Lesson 4.1.6.5

4.1.6.5 The influence of trade unions in determining wages and levels of employment Quiz: AQA Economics, Unit 1

20 questions

In partnership with Revision Ninja

Lesson 4.1.6.5, The influence of trade unions in determining wages and levels of employment: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. Trade unions can influence wages mainly by:

    • Negotiating with employers or threatening collective action to raise pay
    • Setting the national minimum wage by law
    • Controlling the supply of goods in the product market, which lets unions limit output so that firms sell fewer units at higher prices
    • Reducing the MRP of labour through productivity deals, which lower the value that each worker adds to the firm's output in each period
  2. Which factor increases the ability of a trade union to raise wages?

    • A high elasticity of demand for the product made by workers
    • High union membership and a low elasticity of demand for the labour concerned
    • Easy substitution of workers by machines, since employers can then replace striking staff with equipment that needs no labour at all
    • A large pool of unemployed workers willing to replace strikers
  3. The likely effect of a successful union wage rise in a perfectly competitive labour market is:

    • Employment is unchanged, since the wage rise is paid by government and so the employer's demand for labour does not change in any
    • Employment rises, because the MRP of labour falls with higher wages, which makes each additional worker cheaper to hire for the firm
    • Employment rises, since higher wages attract more firms into the market
    • Employment falls, since the wage now exceeds the MRP of marginal workers
  4. In a monopsony labour market, a trade union can:

    • Reduce the wage below the monopsony level and cut employment
    • Raise both the wage and employment towards the competitive level
    • Make the monopsonist hire workers above their MRP permanently
    • Have no effect on employment under any circumstances
  5. A union negotiates a wage above the competitive level in a perfectly competitive market where firms are price takers. What is the likely outcome?

    • A surplus of labour arises, creating unemployment
    • Employment rises as firms raise prices to cover wages
    • No unemployment, since firms absorb the wage rise
    • A shortage of labour arises, so firms hire more workers
  6. Which factor affects the ability of trade unions to influence wages in different labour markets?

    • The elasticity of demand for labour in the industry concerned
    • The colour of the union's logo and the design of its branding
    • The number of unions in the country as a whole, which sets how many bargaining groups each employer faces
    • The age of the union's oldest member, since older unions have more experience of bargaining and so can always secure higher pay
  7. A union's labour has a highly elastic demand. Its ability to raise wages is:

    • Limited, since a wage rise leads to large falls in employment
    • Strong, since employers cannot replace workers
    • Unlimited, since firms pass on all costs to consumers
    • Irrelevant, since elasticity does not affect wage negotiations
  8. Why might a union's wage gain be partly offset in the long run?

    • Unions always reduce productivity to zero, so that every wage gain is lost through a fall in output in each period of production
    • Consumers always buy more when wages rise
    • Employers may substitute capital for labour or reduce hiring, so employment and profit adjust
    • Firms refuse to pay any wage above the minimum wage
  9. A union's members work in an occupation with few substitutes, and the product has inelastic demand. The union's bargaining power is:

    • Irrelevant, since product demand does not matter to wages and bargaining power is decided only by the size of the union's membership
    • Equal to the national minimum wage
    • Relatively strong, since employers have limited options to replace labour
    • Relatively weak, since no substitutes exist for labour
  10. Which strategy is most likely to strengthen a union's bargaining position?

    • Reducing membership to limit the number of negotiations
    • Agreeing to lower wages to attract new employers
    • Avoiding any contact with the employer
    • Securing high membership coverage across the industry
  11. Employers in a monopsony pay wage W1 and hire L1. A union negotiates a higher wage W2, below MRP, and employment rises. This shows:

    • Monopsony power is irrelevant when a union is present
    • The union can offset monopsony power, raising employment towards the competitive level
    • Unions always cut employment whatever the wage
    • The monopsonist's power is increased by union bargaining
  12. Evaluate the view that trade unions always benefit workers as a whole.

    • Unions never affect pay for workers outside the union
    • Unions raise pay for members but may reduce employment for others, so the overall effect depends on the market and coverage
    • Unions always benefit all workers equally, including the unemployed
    • Unions only affect product prices, not workers' wages
  13. Which is an effect of trade union bargaining on wages in a competitive labour market?

    • Wages fall for all workers
    • Wages rise above the market-clearing level for union members, possibly creating unemployment
    • Wages are set equal to average product
    • Employment is unaffected in every case
  14. A union's membership falls by half and its bargaining power drops. What is the most likely effect?

    • A permanent rise in MRP for all workers
    • A weaker ability to raise wages, as fewer workers can credibly withhold labour
    • A stronger ability to raise wages, since fewer workers compete for the same jobs
    • No change, since membership has no effect on bargaining
  15. In a labour market with many unemployed workers, what most limits trade union influence on wages?

    • Unions have most power when many workers are unemployed
    • Unemployed workers are the union's main source of bargaining strength
    • Employers cannot replace striking workers under any circumstances
    • Employers can replace striking workers with unemployed workers, reducing the union's bargaining power
  16. Introducing a trade union into a previously perfectly competitive labour market is likely to:

    • Raise the wage for members above the competitive level and reduce the number employed
    • Leave both the wage and employment unchanged
    • Increase employment while reducing the wage for all workers
    • Lower the wage for members below the competitive level and increase employment
  17. Industrial action by a union is best described as:

    • An employer's decision to close a plant to reduce wages
    • A government action to fix wages across all industries
    • Individual workers negotiating pay privately with their employers, each on their own terms
    • Collective withdrawal of labour, such as a strike, used to press for better terms
  18. If a union in a monopsony labour market secures the competitive wage, employment will:

    • Stay the same because monopsony power is unaffected
    • Rise above the competitive level permanently
    • Fall to zero because the monopsonist cannot pay that wage
    • Rise towards the competitive level, since the wage now equals MRP at that employment
  19. Why might trade unions' effect on wages be harder to measure than it seems?

    • Union members have no effect on wages because the government sets them, so there is nothing to measure in the labour market at all
    • Union effects vary by industry, bargaining power and economic conditions, and other factors also change wages
    • Unions always have exactly the same effect in every market
    • Union effects are the same as the effects of a minimum wage, so economists can measure both with one simple test in every labour market
  20. Which is a constraint on trade union power?

    • Guaranteed employment for all union members
    • Unlimited membership in every industry, which means that unions face no restriction on how many workers can join at any time
    • Legal immunity from any form of wage negotiation, so that unions can bargain freely with employers without any legal limits at all
    • Competition from non-union workers and the threat of employers moving production abroad

All AQA Economics quizzes