1. Which of the following statements is false? a. Monopsony firms have a wage gr
ID: 1118428 • Letter: 1
Question
1. Which of the following statements is false?
a. Monopsony firms have a wage greater than the marginal labour cost because they face upward- sloping labour supply curves.
b. Monopsony firms will behave as if they are competitive if a wage is imposed at the level of the competitive wage.
c. Monopsony firms will hire more workers if a minimum wage is imposed below the monopsony wage.
d. Monopsony firms can earn a higher profit than firms operating in competitive labour markets.
2. American adults of working age work on average 35-40 % more hours per week than their counterparts in France and Germany. All of the following have been mentioned by researchers as possible explanations, except:
a. Higher payroll and incomes taxes applied to both workers and firms.
b. A greater inherent laziness among the French and the Germans.
c. Extensive regulations regarding working and employment practices.
d. Social interactions between workers during time allocated to leisure.
3. What has empirical research on the incidence of the payroll tax found?
a. That most of the burden falls upon workers
b. That there is no burden at all because the tax is free
c. That most of the burden falls upon firms
d. That payroll taxes are indeed "job killers", as claimed by economic conservatives.
4. If the labour market is perfectly competitive, labour demand function is given by ND = a + bW and labour supply function is given by NS = c + dW; W is the wage rate. After imposing a payroll tax T, market equilibrium wage rate will be:
a. lower than before the tax, and workers pay b/(b - d) share of the tax.
b. lower than before the tax, and the firm pays b/(b - d) share of the tax.
c. higher than before the tax, and the firm pays b/(b - d) share of the tax.
d. equal to its level before the tax.
5. Which of the following statements regarding the demand for labour is false?
a. If a firm is a monopsonist in the labour market, the firm's supply curve for labour is not perfectly elastic.
b. If a firm is a monopolist in the product market, the firm's demand curve is more elastic than it would be if the firm were operating in a perfectly competitive product market.
c. If a firm is a monopolist in the product market, it may still behave as a wage taker in the labour market.
d. If the firm is an monopolist in the product market, the firm's demand curve is flatter than it would be if the firm were operating in a perfectly competitive product market.
Explanation / Answer
1. C) Monopsony firms will hire more workers if a minimum wage is imposed below the monopsony wage.
Monopsony firms will hire fewer quantities of labor when minimum wage is imposed below the monopsony wage.
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