Lesson 5.3.1

5.3.1 Wage differentials, monopsony and wage determination Quiz: OCR Economics, Unit 5

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

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Lesson 5.3.1, Wage differentials, monopsony and wage determination: 20 multiple choice questions for the OCR Economics (H460), Unit 5: The labour market, written with Revision Ninja.

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The 20 questions

  1. What defines a monopsony employer in a local labour market?

    • Many buyers
    • Many sellers
    • A single seller
    • A single buyer

  2. What is the shape of the supply curve of labour for a perfectly competitive firm?

    • Horizontal line
    • Upward sloping
    • Vertical line
    • Downward sloping

  3. At what point does a monopsonist employer achieve profit-maximising employment of labour?

    • MRP = Wage
    • MRP = MCL
    • MRP = ACL
    • MCL = ACL

  4. What term describes the addition to total cost when a firm hires one extra worker?

    • Total cost
    • Average cost
    • Marginal cost
    • Variable cost

  5. A worker produces 5 extra output units sold at £4 each. What is their Marginal Revenue Product?

    • £1.25
    • £9
    • £10
    • £20

  6. What type of wage differential compensates workers for hazardous or unsociable working conditions?

    • Economic rent
    • Compensating differential
    • Transfer earnings
    • Efficiency wage

  7. What term describes the minimum income necessary to retain a factor of production in its present employment?

    • Supernormal profit
    • Economic rent
    • Transfer earnings
    • Marginal revenue

  8. When the supply of labour to an occupation is highly inelastic, most worker income consists of what?

    • Marginal cost
    • Consumer surplus
    • Transfer earnings
    • Economic rent

  9. What is the effect on employment when a minimum wage is introduced above competitive equilibrium?

    • Employment unchanged
    • Employment rises
    • Labour supply falls
    • Employment falls

  10. What is the potential effect on employment when a trade union negotiates a wage above monopsony level?

    • Labour demand falls
    • Wage always falls
    • Employment may rise
    • Employment always falls

  11. What market structure exists when a single buyer of labour faces a single seller of labour?

    • Duopoly
    • Collusive oligopoly
    • Natural monopoly
    • Bilateral monopoly

  12. How is Marginal Revenue Product calculated for a firm in a perfectly competitive product market?

    • MPP ÷ Price
    • MPP × Price
    • Total product × Price
    • MPP + Price

  13. How does an increase in the productivity of skilled workers affect the wage gap with unskilled workers?

    • No change occurs
    • Differential narrows
    • Differential widens
    • Wages equalize

  14. Why does the marginal cost curve of labour lie above the average cost curve for a monopsonist?

    • Lower product price
    • Fixed capital costs
    • Falling worker productivity
    • Increasing wage rate

  15. Ten workers cost £100 each daily. To hire eleven, wage rises to £105 for all. What is the MCL?

    • £5
    • £115
    • £105
    • £155

  16. What term describes paying lower wages to certain workers due to prejudice rather than differences in MRP?

    • Employer discrimination
    • Human capital gap
    • Productivity differential
    • Compensating wage gap

  17. If demand for labour becomes more elastic, what impact does a wage increase have on employment?

    • No job losses
    • Higher employment
    • Smaller job losses
    • Greater job losses

  18. Which curve acts as the demand curve for labour for an individual competitive firm?

    • MRP curve
    • MCL curve
    • ACL curve
    • Supply curve

  19. Which factor is a major cause of geographical immobility of labour across UK regions?

    • Housing price differences
    • Lack of qualifications
    • High income taxes
    • Uniform minimum wage

  20. How do wage levels and employment in a monopsony compare to competitive markets?

    • Lower wage, lower employment
    • Lower wage, higher employment
    • Higher wage, higher employment
    • Higher wage, lower employment

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