4.1.6.4 Wage determination and employment in imperfectly competitive labour markets Quiz: AQA Economics, Unit 1

The 20 questions

1. What type of labour market features a single dominant buyer of labour?

   • Monopoly
   • Perfect competition
   • Monopsony
   • Oligopoly

2. For a profit-maximising monopsonist, the marginal cost of labour is always:

   • below the wage
   • above the wage
   • equal to wage
   • equal to revenue

3. Compared to a competitive labour market, a monopsonist pays a wage rate that is:

   • higher
   • unrestricted
   • the same
   • lower

4. A monopsonist faces MRP = 20 - L and marginal cost MCL = 4 + L. What is profit-maximising employment?

   • 8 workers
   • 4 workers
   • 12 workers
   • 16 workers

5. If a worker's MRP is £9 and the monopsonist pays £6, what is the level of monopsonistic exploitation per worker?

   • £3
   • £15
   • £6
   • £9

6. Imperfect information about available job vacancies across a region primarily leads to:

   • perfect wage equality
   • lower worker wages
   • excess labour demand
   • higher labour mobility

7. Monopsony power, trade unions, and imperfect information are all examples of:

   • labour market imperfections
   • fiscal policy tools
   • macroeconomic objectives
   • perfect market features

8. A town has one main employer and workers cannot easily move away. Which concept is illustrated?

   • Monopoly power
   • Monopsony power
   • Bilateral monopoly
   • Perfect competition

9. For a monopsonist hiring an extra worker, what happens to the wage paid to existing staff?

   • It increases
   • It remains constant
   • It becomes zero
   • It decreases

10. Compared to perfect competition, how do wages and employment levels differ under monopsony?

    • Both are higher
    • Both are lower
    • Wages are higher
    • Employment is higher

11. What defines a pure monopsony labour market?

    • Single buyer
    • Many buyers
    • Single seller
    • Price taker

12. When a trade union enters a monopsony labour market, what can happen to wages and employment?

    • Wages fall
    • Employment falls
    • Both must fall
    • Both can rise

13. What market failure allows an employer to pay workers less than their marginal revenue product?

    • High elasticities
    • Imperfect information
    • Perfect mobility
    • Perfect competition

14. In a monopsony labour market, which curve represents the employer's demand for labour?

    • Marginal revenue product
    • Average cost curve
    • Supply curve
    • Marginal cost curve

15. What causes deadweight welfare loss in a monopsony labour market?

    • Minimum wage laws
    • Overemployment of labour
    • Underemployment of labour
    • Excess labour supply

16. Which factor directly reduces a firm's monopsony power in the labour market?

    • Decreased minimum wage
    • Geographical immobility
    • Lower information
    • Trade union entry

17. If a worker's marginal revenue product is £40 and their wage is £30, what is the exploitation gap?

    • £30
    • £10
    • £40
    • £70

18. Imperfect information about job vacancies in other towns primarily reduces which type of mobility?

    • Geographical mobility
    • Occupational mobility
    • Horizontal mobility
    • Vertical mobility

19. In a monopsony labour market, where does the marginal cost of labour curve lie relative to supply?

    • Perpendicular to supply
    • Below supply curve
    • Along supply curve
    • Above supply curve

20. Which market structure features a single dominant buyer of labour?

    • Perfect competition
    • Oligopoly
    • Monopsony
    • Monopoly

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