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Quiz 510
Quiz 510
Quiz 510
44 Questions
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Quiz 510
5. Efficiency wages
a. increase productivity and reduce unemployment.
b. increase productivity but increase unemployment.
c. decrease productivity but reduce unemployment.
d. decrease productivity and increase unemployment.
6. Suppose that efficiency wages become more common in the economy. Imposing efficiency
wages
a. increases the quantity demanded and decreases the quantity supplied of labor.
b. decreases the quantity demanded and increases the quantity supplied of labor.
c. increases the quantity demanded and decreases the quantity supplied of labor.
d. decreases the quantity demanded and increases the quantity supplied of labor.
8. Efficiency wages
a. increase frictional unemployment by keeping wages above equilibrium.
b. decrease frictional unemployment by keeping wages at equilibrium.
c. increase structural unemployment by keeping wages above equilibrium.
d. decrease structural unemployment by keeping wages at equilibrium.
13. Susan is a plant manager in charge of a factory in a relatively poor country. Even though
market wages are low, she decides to raise the wages of her workers. Her decision
a. might increase profits if it means that the wage is high enough for her workers to eat a
nutritious diet that makes them more productive.
b. will help eliminate the excess supply of labor.
c. may cause her workers to reduce the effort they expend at their jobs.
d. All of the above are correct.
16. Buddy is the owner of a firm that bottles beer in St. Louis, Missouri. There are many other
such firms in the area. Buddy decides that if he pays his workers a wage higher than the going
market wage, his profits will increase. Which of the following is a likely explanation for his
decision?
a. The higher the wage, the less often his workers will choose to leave his firm.
b. The higher the wage, the lower will be the costs of obtaining needed supplies.
c. The higher the wage, the more he can charge for his beer
d. The higher the wage, the more he will have to monitor his workers for shirking.
17. The efficiency-wage theory of worker turnover suggests that firms with higher turnover will
have
a. higher production costs and higher profits.
b. higher production costs and lower profits.
c. lower production costs and higher profits.
d. lower production costs and lower profits.
21. Emeril is the owner of a restaurant. He decides to raise the wages of his workers even though
he faces an excess supply of labor. His decision
a. might increase profits if it attracts a better pool of workers to apply for jobs at his restaurant.
b. will reduce the excess supply of labor.
c. is an example of the benefits of a minimum-wage law.
d. All of the above are correct.
22. Michael decides to hire some additional workers for his roofing company. The equilibrium
wage is $17 per hour. Efficiency wage theory suggests that it is reasonable for Michael to offer
a. $17 per hour.
b. less than $17 per hour because some people would be willing to work for less.
c. less than $17 an hour to prevent shirking.
d. more than $17 per hour in order to attract a better pool of applicants.
23. Rafael is the newly-appointed plant manager for a company that manufactures head phones.
Rafael’s senior supervisors told him that the output the firm produces, given the number of
workers employed, indicates that some workers may be shirking. According to efficiency wage
theory, what should he do?
a. pay all workers more than the equilibrium wage rate
b. pay all workers below the equilibrium wage rate to make up for the loss from shirking
c. make sure that workers are getting paid exactly the equilibrium wage rate
d. fire the workers with the most seniority
25. Which of the following is not a reason that paying efficiency wages may increase a firm's
profit?
a. Efficiency wages increase worker health and therefore increase worker productivity.
b. Efficiency wages decrease worker turnover and therefore decrease hiring and training costs.
c. Efficiency wages decrease worker shirking and therefore increase worker productivity.
d. Efficiency wages are below the equilibrium wage rate but still attract a sufficient number of
workers.
26. Ariana is the CEO of a corporation that hires nonunion labor. According to the theory of
efficiency wages, if she decides to pay her workers more than the competitive equilibrium wage,
then
a. the profits of her firm might increase.
b. she will face a shortage of labor.
c. the turnover of her workers may increase.
d. None of the above is correct.
27. Three employers have justified their actions as follows. Whose logic is not consistent with
the logic of efficiency wage theory?
a. Instead of spending money on an electronic timing system that monitors worker hours, Tom
spends an equivalent amount of money on higher wages.
b. Dick pays his workers less than the equilibrium wage so that they will not have the time or
money to look for work somewhere else.
c. Harry pays his workers in a developing country more than the going wage hoping that they
will get a better diet and so be more productive.
d. None of the above is consistent with the logic of efficiency wage theory.
28. In which of the following situations should a firm pay efficiency wages?
a. A hiring manager can easily judge the quality of applicants, and after workers have worked for
the firm a while, they tend not to look for other jobs.
b. A hiring manager can easily judge the quality of applicants, and after workers have worked for
the firm a while, they tend to look for other jobs.
c. A hiring manager cannot easily judge the quality of applicants, and after workers have worked
for the firm a while, they tend to look for other jobs.
d. A hiring manager cannot easily judge the quality of applicants, and after workers have worked
for the firm a while, they tend not to look for other jobs.
29. According to the theory of efficiency wages, if a firm stops paying efficiency wages it is
likely to see a(n)
a. increase in the number of job applicants and an increase in how long workers stay on the job.
b. increase in the number of job applicants and a decrease in how long workers stay on the job.
c. decrease in the number of job applicants and an increase in how long workers stay on the job.
d. decrease in the number of job applicants and a decrease in how long workers stay on the job.
32. Which of the following is not a reason economies experience structural unemployment?
a. job search
b. unions
c. minimum-wage laws
d. efficiency wages
33. Which of the following causes of unemployment is not associated with a wage rate above the
market equilibrium level?
a. efficiency wages
b. job search
c. minimum-wage laws
d. unions
34. If there were no factors keeping wages from reaching equilibrium then there would be no
a. cyclical unemployment.
b. frictional unemployment.
c. structural unemployment.
d. natural rate of unemployment.
36. Which of the following causes of unemployment is associated with a wage rate above the
market equilibrium level?
a. minimum-wage laws
b. unions
c. efficiency wages
d. All of the above are correct.
38. Efficiency wages, minimum-wage laws, and unions all keep wages
a. below the equilibrium level, causing a shortage of labor.
b. below the equilibrium level, causing a surplus of labor.
c. above the equilibrium level, causing a shortage of labor.
d. above the equilibrium level, causing a surplus of labor.
39. Minimum-wage laws and unions are similar to each other but different from efficiency wages
in that minimum-wage law and unions
a. cause unemployment, but efficiency wages do not.
b. cause the quantity of labor supplied to exceed the quantity of labor demanded, but efficiency
wages do not.
c. cause wages to be above the equilibrium level.
d. prevent firms from lowering wages in the presence of a surplus of workers.
40. Unions
a. and firms paying wages above equilibrium to improve worker effort both create frictional
unemployment.
b. create frictional unemployment, while firms paying wages above equilibrium to improve
worker effort create structural unemployment.
c. create structural unemployment, while firms paying wages above equilibrium to improve
worker effort create frictional unemployment.
d. and firms paying wages above equilibrium to improve worker effort both create structural
unemployment.
41. Which famous company executive introduced an innovative pay system that is consistent
with the theory of efficiency wages?
a. Lee Iococca
b. Steve Jobs
c. Mark Zuckerberg
d. Henry Ford