Question 1

Economists who study labor markets have discovered that

Accepted Answer

A)  only about 5 percent of wage differences are related to chance. 
B)  ability is not difficult to measure but is largely insignificant in explaining wage differences. 
C)  work effort is difficult to measure but is not likely to contribute much to an explanation of wage differences. 
D)  ability, effort, and chance are likely to be significant contributors to wage differences. 
A)  only about 5 percent of wage differences are related to chance. 
B)  ability is not difficult to measure but is largely insignificant in explaining wage differences. 
C)  work effort is difficult to measure but is not likely to contribute much to an explanation of wage differences. 
D)  ability, effort, and chance are likely to be significant contributors to wage differences. D

Question 2

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

Accepted Answer

A)  the theory of efficiency wages 
B)  the marginal-productivity theory 
C)  human-capital theory 
D)  signaling theory 
A)  the theory of efficiency wages 
B)  the marginal-productivity theory 
C)  human-capital theory 
D)  signaling theory A

Question 3

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

Accepted Answer

A)  discrimination by customers is the most common type of economic discrimination. 
B)  differences in human capital and job characteristics must be important in explaining the differences in wages. 
C)  firms apparently are not profit maximizers. 
D)  the market has failed to properly allocate wages to different workers. 
A)  discrimination by customers is the most common type of economic discrimination. 
B)  differences in human capital and job characteristics must be important in explaining the differences in wages. 
C)  firms apparently are not profit maximizers. 
D)  the market has failed to properly allocate wages to different workers. B

Question 4

In the signaling theory of education,

Accepted Answer

A)  schooling itself does not lead to more productive workers. 
B)  chance plays more of a role than in the human-capital theory. 
C)  schooling enhances worker productivity. 
D)  compensating differentials do not matter. 
A)  schooling itself does not lead to more productive workers. 
B)  chance plays more of a role than in the human-capital theory. 
C)  schooling enhances worker productivity. 
D)  compensating differentials do not matter.

Question 5

Education and on-the-job training are sources of human capital.

Accepted Answer

A) True 
 B)False

Question 6

Christy and Claudia are aspiring models.Talent scouts consider them to be similarly beautiful.Both enter a talent show.Claudia contracts food poisoning the night before the competition and withdraws.Christy wins the competition and signs a multi-million dollar contract.The differences in their earnings likely reflect

Accepted Answer

A)  discrimination. 
B)  differences in human capital. 
C)  differences in signaling. 
D)  chance. 
A)  discrimination. 
B)  differences in human capital. 
C)  differences in signaling. 
D)  chance.

Question 7

Given that the median male is better paid than the median female,which of the following is a valid explanation for wage differences?

Accepted Answer

A)  compensating differentials 
B)  differences in human capital 
C)  discrimination 
D)  All of the above can be a partial explanation. 
A)  compensating differentials 
B)  differences in human capital 
C)  discrimination 
D)  All of the above can be a partial explanation.

Question 8

If an older worker earns less than a younger worker for the same job,we have proof of age discrimination.

Accepted Answer

A) True 
 B)False

Question 9

First grade teachers who work in Lynn,Massachusetts's (a large,low income city north of Boston)public schools earn more than first grade teachers who work in private schools in more affluent communities north of Boston.Lynn teachers belong to a teachers' union.Which statement best explains the scenario described above?

Accepted Answer

A)  Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union. 
B)  Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
C)  Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union. 
D)  Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
A)  Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union. 
B)  Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
C)  Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union. 
D)  Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union.

Question 10

In the signaling theory of education,

Accepted Answer

A)  discrimination does not affect wage differentials. 
B)  schooling makes workers more productive in the long-run. 
C)  schooling makes workers more productive in the short-run. 
D)  the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education. 
A)  discrimination does not affect wage differentials. 
B)  schooling makes workers more productive in the long-run. 
C)  schooling makes workers more productive in the short-run. 
D)  the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education.

Question 11

One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs,especially for those workers who deal with the public.

Accepted Answer

A) True 
 B)False

Question 12

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Accepted Answer

A) True 
 B)False

Question 13

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

Accepted Answer

A)  12% more than women with a high school education. 
B)  26% more than women with a high school education. 
C)  42% more than women with a high school education. 
D)  71% more than women with a high school education. 
A)  12% more than women with a high school education. 
B)  26% more than women with a high school education. 
C)  42% more than women with a high school education. 
D)  71% more than women with a high school education.

Question 14

Why is a plumber never likely to be as rich as a movie star?

Accepted Answer

A)  Compensating differentials create a higher wage in the movie business. 
B)  There haven't been any significant technological advances in the plumbing industry. 
C)  Productivity levels are low in the plumbing industry due to low worker morale. 
D)  A plumber can provide his services to only a limited number of customers. 
A)  Compensating differentials create a higher wage in the movie business. 
B)  There haven't been any significant technological advances in the plumbing industry. 
C)  Productivity levels are low in the plumbing industry due to low worker morale. 
D)  A plumber can provide his services to only a limited number of customers.

Question 15

If men,on average,earn 20 percent more than women in a particular occupation,

Accepted Answer

A)  this is clear evidence of discrimination. 
B)  some of this differential could be due to differences in educational levels. 
C)  some of this differential could be due to differences in human capital. 
D)  Both b and c are correct. 
A)  this is clear evidence of discrimination. 
B)  some of this differential could be due to differences in educational levels. 
C)  some of this differential could be due to differences in human capital. 
D)  Both b and c are correct.

Question 16

Discrimination is usually not a profit-maximizing strategy.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following variables related to a worker's wage are the most difficult to measure?

Accepted Answer

A)  ability, effort, and chance 
B)  job characteristics, gender, and race 
C)  gender, race, and geographic location 
D)  years of schooling, age, and years of experience 
A)  ability, effort, and chance 
B)  job characteristics, gender, and race 
C)  gender, race, and geographic location 
D)  years of schooling, age, and years of experience

Question 18

Which of the following statements is correct?

Accepted Answer

A)  Compensating wage differentials reflect different skills of workers. 
B)  Discrimination by employers affects the marginal productivity of workers. 
C)  The signaling theory of education suggests that schooling does not affect worker productivity. 
D)  The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers. 
A)  Compensating wage differentials reflect different skills of workers. 
B)  Discrimination by employers affects the marginal productivity of workers. 
C)  The signaling theory of education suggests that schooling does not affect worker productivity. 
D)  The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers.

Question 19

In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?

Accepted Answer

A)  Governments regulate to resolve problems of discrimination. 
B)  Profit-maximizing firms that do not discriminate tend to replace firms that discriminate. 
C)  Wages paid to groups that are victimized by discrimination are eventually bid up to above-equilibrium levels. 
D)  Discrimination is usually the outcome of rational decision-making processes, and competitive markets produce rational outcomes. 
A)  Governments regulate to resolve problems of discrimination. 
B)  Profit-maximizing firms that do not discriminate tend to replace firms that discriminate. 
C)  Wages paid to groups that are victimized by discrimination are eventually bid up to above-equilibrium levels. 
D)  Discrimination is usually the outcome of rational decision-making processes, and competitive markets produce rational outcomes.

Question 20

Figure 19-2
  
-Refer to Figure 19-2.This figure depicts labor demand and supply in a nonunionized labor market.The original equilibrium is at point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then there will be an excess

Accepted Answer

A)  supply of 3,000 workers. 
B)  demand of 7,000 workers. 
C)  supply of 4,000 workers. 
D)  supply of 7,000 workers. 
A)  supply of 3,000 workers. 
B)  demand of 7,000 workers. 
C)  supply of 4,000 workers. 
D)  supply of 7,000 workers.

Economists who study labor markets have discovered that

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

In the signaling theory of education,

Education and on-the-job training are sources of human capital.

Given that the median male is better paid than the median female,which of the following is a valid explanation for wage differences?

If an older worker earns less than a younger worker for the same job,we have proof of age discrimination.

In the signaling theory of education,

One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs,especially for those workers who deal with the public.

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

Why is a plumber never likely to be as rich as a movie star?

If men,on average,earn 20 percent more than women in a particular occupation,

Discrimination is usually not a profit-maximizing strategy.

Which of the following variables related to a worker's wage are the most difficult to measure?

Which of the following statements is correct?

In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?

Figure 19-2 -Refer to Figure 19-2.This figure depicts labor demand and supply in a nonunionized labor market.The original equilibrium is at point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then there will be an excess

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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Exam 19: Earnings and Discrimination.

Economists who study labor markets have discovered that

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

In the signaling theory of education,

Education and on-the-job training are sources of human capital.

Given that the median male is better paid than the median female,which of the following is a valid explanation for wage differences?

If an older worker earns less than a younger worker for the same job,we have proof of age discrimination.

In the signaling theory of education,

One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs,especially for those workers who deal with the public.

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

Why is a plumber never likely to be as rich as a movie star?

If men,on average,earn 20 percent more than women in a particular occupation,

Discrimination is usually not a profit-maximizing strategy.

Which of the following variables related to a worker's wage are the most difficult to measure?

Which of the following statements is correct?

In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?

Figure 19-2 -Refer to Figure 19-2.This figure depicts labor demand and supply in a nonunionized labor market.The original equilibrium is at point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then there will be an excess

Ten Principles of Economics.

Thinking Like an Economist.

Interdependence and the Gains from Trade.

The Market Forces of Supply and Demand.

Elasticity and Its Application

Supply, Demand, And Government Policies.

Consumers, Producers, and the Efficiency of Markets.

Application: The Costs of Taxation.

Application: International Trade.

Externalities.

Public Goods and Common Resources.

The Design of the Tax System.

The Costs of Production.

Firms in Competitive Markets.

Monopoly.

Monopolistic Competition.

Oligopoly.

The Market For the Factors of Production.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

Filters