Labor Relations and Collective Bargaining Test Bank
Course Introduction
This course explores the foundations and dynamics of labor relations and collective bargaining within various organizational settings. Students will examine the legal, historical, and theoretical underpinnings of labor unions, management strategies, and the collective bargaining process. Key topics include labor laws, the negotiation process, contract administration, dispute resolution, and the impact of labor relations on organizational effectiveness. Through case studies and practical exercises, students develop a comprehensive understanding of workplace conflict resolution, employee rights, and the evolving roles of labor and management in a changing economic and social environment.
Recommended Textbook
Modern Labor Economics Theory and Public Policy 11th Edition by Ronald G. Ehrenberg
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16 Chapters
594 Verified Questions
594 Flashcards
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Chapter 1: Introduction
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Sample Questions
Q1) It has been said that "Paul will rarely complain about a plan that takes money from Peter to pay Paul." This suggests that redistributional transactions are usually
A) mutually beneficial transactions.
B) the result of government mandates.
C) voluntary transactions.
D) illegal transactions.
Answer: B
Q2) In a world without scarcity
A) there would be no costs.
B) there would be no benefits.
C) goods would have no value.
D) there would be no wants.
Answer: A
Q3) Omitted variable bias exists if the omitted variable is
A) unrelated to the dependent variable or the independent variable.
B) related to the dependent variable, but unrelated to the independent variable.
C) related to the independent variable, but unrelated to the dependent variable.
D) related to both the independent variable and the dependent variable.
Answer: D
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Page 3
Chapter 2: Overview of the Labor Market
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Sample Questions
Q1) Because workers have varying preferences about the type of work they like to do,
A) the market demand curve for chefs is downward sloping.
B) the market supply curve for chefs is upward sloping.
C) the firm supply curve for chefs is vertical.
D) the firm supply curve for chefs is horizontal.
Answer: B
Q2) Which of the following events will cause the labor demand curve to shift up and to the right?
A) a lower wage
B) an increase in product demand
C) an increase in the supply of labor
D) all of the above shift the labor demand curve up
Answer: B
Q3) Workers in an industry are probably underpaid if
A) employers have difficulty hiring and retaining qualified workers.
B) the workers cannot afford to quit their jobs.
C) the workers could receive a higher salary in another occupation.
D) firms in the industry are making a positive profit.
Answer: A
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Page 4
Chapter 3: The Demand for Labor
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Sample Questions
Q1) If a firm hires another unit of labor, output goes up by 12 units. The wage rate for the unit of labor is $6. What is the firm's cost of producing another unit of output using labor?
A) $18
B) $9
C) $1.50
D) $0.50
Answer: D
Q2) If an increase in the cost of labor causes the firm to use less capital, then
A) the scale effect has dominated over the substitution effect.
B) the substitution effect has dominated over the scale effect.
C) the firm has moved along an isoquant curve.
D) the firm has moved onto a higher isoquant.
Answer: A
Q3) When the price of capital increases, a firm will
A) employ more labor because labor has become relatively cheaper.
B) employ less labor due to the increase in costs.
C) employ the same amount of labor.
D) employ more, less, or the same amount of labor.
Answer: D
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Page 5
Chapter 4: Labor Demand Elasticities
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Sample Questions
Q1) If teenagers and adults are substitutes in production, and the wage of teenagers falls, then
A) they must be gross substitutes and the employment of adults will fall.
B) they must be gross complements and the employment of adults will fall.
C) they could be either gross substitutes or gross complements and the employment of adults could rise or fall.
D) they must be gross substitutes and the employment of adults will rise.
Q2) The minimum wage is a relatively blunt instrument with which to reduce poverty because
A) only about half the labor force is covered by the minimum wage.
B) only about half the employers comply with the law.
C) most workers whose wages are affected by minimum wage increases do not live in poor families.
D) minimum wage increases cause large increases in unemployment.
Q3) The introduction of new forms of capital generally
A) decreases the own-wage elasticity of labor demand.
B) increases the bargaining power of unions.
C) increases the own-wage elasticity of labor demand.
D) shifts the labor demand curve to the right.
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Page 6
Chapter 5: Frictions in the Labor Market
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Sample Questions
Q1) Initially, when a firm hires a fourth worker, its wage rate goes from $80 a worker to $90. The marginal revenue product of the fourth worker is $100. Then the government imposes a minimum wage of $90 a worker. If the firm now hires the fourth worker, its profits will
A) will increase by $10.
B) will increase by $20.
C) will decrease by $10.
D) will decrease by $20.
Q2) After general training, the employee's wage will be
A) equal to his or her marginal product of labor.
B) greater than his or her marginal product of labor, due to the training received.
C) less than his or her marginal product of labor, to pay for the cost of the training received.
D) either greater or less than his or her marginal product of labor.
Q3) Training costs
A) exclude opportunity costs of trainees' time.
B) arise mostly from out-of-classroom training.
C) exclude the opportunity cost of using capital equipment.
D) exclude opportunity costs of trainers' time.
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Page 7
Chapter 6: Supply of Labor to the Economy: the Decision to Work
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Sample Questions
Q1) If income is held constant and the wage rate increases, the desired hours of work will A) increase.
B) decrease.
C) stay the same.
D) change ambiguously.
Q2) A wage increase creates a substitution effect which leads the worker to desire ________ leisure, and an income effect which leads the worker to desire ________ leisure.
A) more; less
B) less; more
C) less; less
D) more; more
Q3) Empirical estimates show that for men
A) the income effect is greater than the substitution effect.
B) the substitution effect is greater than the income effect.
C) the income and substitution effects are both large so that wage changes have no effect on hours.
D) the income and substitution effects are both small so that wage changes have no effect on hours.
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Chapter 7: Labor Supply: Household Production, the Family, and
the Life Cycle
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Sample Questions
Q1) If Social Security benefits were changed so those retiring at a later age got much more got substantially then the substitution effect would probably ________ and the income effect would probably ________ on the retirement age.
A) increase, increase
B) increase, decrease
C) decrease, decrease
D) decrease, increase
Q2) If a family's budget constraint shifts because of an increase in non-labor income, then a member of the family who works outside of the home will
A) choose to decrease his or her hours of work.
B) choose to increase his or her hours of work.
C) not change his or her hours of work.
D) either increase or decrease his or her hours of work, depending on the size of the substitution effect.
Q3) If someone enjoys household production (such as raising children) this A) would be shown by a shift in his budget constraint.
B) will make his household production isoquant curves flatter than otherwise.
C) is the same as being more productive in household production.
D) will make his household production isoquant curves steeper than otherwise.
Page 9
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Chapter 8: Compensating Wage Differentials and Labor
Markets
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Sample Questions
Q1) If all workers like nice working conditions and labor markets are competitive (such that workers are mobile and fully informed), then in equilibrium
A) no worker will be in job that does not have nice working conditions.
B) workers will prefer to work in jobs with nice working conditions.
C) workers will prefer to work in jobs without nice working conditions.
D) workers will be indifferent between jobs with and without nice working conditions.
Q2) With the assumptions made in our model, OSHA standards that decrease risk levels in the workplace should establish the allowable risk levels
A) to ensure the highest degree of health and safety protection for all workers.
B) so that they will not result in higher costs/lower profits for employers.
C) by focusing on jobs currently paying the largest compensating wage differentials.
D) by weighing the costs of safety programs against the value workers or other beneficiaries attached to the benefits of reduced risk.
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Chapter 9: Investments in Human Capital: Education and Training
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Sample Questions
Q1) The wages paid by two careers, X and Y, have the same present value. Which of the following increase the likelihood that career X will pay more in wages over time (summed over the lifetime without discounting)?
A) Career X has an earlier retirement age.
B) Career X pays a much steadier wage.
C) Career X has fewer hours of work per year.
D) Career X pays the majority of its wages at a later age.
Q2) In the labor market, signals are
A) any personal characteristic viewed as an indicator of productivity.
B) any acquired characteristic viewed as an indicator of productivity.
C) any personal characteristic which is proven to increase productivity.
D) any acquired characteristic which is proven to increase productivity.
Q3) Which of the following best explains why the most rapid increase in a person's wages usually occur at younger ages, giving a concave shape to the age/earnings profile?
A) Oon-the-job training is free.
B) On-the-job training usually declines with age.
C) People who have more human capital are more likely to acquire more on-the-job training.
Page 11
D) People with children cut back their hours of work.
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Chapter 10: Worker Mobility: Migration, Immigration, and Turnover
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Sample Questions
Q1) Suppose that by moving, one could increase one's income by 20%. Which of these events will reduce the likelihood a person will move
A) wages in the person's profession, nationwide, fall dramatically.
B) the person becomes better educated.
C) markets for the person's skill become less localized.
D) the person has no children, making a good fit less important.
Q2) Which of the following would decrease the mobility of workers within a nation?
A) laws making it more costly for employers to fire workers
B) laws requiring a mandatory waiting period before persons moving into a community qualify for welfare benefits
C) an increase in the percent of jobs that are unionized
D) all of the above
Q3) If skilled and unskilled labor are gross complements, then an increase in immigration and a corresponding decrease in wages paid to unskilled laborers will cause
A) an increase in the employment of skilled labor.
B) a decrease in the employment of skilled labor.
C) no change in the employment of skilled labor.
D) a decrease in the employment of unskilled labor.
Page 12
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Chapter 11: Pay and Productivity: Wage Determination
Within the Firm
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Sample Questions
Q1) In a promotion tournament model, the salary of the winner will be higher when A) the cost of the extra effort of the losers is lower.
B) there are many qualified participants.
C) it is easy for participants to sabotage the efforts of others.
D) participants are more diverse in their ability and effort levels.
Q2) A firm penalizes workers who take excessive sick days. As a result, sick workers come to work, make other workers sick, and reduce the firm's productivity. This is an example of
A) moral hazard.
B) efficiency wage.
C) pay based upon measured aspects of work.
D) signaling.
Q3) A self-enforcing contract requires that
A) employees gain from opportunistic behavior.
B) one party receives the entire surplus.
C) both employees and employers lose by discontinuing their contract.
D) the surplus be divided equally.
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13
Chapter 12: Gender, Race, and Ethnicity in the Labor Market
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Sample Questions
Q1) Actual efforts to identify wage discrimination in the labor market
A) provide conclusive proof that wage discrimination against women exists and reduces their wages by about 10%.
B) provide conclusive proof that wage discrimination against women exists and reduces their wages by about 20%.
C) cannot prove the existence of wage discrimination because some important unmeasurable characteristics differ by gender.
D) cannot prove the existence of wage discrimination because some important measurable characteristics differ by gender.
Q2) Comparable worth analysis in Minnesota found that
A) measured worth of most jobs was completely unrelated to pay.
B) a regression of measured worth versus pay yielded a horizontal line.
C) jobs with higher measured worth received higher pay.
D) jobs with higher measured worth received lower pay.
Q3) Which of the following can NOT explain differences in earnings of men and women?
A) experience
B) occupation
C) unobservable characteristics
D) income maximization by all workers
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Page 14
Chapter 13: Unions and the Labor Market
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Sample Questions
Q1) Suppose all textile workers in the United States formed a union. Which of the following will make it more likely the union will ask for a larger wage increase (assuming the union cares about both higher wages and retaining jobs)?
A) Labor costs represent a large share of textile production costs.
B) Textile firms will not invest in capital substituting for labor in producing textiles because textiles is a declining industry.
C) Labor is a good substitute for capital.
D) Textile buyers consider U.S. textiles a good substitute for non-U.S. made textiles.
Q2) Unionization rates in the United States are highest
A) among white workers.
B) among young workers.
C) in the government sector.
D) in the manufacturing sector.
Q3) The relative union wage advantage is generally
A) about 50% in the United States.
B) smaller in the United States than in Europe.
C) larger in the public sector than in the private sector.
D) larger during recessions.
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Chapter 14: Unemployment
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Sample Questions
Q1) Unemployment tends to go up when aggregate demand falls mainly because
A) when wages fall, workers seek alternative employment.
B) unions renegotiate for lower wages, making it difficult for job searchers to find suitable jobs.
C) wage rates then to be downward rigid.
D) most human capital is general and not firm-specific.
Q2) If all employers pay an efficiency wage, then
A) more employees would shirk.
B) unemployment would be higher.
C) firms would be better able to monitor their employees productivity.
D) all of the above
Q3) The wage curve
A) shows that with higher regional rates of unemployment, wages for otherwise comparable workers are higher.
B) is evidence that most national economies have regionally integrated labor markets.
C) may exist because efficiency-wage premiums can be smaller in areas of high unemployment.
D) is evidence that wages are always at equilibrium.
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16
Chapter 15: Inequality in Earnings
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Sample Questions
Q1) Which of these decades had the greatest increase in inequality?
A) The 80s
B) The 90s
C) 2000-2008
D) Inequality has had about the same increase in each decade.
Q2) If the fraction of the people in the middle of the income distribution decreases by 20 percent with half of these moving to the lower end and the other half to the upper end, then income inequality will
A) increase.
B) decrease.
C) be unaffected.
D) uncertain.
Q3) According to the text, the main reason for the increase in inequality since 1980 is
A) the policies favored by Ronald Reagan.
B) higher compensation of corporation bosses.
C) technical change favoring those with more human capital.
D) decreased international trade.
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Chapter 16: The Labor Market Effects of International Trade and
Production Sharing
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Sample Questions
Q1) With differing comparative advantages, nations who trade (compared to when they did not trade)
A) get more of the good that they have the comparative advantage in but less of other goods.
B) get less of all goods, but are better off because they can get the mix of goods they want.
C) will only be better off if they export more than they import.
D) can get more of all goods.
Q2) Mr. X, an American, loses his job due to foreign competition. Mr. Y, an American, loses his job because other Americans shifted their demand to other goods produced in America. Both lose when these events occur. Excluding the utility of foreigners from consideration, these events are Pareto optimal when
A) Mr. X is compensated for his loss.
B) Mr. Y is compensated for his loss.
C) Both Mr. X and Mr. Y are compensated for their loss.
D) Both events are optimal without any compensation to either Mr. X or Mr. Y.
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