By reducing labor turnover, unions may increase productivity because a lower turnover rate

1

Chapter 11 MULTIPLE-CHOICE QUESTIONS

1. A single union firm in a competitive industry otherwise comprised of nonunion firms:

a. will make economic losses if it pays a wage rate above its competitors

b. will pay a higher union wage advantage than unionized firms in less competitive

industries

c. will make economic profits if it pays a wage rate equal to its rival firms

d. will produce more output than its rival firms

2. A union wage advantage is less likely to occur where:

a. the “spillover effect” outweighs the “threat effect”

b. product markets are characterized by substantial monopoly power

c. only a few firms within a competitive industry are unionized

d. there is a distinct “shock effect”

3. Union workers receive more compensation than otherwise similar nonunion workers. This fact:

a. is proof that unions raise the wages of their members relative to nonunion workers

b. could be explained by the fact that women workers are a larger proportion of weakly

unionized industries

c. could be explained by the fact that unionized industries are less capital intensive

d. could be explained by the fact that unionized firms are typically smaller

4. If Wu is the union wage and Wn is the nonunion wage, the pure union wage advantage is:

a. 100



W

WW

u

un c. 100

W

WW

n

nu

b. 100

W

W

u

n d. WWun

5. If union workers in a given occupation are paid $20 per hour while nonunion workers receive $16

per hour, the measured union wage advantage is:

a. 20% c. 80%

b. 25% d. more information is required

6. 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:

a. 20% c. 80%

b. 25% d. more information is required

7. The nonunion wage rate may fall as the result of a union wage increase because of the:

a. product-market effect c. threat effect

b. spillover effect d. compensating wage differential effect

8. The nonunion wage rate may rise as the result of a union wage increase because of the:

a. spillover effect c. threat effect

b. superior-worker effect d. compensating wage differential effect

9. The measured union wage advantage will understate the pure advantage because of the:

a. spillover effect c. product market effect

b. superior-worker effect d. compensating wage differential effect

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