true?

a. Unions have a right to form by law.

b. The National Labor Relations board oversees the activities of unions.

c. Unions have fought successfully in many states for right-to-work laws.

d. Unions typically demand higher wages and better working conditions for their members

QUESTION 8

If unemployment insurance were restricted to two weeks of benefits, workers who lost their jobs due to __________ unemployment would be liekly to suffer the most.

a. structural

b. frictional

c. voluntary

d. contractionary

QUESTION 9