A single union firm in a competitive industry otherwise comprised of nonunion fi

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A single union firm in a competitive industry otherwise comprised of nonunion firms: will make economic losses if it pays a wage rate above its competitors will pay a higher union wage advantage than unionized firms in less competitive industries will make economic profits if it pays a wage rate equal to its rival firms will produce more output than its rival firms A union wage advantage is less likely to occur where: the "spillover effect" outweighs the "threat effect" product markets are characterized by substantial monopoly power only a few firms within a competitive industry are unionized there is a distinct "shock effect" Union workers receive more compensation than otherwise similar nonunion workers. This fact: is proof that unions raise the wages of their members relative to nonunion workers could be explained by the fact that women workers are a larger proportion of weakly unionized industries could be explained by the fact that unionized industries are less capital ensive could be explained by the fact that unionized firms are typically smaller If Wu is the union wage and Wn is the nonunion wage, the pure union wage advantage is: Wn - Wu/Wu times 100 Wn/Wu times 100 Wu - Wn/Wn times 100 Wn - Wu It union workers in a given occupation are paid $20 per hour while nonunion workers receive $16 per hour, the measured union wage advantage is: 20% 25% 80% more information is required If nonunion workers in a given occupation are paid $16 per hour while union workers receive $20 per hour, the pure union wage advantage is: 20% 25% 80% more information is required The nonunion wage rate may fall as the result of a union wage increase because of the: product-market effect spillover effect threat effect compensating wage differential effect The nonunion wage rate may rise as the result of a union wage increase because of the: spillover effect superior-worker effect threat effect compensating wage differential effect The measured union wage advantage will understate the pure advantage because of the: spillover effect superior-worker effect product market effect compensating wage differential effect Suppose the union wage rate rises. The "spillover effect" suggests that the nonunion wage rate should _____; the "threat effect" suggests that the nonunion wage rate should _____. fall, fall rise, fall fall, rise rise, rise "The union wage advantage is understated because nonunion wages rise as consumer demand shifts away from relatively higher priced union produced goods." This describes the: product-market effect spillover effect superior-worker effect threat effect Questions 12 - 16 refer to the following diagram. Wages in both the union and nonunion sectors are initially $10. The union then negotiates a wage rate of $12. The post-negotiation nonunion wage is not yet known. The pure union wage advantage in this market is: 20% 25% $2 More information is needed The measured union wage advantage in this market is: 20% 25% $2 More information is needed The product market effect would be modeled by shifting the: nonunion supply curve to the right, increasing the measured union wage advantage nonunion demand curve to the right, reducing the measured union wage advantage union demand curve to the right, increasing the measured union wage advantage union supply curve to the right, reducing the pure union wage advantage The threat effect would be modeled by: shifting the nonunion supply curve to the right, increasing the measured union wage advantage shifting the nonunion demand curve to the right, reducing the measured union wage advantage shifting the union demand curve to the right, increasing the measured union wage advantage raising the nonunion wage above its equilibrium level, decreasing the measured union wage advantage The spillover effect would be modeled by: shitting the nonunion supply curve to the right, increasing the measured union wage advantage shitting the nonunion demand curve to the right, reducing the measured union wage advantage shifting the union demand curve to the right, increasing the measured union wage advantage raising the nonunion wage above its equilibrium level, reducing the true union wage advantage It is difficult to measure the pure union wage advantage because: women constitute a greater proportion of the work force in strongly unionized industries than in weakly unionized industries unionized industries tend to have larger plants that may require greater worker supervision, thus promoting union employers to seek out "superior" workers unionized industries tend to employ production methods that are highly labor- ensive and therefore require lower-paid unskilled workers unions are more easily established in those industries that pay low wages, so that the percentage wage gains are much smaller The measured union wage advantage may overstate the pure union wage advantage because: workers who lose their jobs in the union sector may seek and obtain jobs in the nonunion sector, reducing wage rates in the latter nonunion employers may increase the wages they pay their workers to reduce the likelihood their firms will become unionized workers who lose their jobs in the union sector may prefer to remain in the union sector, hoping to be recalled rather than accepting lower-paying nonunion wages unionized plants tend to be less efficient, resulting in lower marginal products of union workers Hirsch and Macpherson estimate the overall union wage advantage to be approximately: 4% 9% 15% 28% Compared to the private sector, empirical research suggests that the union wage advantage in the public sector is approximately: 5 percentage points lower 5 percentage points higher 10 percentage points lower the same The union wage advantage: peaked in the mid-1970s has fallen consistently since 1965 peaked in the mid-1990s has risen consistently since 1965 Which one of the following is a true statement? The union wage advantage is smaller if fringe benefits are included The union wage advantage is greater if fringe benefits are included Inclusion of fringe benefits has no measurable impact on the union wage advantage Because fringe benefit levels are prescribed by law, the impact of these benefits on the union wage advantage is negligible The union wage advantage tends to: decrease during recessions be smaller among lower-educated workers be smaller among African Americans be larger among craft unions Which one of the following is a true statement? The union wage advantage narrows during récessions There is no union wage advantage for African American males Unions achieve bigger wage gains for clerical workers than workers in crafts The union wage advantage is bigger for workers with less education than for workers with more education Which one of the following does not help to explain why union workers receive more fringe benefits than nonunion workers? The unionized firm is willing to pay both higher wages and fringe benefits to avoid the costs of a strike The higher incomes of union workers allow them to "purchase" more fringe benefits Unions are primarily composed of younger workers who have more to gain from long-term compensation such as the kind provided by union pension plans As collective voice institutions, unions may hetter formulate fringe benefit proposals, inform their membership of their worth, and communicate these desires to the firm Unions may reduce economic efficiency by: providing an "exit" mechanism insisting promotions be based on ability rather than seniority imposing restrictive work rules reducing worker turnover Unions may increase economic efficiency by: providing an "exit" mechanism insisting promotions be based on ability rather than seniority imposing restrictive work rules reducing worker turnover Unions may increase productivity by: providing a "voice mechanism" providing an "exit mechanism" reducing the capital/labor ratio increasing worker turnover, particularly anions younger workers so that only the best employees survive By reducing labor turnover, unions may increase productivity because a lower turnover rate: results in a less-experienced workforce increases the incentive for firms to provide specific training to their workers allows firms to employ a greater number of younger, more energetic workers increases the incentive for firms to substitute labor for capital in the production process

Explanation / Answer

1.c

2.a

3.b

4.d

5.c

6.a

7.c

8.c

9.b

10.d

11.a

12.d

13.c

14.b

15.d

16.c

17.d

18.d

19.c

20.a

21.b

22.a

23.a

24.c

25.b

26.d

27.c

28.d

29.a

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