36. Unions and efficiency wages usually lead to wages that are below the equilib

Question

36. Unions and efficiency wages usually lead to wages that are below the equilibrium level. True False 37. A shift in demand for a given factor of production will NOT occur if: the productivity of that factor decreases. there is a decrease in the price of a substitute factor. the productivity of that factor increases. the price of that factor falls. 38. In terms of labor supply, the substitution effect of a higher wage causes a(n): substitution of leisure for work. reduction of work time to zero. increase in the quantity of labor supplied. increase in leisure time. 39. If the age at which a person can receive Social Security benefits increases from 67 to 70, the supply of labor will increase. False True 40. An efficiency wage is: above the equilibrium wage and is paid to provide workers with an incentive increase productivity. determined by collective bargaining between unions and management. efficient because it is exactly equal to the wage rate implied by the marginal productivity theory. equal to the value of the marginal product of laboradjusted so as to make the structure of compensation more equitable. 36. Unions and efficiency wages usually lead to wages that are below the equilibrium level. True False

Explanation / Answer

36. False they lead to wages above the equilibrium wage rate.

37. the price of that factor falls.

Shift in demand occurs due to change in factors other than the price of the commodity.

38. increase in the quantity of labor supplied

Substitution effect always induced a worker to work more at higher wage.

39. True as people receive benefit after age of 70 so they will work for 3 year after 67 of age.

40. above the equilibrium wage and is paid to provide workers with an incentive increase productivity.

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