2156 - Midterm 2 Review

What is the percentage change in union density in the base and the final periods? (Ignore the percent sign in your answer)

What is the percentage change in union density due to structural change in the composition of employment? (Ignore the percent sign in your answer)

Match the following four axioms of the Nash's bargaining solution with their definitions:

• Independence of irrelevant alternatives

• If the feasible bargaining, S, is symmetric, the solution will give equal utility increments to both parties.

• Pareto efficiency

• Only Pareto-efficient bargains will be agreed to.

• Transformation invariance

• If the parties chose outcome A from all the alternatives in the set S, then the same outcome should be chosen from the set T, which is a subset of S.

• Symmetry

• The solution is NOT altered by linear transformations of the utility function of either party.

Following are the activities that attempt to alter the constraint focus on the product market EXCEPT:

• Opposition to regulation

• Support for quotas, tariffs, and other restrictions on foreign competition

• Advertising of the product by attaching a union label on the product

• Attempting to organize all the firms in an industry

The contract curve is the locus of the Pareto-efficient (or Pareto-optimal) wage-employment outcomes, which are characterized by the points where the union's indifference curve being tangent to the firm's isoprofit curve.

• TRUE

• FALSE

The isoprofit curve and the demand for labour curve intersect at the maximum point of the demand for labour curve.

• TRUE

• FALSE

Mary and Jane have $200 to share. In the first bargaining round, Mary will propose how to share this sum, and Jane can either accept or reject Mary's proposal. If an agreement is not reached in the first round, there will be $175 to share in round 2 when Jane will propose how to share this sum, and Mary can either accept or reject Jane's proposal. If an agreement is not reached in round 2, each player will receive $50. According to Rubinstein's bargaining model, in the bargaining solution, Mary will propose that she would get how many dollars out of $200 in the first round. Ignore the dollar sign in your answer.

In a basic model of wage and employment determination, the union stipulates the wage. The firm then responds by choosing an employment level that maximizes

• Profit

• Labour costs

• Wage

• Strike duration

• Output

​ (a)   is the percentage of paid workers whose wages and working conditions are covered by a collective agreement.

​ (b)   defines the union membership as a percentage of paid workers.

Union's objective is met through ​ (c)   and the outcome in an agreement specifying wages, benefits, and aspects of employment relations.

• Collective agreement coverage
• Union density
• Collective bargaining
• Unions
• Industrial unions
• Union growth

An electricians' union is an example of ​ (a)  

• a craft union
• an industrial union
• a public employee union
• a professional association
• an employee association