1. Consider a labor market in which the intersection of the demand curve and the supply curve occurs on the “backward-bending” part of the labor supply curve (i.e. the part where the labor supply curve is downward sloping), but the demand curve is steeper than the supply curve. Which of the following best describes the effect a shift to the right of the labor demand curve?

a) Equilibrium wage increases, equilibrium employment increases

b) Equilibrium wage decreases, equilibrium employment increases

c) Equilibrium wage increases, equilibrium employment decreases

d) Equilibrium wage decreases, equilibrium employment decreases

2. Compared to a firm in a competitive market, a unionized firm usually has:

a) Higher wages, higher employment

b) Higher wages, lower employment

c) Lower wages, higher employment

d) Lower wages, lower employment

3. Two identical workers:

a) Must always receive the same wage in the market

b) Never receive the same wage in the market

c) Could receive the same wage in the market

d) Do not go to the same market