Wage Quantity of Labor Rate Demanded
$16 800
14 1,000
12 1,200
10 1,600
8 1,800
Refer to the given data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $10 to $12. As a result of the wage increase, firms will hire:.
a. fewer workers and the total paid out for wages will decline.
b. fewer workers, but the total paid out for wages will increase.
c. fewer workers, but the total paid out for wages will remain unchanged.
d. more capital, if capital and labor are used in fixed proportions in production.
2. If the price of capital declines, the consequent output effect would be:.
a. greater, the more elastic the demand for the product.
b. greater, the less elastic the demand for the product.
c. negative.
d. of consequence only if capital and labor are used in fixed proportions.
3. Which of the following describes the equilibrium condition in a purely competitive labor market?
A. MRP = Wage Rate.
B. MRP > Wage Rate.
C. Wage Rate > MRC.
D. Wage Rate < MRC.
4. Suppose all workers are identical, but working for Ajax is more pleasant than working for Acme. In all other nonwage aspects the two firms offer the same job characteristics. We would expect:.
a. wage rates at Ajax to be higher than at Acme.
b. wage rates at Ajax to be lower than at Acme.
c. wage rates at Ajax and Acme to be the same.
d. workers at Ajax would have to be monitored more closely than at Acme.