Question 1

A wage- setting union in a monopsonistic market:

Accepted Answer

A)  can raise both wages and employment above the level set by the monopsonist.
B)  can raise wages above the level set by the monopsony but only if it allows employment to fall below the level set by the monopsonist.
C)  gains its wage and employment demands by presenting the employer with a perfectly inelastic supply of labour.
D)  can raise wages to what would be the competitive level but no higher.E) None of the above
F) All of the above

Question 2

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour and a minimum wage is imposed on the firm. Relative to the initial monopsony equilibrium, the minimum wage will induce the firm to increase employment if the minimum wage is:

Accepted Answer

A)  less than $30.
B)  less than $50.
C)  larger than $20, but less than $40.
D)  larger than $30, but less than $50.E) A) and C)
F) B) and D)

Question 3

The fact that Lady Gaga earns tens of millions of dollars every year:

Accepted Answer

A)  is due to the lack of substitutability between quality and quantity.
B)  is highly unfair.
C)  cannot be explained by the mechanism driving the New York Times bestseller list.
D)  is a matter of luck.E) All of the above
F) A) and D) A

Question 4

In market 1, the demand for labour is w1 = 100 - z1, where w1 is the wage rate and z1 is the number of workers. Similarly, in market 2 the demand for labour is w2 = 100 - z2. There are 100 workers to be allocated to the two markets, and workers are concerned only with their expected wage. If the two labour markets are competitive, then in equilibrium workers are allocated to the two markets in which of the following ways?

Accepted Answer

A)  60 workers to market 1 and 40 to market 2
B)  70 workers to market 1 and 30 to market 2
C)  50 workers to market 1 and 50 to market 2
D)  40 workers to market 1 and 60 to market 2E) B) and C)
F) A) and D)

Question 5

Superstar markets exist in:

Accepted Answer

A)  PC sales but not in CD market.
B)  athletics but not entertainment.
C)  book sales but not in the market for clerical jobs.
D)  music but not in academia.E) A) and C)
F) C) and D) C

Question 6

A wage floor in a two- sector model does all of the following except:

Accepted Answer

A)  reallocate workers to the low wage sector.
B)  allocate workers to their most productive jobs.
C)  reduce wages for unprotected workers.
D)  cause some workers to be underemployed.E) A) and C)
F) All of the above

Question 7

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Accepted Answer

If the welfare of the first family is me...

Question 8

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

Accepted Answer

A)  $20.
B)  $40.
C)  $30.
D)  $50.E) B) and D)
F) B) and C)

Question 9

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Accepted Answer

The efficient transfer mechanism is conc...

Question 10

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Accepted Answer

A)  identical to the supply of labour at all wages.
B)  horizontal while the wage is greater than the supply of labour.
C)  steeper than the supply of labour at all wages.
D)  flatter than the supply of labour at all wages.E) A) and B)
F) None of the above

Question 11

In the markets for superstars:

Accepted Answer

A)  the individuals competing are relatively numerous.
B)  the difference in talent between the ones that make it an those that don't is significant.
C)  highly talented individuals earn disproportionately higher wages.
D)  the homogeneity of incomes is similar with the ones of many professions.E) None of the above
F) B) and D) C

Question 12

The distribution of income depends primarily on:

Accepted Answer

A)  political power.
B)  initial endowments.
C)  hours worked.
D)  prevailing input prices.E) B) and C)
F) A) and C)

Question 13

Provide a few examples illustrating how luck plays a role in the distribution of income.

Accepted Answer

Being born with a set of talen...

Question 14

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Accepted Answer

A)  will decrease employment.
B)  may increase employment.
C)  will decrease the wage rate in the long run.
D)  will reduce the average earnings of those employed in the initial competitive equilibrium.E) A) and C)
F) A) and D)

Question 15

Which of the following are reasons for altering the redistribution of income?

Accepted Answer

A)  Reduce poverty.
B)  Income distribution rests too much on luck.
C)  Market distribution is inefficient.
D)  Government redistribution is not just.E) B) and D)
F) A) and B)

Question 16

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Accepted Answer

A)  People are self- interested.
B)  Moral judgments must be impersonal.
C)  People accept risk.
D)  Impersonal judgments lead to equal incomes.E) A) and B)
F) A) and C)

Question 17

A union wage is like a minimum wage in that it does all of the following except:

Accepted Answer

A)  increase employment in monopsony markets.
B)  decrease employment in competitive markets.
C)  increase income equality.
D)  increase efficiency in monopsony markets.E) C) and D)
F) A) and D)

Question 18

The negative income tax:

Accepted Answer

A)  is similar with the topping- up mechanism.
B)  provide a simple scheme to redistribute income to poorer members of society.
C)  introduces less inefficiency than the one associated with the topping- up mechanism.
D)  encourages potential recipients to give up work.E) C) and D)
F) A) and D)

Question 19

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

Accepted Answer

A)  Wage rates in Cornwall decreased.
B)  Workers left the town in search of another monopsony market.
C)  Wage rates in Cornwall increased.
D)  The price of goods sold by the Cornwall company decreased.E) All of the above
F) B) and C)

Question 20

Standard welfare systems are:

Accepted Answer

A)  inefficient because they discourage recipients from working.
B)  ineffective programs for encouraging technological innovation.
C)  effective institutions for equalizing the income distribution.
D)  efficient because they rely on lump sum taxes.E) A) and D)
F) C) and D)

Exam 12: Labour Market Applications

A wage- setting union in a monopsonistic market:

Correct Answer
verified

Correct Answer
verified

The fact that Lady Gaga earns tens of millions of dollars every year:

Correct Answer
verified
A

Correct Answer
verified

Superstar markets exist in:

Correct Answer
verified
C

A wage floor in a two- sector model does all of the following except:

Correct Answer
verified

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Correct Answer
verified
If the welfare of the first family is me...
View Answer

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

Correct Answer
verified

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Correct Answer
verified
The efficient transfer mechanism is conc...
View Answer

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Correct Answer
verified

In the markets for superstars:

Correct Answer
verified
C

The distribution of income depends primarily on:

Correct Answer
verified

Provide a few examples illustrating how luck plays a role in the distribution of income.

Correct Answer
verified
Being born with a set of talen...
View Answer

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Correct Answer
verified

Which of the following are reasons for altering the redistribution of income?

Correct Answer
verified

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Correct Answer
verified

A union wage is like a minimum wage in that it does all of the following except:

Correct Answer
verified

The negative income tax:

Correct Answer
verified

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

Correct Answer
verified

Standard welfare systems are:

Correct Answer
verified

Exam 12: Labour Market Applications

A wage- setting union in a monopsonistic market:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The fact that Lady Gaga earns tens of millions of dollars every year:

Correct AnswerverifiedA

Correct AnswerverifiedShow Answer

Superstar markets exist in:

Correct AnswerverifiedC

A wage floor in a two- sector model does all of the following except:

Correct AnswerverifiedShow Answer

Comment on the following statement: "A family with lower income but more children than another family is necessarily worse off."

Correct AnswerverifiedIf the welfare of the first family is me...View AnswerShow Answer

The supply of labour to a monopsonistic firm is w = 10 + z, where w is the wage rate and z is quantity of labour. The firm's MRP = 70 - z. The firm employs only labour. The wage rate which maximizes the firm's profit is:

Correct AnswerverifiedShow Answer

Outline the main difficulties with implementing an efficient transfer mechanism in practice.

Correct AnswerverifiedThe efficient transfer mechanism is conc...View AnswerShow Answer

In a monopsony labour market with minimum wage legislation, a firm's MFC is:

Correct AnswerverifiedShow Answer

In the markets for superstars:

Correct AnswerverifiedC

The distribution of income depends primarily on:

Correct AnswerverifiedShow Answer

Provide a few examples illustrating how luck plays a role in the distribution of income.

Correct AnswerverifiedBeing born with a set of talen...View AnswerShow Answer

Consider a labour market initially in competitive equilibrium. The introduction of an effective minimum wage:

Correct AnswerverifiedShow Answer

Which of the following are reasons for altering the redistribution of income?

Correct AnswerverifiedShow Answer

Which of the following is not an aspect of the argument for reducing inequality in the income distribution?

Correct AnswerverifiedShow Answer

A union wage is like a minimum wage in that it does all of the following except:

Correct AnswerverifiedShow Answer

The negative income tax:

Correct AnswerverifiedShow Answer

At one point in time, a company had monopsony power in the town of Cornwall's labor market. But over time, new businesses moved to the area and the monopsony power was broken. What happened when the company lost its monopsony power?

Correct AnswerverifiedShow Answer

Standard welfare systems are:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
If the welfare of the first family is me...
View Answer

Correct Answer
verified

Correct Answer
verified
The efficient transfer mechanism is conc...
View Answer

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified
Being born with a set of talen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified