Question

#1: The Equilibrium wage rate in an industry is found by
-The intersection of the firm's demand curve for labor and the riems supply curve of labor
-The intersection of the market demand curve for labor and the marginal revenue product curve of labor
-The intersection of the market demand curve for labor and the market supply curve of labor
-negotiations between the union leadership and the manager of the firms
#2: A union that pursueda policy of restrictingentry iver time into the union would:
-Also have to negotiate to be sure that all membere were able to find jobs
-Fail to obtain benefits for their workers in excess of what the workers would get under open markets
-Generate rising real wages for its membership over time as long as demand..
-See real wages hold constant over time at whatever premium they could get initially
#3: For a monopsonist, marginal factor cost exceeds the wage rate since:
-The supply of labor perfectly elastic
-When new workers are hired the wage rate must be increased for all workers and not just the additional workers
-More workers have to be paid the prevailing wage rate
-The labor demand is downward sloping
#4: When examining the financial status of households, wealth is
-A stock variable and includes both tangible assets and human capital
-Synonyms with income
-A flow variable whereas income is a stock variable
-Not as important as income because wealtg doesnt change over time

#5: Much of a person's increased productivity cancbe linked to:
a. The price elasticity of demand for the product
b. The prevalent marginal tax rate
c. The income elasticity of demand for the product
d. On-the-job training
#6: A major problem with using the egalitarian principle to distribute income is that:
a. its difficult to know when an equal distribution or income has been achieved
b. it would eliminate the incentives that rewards provide in an economic system
c. it would not be fair to the wealthy
d. there exist no mechanisms to carry out such a scheme
#7 In an attempt to reduce the poverty rate, there has been a movement away from income maintenance programs to:
a. supplemental security income programs
b. reducing the age a person can retire at
c. encouraging people to get jobs
d. incorporating the Lorenz policy in decisions

Answer 1

1. The intersection of the market demand curve for labour and the market supply curve of labour. In an industry, the equilibrium wage rate is determines by the market demand and supply for labour rather than an individual firm's demand and supply of labour curve.

2. Also have to negotiate to be sure that all members were able to find jobs. This is because restricted entry will prevent the number of firms in the market from increasing hence employment opportunities will also be stagnant. In this scenario if the unions cannot ensure employment for all its members, it will be very difficult to maintain membership numbers and have support from the labourers for its policy of restricted entry.

3. The labour demand curve is downward sloping. The exploitation is possible as the MRP curve or the labour demand curve is downward sloping.

4. A stock variable and includes both tangible assets and human capital. Wealth is an all comprising term that cakes into account the stock of wealth that a household has, both physical and human.

5. On-the-job training. This helps to increase the efficiency of the worker which has a direct positive influence on her productivity.

6. It would eliminate the incentives that rewards provide in an economic system. The entire economic system is based on incentives. Profit is an incentive for investment, increased wage is an incentive to provide increased labour and so on. The moment the pay is based on presence rather than performance and it is equal for all, the receiver will automatically lose the incentive to strike for increased productivity thereby harming the economic system by resulting in inefficient allocation of resources.

7. Supplemental security income programs. This helps to bring a person above the poverty line thereby reducing the poverty head counts and the rate of poverty.