Question

49. A monopsonist will pay a wage that: A. is greater than that in a perfectly competitive labor market. B. is the same as that in a perfectly competitive labor market. C. is less than that in a perfectly competitive labor market. D. maybe greater than, less than, or equal to that in a competitive labor market, depending on labor supply 50. If a single union supplies all the labor in a competitive labor market, the union probably will: A. increase labor supply to raise employment. B. restrict labor supply to raise wages. C. increase union membership to increase wages. D. behave as a monopsonist. 51. Transfer payments are not included in measures of income distribution, therefore income distribution A. overestimates the inequality of living standards. B understates the inequality of living standards. C. accurately represents the true inequality of living standards. D. could exaggerate or understate the inequality of living standards depending on whether the transfers are goods or services. 52. To which of the following policies is the Earned Income Tax Credit most closely related? A. minimum-wage laws. B. welfare C. negative income tax. D. transfer payments. 53. Current antipoverty welfare programs discourage work because: A. they make recipients more comfortable than most middle-class Americans B. benefits are reduced at such a high rate when recipients earn more income that there is little or no incentive to work once one is receiving benefits. C. antipoverty programs attract naturally lazy people to begin with. D. in order to be eligible for benefits, a recipient cannot have a job.

Answer 1

Question 49) option C)

A monopsonist is the only demander of labor in the market, thus it has the power to pay wages below the marginal revenue product of labor and to hire fewer workers than a perfectly competitive firm.

In perfect competition Labor market: MRP = average cost of Labor

In Monopsony, MRP = marginal cost of labor

Q50) option B)

Option d is wrong, in case of Monopsony, only single demander exist in the market with large number of suppliers.

Thus with single union imply that it behaves as a Monopolist & can restrict the output to raise the prices & hence restrict Labor supply to increase the wages.

Q51) option B)

In case of transfer payments, the poor gets benefitted, so if transfer payment not included in income distribution, then it will underestimate the inequality in living standards

Q52) option C)

Earned income tax credit is refundable tax credit program for low- to moderate-income working individuals , thus it's like a negative income tax.

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