Law and Economics of Labor

Description: This quiz covers the intersection of law and economics as it relates to labor markets. Questions will explore topics such as minimum wage laws, labor unions, and discrimination in the workplace.
Number of Questions: 15
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Tags: labor economics law and economics employment law
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Which of the following is a primary goal of minimum wage laws?

  1. To increase the supply of labor.

  2. To decrease the demand for labor.

  3. To raise the wages of low-skilled workers.

  4. To reduce unemployment.


Correct Option: C
Explanation:

Minimum wage laws are designed to set a floor on wages, below which employers cannot legally pay their workers. The primary goal of these laws is to raise the wages of low-skilled workers, who are often the most vulnerable to exploitation.

What is the main argument in favor of labor unions?

  1. They increase the bargaining power of workers.

  2. They reduce the cost of labor for employers.

  3. They promote economic growth.

  4. They reduce inequality.


Correct Option: A
Explanation:

Labor unions are organizations that represent the interests of workers in negotiations with employers. The main argument in favor of labor unions is that they increase the bargaining power of workers, allowing them to negotiate for higher wages, better benefits, and safer working conditions.

What is the primary legal mechanism for addressing discrimination in the workplace?

  1. The Equal Pay Act of 1963.

  2. The Civil Rights Act of 1964.

  3. The Age Discrimination in Employment Act of 1967.

  4. The Americans with Disabilities Act of 1990.


Correct Option: B
Explanation:

The Civil Rights Act of 1964 is the primary legal mechanism for addressing discrimination in the workplace in the United States. It prohibits discrimination on the basis of race, color, religion, sex, or national origin in employment, among other areas.

Which of the following is a common argument against minimum wage laws?

  1. They lead to higher unemployment.

  2. They reduce the quality of goods and services.

  3. They discourage investment.

  4. They increase the cost of living.


Correct Option: A
Explanation:

One of the most common arguments against minimum wage laws is that they lead to higher unemployment, particularly among low-skilled workers. This is because employers may be less likely to hire workers if they are required to pay them a higher wage.

What is the main purpose of the National Labor Relations Act of 1935?

  1. To promote collective bargaining.

  2. To regulate child labor.

  3. To set minimum wage standards.

  4. To provide unemployment benefits.


Correct Option: A
Explanation:

The National Labor Relations Act of 1935, also known as the Wagner Act, is a federal law that promotes collective bargaining and protects the rights of workers to organize and engage in union activities.

Which of the following is an example of a non-wage benefit that labor unions may negotiate for?

  1. Paid sick leave.

  2. Health insurance.

  3. Retirement benefits.

  4. All of the above.


Correct Option: D
Explanation:

Non-wage benefits are benefits that workers receive in addition to their wages. Examples of non-wage benefits that labor unions may negotiate for include paid sick leave, health insurance, retirement benefits, and other benefits that improve the quality of life for workers.

What is the term for the situation where workers are paid less than the minimum wage?

  1. Wage theft.

  2. Wage discrimination.

  3. Wage exploitation.

  4. Wage suppression.


Correct Option: A
Explanation:

Wage theft is the term for the situation where workers are paid less than the minimum wage or are not paid for all of the hours they work. This can be a serious problem, as it can lead to workers being unable to meet their basic needs.

Which of the following is an example of a labor market institution?

  1. Minimum wage laws.

  2. Labor unions.

  3. Social security.

  4. Unemployment insurance.


Correct Option: B
Explanation:

Labor market institutions are institutions that affect the functioning of labor markets. Examples of labor market institutions include minimum wage laws, labor unions, social security, and unemployment insurance.

What is the main purpose of the Fair Labor Standards Act of 1938?

  1. To set minimum wage standards.

  2. To regulate child labor.

  3. To promote collective bargaining.

  4. To provide unemployment benefits.


Correct Option: A
Explanation:

The Fair Labor Standards Act of 1938 is a federal law that sets minimum wage standards, regulates child labor, and requires employers to pay overtime pay to employees who work more than 40 hours per week.

Which of the following is an example of a labor market externality?

  1. Pollution from a factory.

  2. Traffic congestion caused by commuting workers.

  3. The spread of infectious diseases in the workplace.

  4. All of the above.


Correct Option: D
Explanation:

Labor market externalities are costs or benefits that are imposed on third parties as a result of labor market activities. Examples of labor market externalities include pollution from a factory, traffic congestion caused by commuting workers, and the spread of infectious diseases in the workplace.

What is the term for the situation where employers pay workers different wages for the same job based on their race, gender, or other protected characteristic?

  1. Wage discrimination.

  2. Wage theft.

  3. Wage exploitation.

  4. Wage suppression.


Correct Option: A
Explanation:

Wage discrimination is the term for the situation where employers pay workers different wages for the same job based on their race, gender, or other protected characteristic. This is a serious problem, as it can lead to workers being paid less than they deserve and being unable to meet their basic needs.

Which of the following is an example of a labor market policy?

  1. Minimum wage laws.

  2. Labor unions.

  3. Social security.

  4. Unemployment insurance.


Correct Option: A
Explanation:

Labor market policies are government policies that are designed to affect the functioning of labor markets. Examples of labor market policies include minimum wage laws, labor unions, social security, and unemployment insurance.

What is the main purpose of the Equal Pay Act of 1963?

  1. To promote equal pay for equal work.

  2. To regulate child labor.

  3. To set minimum wage standards.

  4. To provide unemployment benefits.


Correct Option: A
Explanation:

The Equal Pay Act of 1963 is a federal law that prohibits employers from discriminating on the basis of sex in the payment of wages for equal work.

Which of the following is an example of a labor market imperfection?

  1. Minimum wage laws.

  2. Labor unions.

  3. Social security.

  4. Unemployment insurance.


Correct Option: A
Explanation:

Labor market imperfections are factors that prevent labor markets from operating efficiently. Examples of labor market imperfections include minimum wage laws, labor unions, social security, and unemployment insurance.

What is the term for the situation where workers are paid less than the market wage due to monopsony power?

  1. Wage theft.

  2. Wage discrimination.

  3. Wage exploitation.

  4. Wage suppression.


Correct Option: D
Explanation:

Wage suppression is the term for the situation where workers are paid less than the market wage due to monopsony power. This can occur when there is only one buyer of labor in a market, such as a single employer in a small town.

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