econ chap 15

The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged that they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired. What is the number of unemployed?

• 
  a. 10

• b. 20

• c. 30

• 
  d. 40

The population of Ectenia is 100 people: 40 work full-time, 20 work half-time but would prefer to work full-time, 10 are looking for a job, 10 would like to work but are so discouraged that they have given up looking, 10 are not interested in working because they are full-time students, and 10 are retired.hat is the size of Ectenia's labor force?

• a. 50

• 
  b. 60

• 
  c. 70

• 
  d. 80

The main policy goal of unemployment insurance is to reduce the _________.

• a. income uncertainty that workers face

• b. amount of frictional unemployment

• 
  c. search effort of the unemployed

  
  

• d. role of unions in wage setting

  
  

One unintended consequence of unemployment insurance is that it reduces the _________.

• 
  a. income uncertainty that workers face

• 
  b. amount of frictional unemployment

  
  

• c. role of unions in wage setting

  
  

• 
  d. search effort of the unemployed

In a competitive labor market, an increase in the minimum wage results in a(n) __________ in the quantity of labor supplied and a(n) __________ in the quantity of labor demanded.

• a. decrease; decrease

• b. decrease; increase

• c. increase; decrease

• d. increase; increase

Answer explanation

In a competitive labor market, an increase in the minimum wage results in:

• - an increase in the quantity of labor supplied (workers are more willing to work at the higher wage)
  - a decrease in the quantity of labor demanded (firms hire fewer workers at the higher wage).

Approximately what percent of U.S. workers are directly affected by the minimum wage?

• a. 1

• b. 6

• c. 12

• d. 25

In the United States, unionized workers are paid about _____ percent more than similar nonunion workers

• a. 2

• b. 5

• c. 15

  
  

• d. 40

In many European nations, unions _________.

• a. are social clubs without any economic impact

• 
  b. play a much larger role than they do in the United States

• c. conspire with firms to keep wages below competitive levels

• d. are considered cartels in violation of antitrust laws

According to the theory of efficiency wages, __________.

• a. sectoral shifts are the main source of frictional unemployment

• 
  b. firms may find it profitable to pay above-equilibrium wages

• 
  c. right-to-work laws reduce the bargaining power of unions

• d. an excess supply of labor puts downward pressure on wages

Answer explanation

Efficiency-wage theory states that firms sometimes intentionally pay higher-than-equilibrium wages to boost worker productivity, reduce turnover, attract higher-quality employees, or discourage shirking. This can lead to structural unemployment, since wages are kept above the market-clearing level.

When a firm pays an efficiency wage, it may __________.

• 
  a. have to monitor its workers more closely

• b. have trouble attracting enough workers

• c. experience declines in worker quality

• d. find that its workers quit less frequently