Test 12/10

Question 1

PC Labor Market

Answer 1

• many small firms
• workers have industrial skills
• wage is constant
• workers are wage takers

Question 2

What is the reason that the resource demand curve is down sloping in pure competition?

Answer 2

Diminishing productivity

Question 3

In imperfect competition, why does the resource demand curve sloping downward?

Answer 3

Marginal product diminishes and product price falls as output increases

Question 4

MP • P = MRP will not work for

Answer 4

Imperfect competition

Question 5

MRP =

Answer 5

Change in TR/ change in resource quantity

Question 6

MRC =

Answer 6

Change in TC/ change in resource quantity

Question 7

MRP- demand for resource depends on

Answer 7

• productivity of resource

- market value or price of good produced

Question 8

Factors that determine the sensitivity of producers to changes in resource prices: elasticity of resource demand

Answer 8

-ease of resource substitutability
• the larger the number of good substitute resources available, the greater the elasticity of demand for a particular resource
-elasticity of product demand
• the greatest the elasticity of product demand, the greater the elasticity of resource demand; derived demand is reason
-labor cost-total ratio
•the larger the proportion of total production cost accounted for by a resource, the greater will be the elasticity of demand for that resource

Question 9

Least cost rule

Answer 9

MPL/PL=MPC/PC

Question 10

Profit maximization rule

Answer 10

MRPL/PL=1

MPRC/PC=1

Question 11

Wage and wage rates

Answer 11

The price paid for labor. Wage is said to mean some wage rate per unit of time. Weekly or monthly salaries, bonuses, royalties, commissions are also forms of wages

Question 12

Nominal wage

Answer 12

The amount of money received per hour, per day or whatever the time frame

Question 13

Real wage

Answer 13

The quantity of goods and service a person can obtain with nominal wages; purchasing power of nominal wages

Question 14

Demand for labor depends on productivity

Answer 14

• plentiful capital: total capital available per worker in US is about $75,000
• access to abundant natural resources: departed or imported
• advanced technology: use of technologically superior equipment and scientific study and research
• labor quality: high living standards in health and education give us an edge
• intangible factors: efficiency and flexibility of management, business, social and political environment m, vast size of market

Question 15

Market demand

Answer 15

Sum of labor demand curves of the individual firms

Question 16

Market supply

Answer 16

Assume no Union, slopes upward because as a group, the firms must pay higher wages rates to obtain more workers; workers have some alternative

Question 17

MRC = supply

Answer 17

For PC only

Question 18

Union goals

Answer 18

• increased wages
• increased benefits
• better working conditions

Question 19

Factors other than wages that affect the supply of labor

Answer 19

• attractiveness of the job
• skill required
• required training
• mobility

Question 20

Craft Union

Answer 20

Skilled workers in a particular trade

Question 21

Industrial union

Answer 21

Skilled and unskilled workers in a particular industry

Question 22

Sherman antitrust act

Answer 22

First important federal measure to limit the power of companies that controlled a high percentage of market share

Question 23

Clayton antitrust act

Answer 23

Outlawed anything that would “lesson competition or tend to create a monopoly in any line of commerce”

Question 24

Norris-LaGuardia Act

Answer 24

• Limited the use of injunctions (court order) by judges to stop strikes
• ended the use of yellow dog contracts (written pledge not to join Union)

Question 25

National labor relations act (Wagner act)

Answer 25

Guaranteed workers the right to unionize and engage in collective bargaining (negotiating a labor contract)

Question 26

Fair labor standards act

Answer 26

- provided for minimum wage | - provided time and a half for overtime beyond 40 hours per week- for hourly wage earners

Question 27

Labor management relations act (Taft Hartley)

Answer 27

- prevented employees from engaging in "unfair labor practices" - outlawed closed shops (had to be in Union to get job, couldn't get job until in Union) - permitted Union shops (forced you to join Union) - gave the power of injunction to the US president for strikes that threaten the "national safety" - permitted "right to work laws" and open shops (get to choose whether or not to be in Union)

Question 28

Conciliation

Answer 28

A third party tries to bring labor and management together to end dispute

Question 29

Mediation

Answer 29

A third party makes suggestions on how to solve labor disputes (non binding)

Question 30

Arbitration

Answer 30

A third party hears both sides of labor dispute and makes a decision (legally binding)

Question 31

Tactics of management

Answer 31

1. Company Union: a Union organized and financed by management 2. Lockout: management shuts down a company- "locks out" the employees 3. Injunction: court order to keep employees from striking 4. Yellow-Dog Contract: agreeing not to join the union when hired 5. Blacklist: list distributed and designed to keep people from getting hired in an industry

Question 32

Tactics of labor

Answer 32

- strike - picketing - slowdown (go to work but don't actually do much) - closed shops - boycott - Union shops

Question 33

If nominal wage increase is less than price level, real wage?

Answer 33

Drops

Question 34

Which graphs show tactics of industrial union?

Answer 34

Industrial and bilateral

Question 35

Which graphs show tactics of a monopsony?

Answer 35

Monopsony and bilateral