Question 1

Which of the following is most likely to cause the productivity of labor to increase?

Accepted Answer

A)  higher money wages 
B)  a higher rate of investment in human and nonhuman capital 
C)  more flexible working hours and improved retirement plans 
D)  an increase in the proportion of the workforce that belongs to a labor union 
A)  higher money wages 
B)  a higher rate of investment in human and nonhuman capital 
C)  more flexible working hours and improved retirement plans 
D)  an increase in the proportion of the workforce that belongs to a labor union

Question 2

Other things the same, the wages in an occupation are likely to be higher the more

Accepted Answer

A)  dangerous the job. 
B)  prestigious the work environment of the occupation. 
C)  desirable the location of the job. 
D)  pleasant the working conditions. 
A)  dangerous the job. 
B)  prestigious the work environment of the occupation. 
C)  desirable the location of the job. 
D)  pleasant the working conditions.

Question 3

The tournament pay explanation is useful in an attempt to explain why

Accepted Answer

A)  some corporate executives earn amounts higher than their marginal revenue product. 
B)  very few people actually earn the minimum wage. 
C)  political entrepreneurs can generate campaign contributions from businesses outside of their districts. 
D)  people with only a high school education earn less than those with college degrees. 
A)  some corporate executives earn amounts higher than their marginal revenue product. 
B)  very few people actually earn the minimum wage. 
C)  political entrepreneurs can generate campaign contributions from businesses outside of their districts. 
D)  people with only a high school education earn less than those with college degrees.

Question 4

Everything else equal, wages are likely to be higher when

Accepted Answer

A)  the location of the job is more desirable. 
B)  the work environment is more prestigious. 
C)  more skill is required to perform well on the job. 
D)  the work is safer. 
A)  the location of the job is more desirable. 
B)  the work environment is more prestigious. 
C)  more skill is required to perform well on the job. 
D)  the work is safer.

Question 5

Which of the following would be most likely to cause an increase in the wage rate for a particular job?

Accepted Answer

A)  A decrease in the amount of training needed to perform this job. 
B)  An increase in the danger of this job. 
C)  A decrease in the danger of this job. 
D)  An improvement in the working conditions associated with this job. 
E)  An increase in the number of workers with the skills for this job. 
A)  A decrease in the amount of training needed to perform this job. 
B)  An increase in the danger of this job. 
C)  A decrease in the danger of this job. 
D)  An improvement in the working conditions associated with this job. 
E)  An increase in the number of workers with the skills for this job.

Question 6

Occupations X and Y employ persons with the same productivity. Workers in the two occupations work the same number of hours per day when on the job. Employment is stable throughout the year in X, while Y is characterized by seasonal layoffs. How will the hourly wage rate and annual earnings compare in the two occupations?

Accepted Answer

A)  The hourly wage rate will be higher in X, but the annual earnings will be higher for Y. 
B)  Both the hourly wage rate and annual earnings will be higher in X. 
C)  Both the hourly wage rate and annual earnings will be higher in Y. 
D)  The hourly wage rate will be higher in Y, but the annual earnings will likely be higher for X. 
A)  The hourly wage rate will be higher in X, but the annual earnings will be higher for Y. 
B)  Both the hourly wage rate and annual earnings will be higher in X. 
C)  Both the hourly wage rate and annual earnings will be higher in Y. 
D)  The hourly wage rate will be higher in Y, but the annual earnings will likely be higher for X.

Question 7

Sue: "I much prefer eating at the El Grande Mexican Restaurant to the others in town because all of their employees are Mexican and speak Spanish. It gives the place a real 'authentic' feel." Which of the following is true about the above statement?

Accepted Answer

A)  This is an example of customer-based discrimination for one group of employees over another. 
B)  Despite customer preferences, we would expect the restaurants in town to hire equally from all racial and ethnic groups. 
C)  If many customers felt the same way Sue does, there would be pressure for firms to satisfy this consumer preference in their hiring. 
D)  Both a and c are correct. 
A)  This is an example of customer-based discrimination for one group of employees over another. 
B)  Despite customer preferences, we would expect the restaurants in town to hire equally from all racial and ethnic groups. 
C)  If many customers felt the same way Sue does, there would be pressure for firms to satisfy this consumer preference in their hiring. 
D)  Both a and c are correct.

Question 8

Which of the following would cause the demand for mathematicians to increase?

Accepted Answer

A)  a decrease in the productivity of mathematicians. 
B)  an increase in the wage of mathematicians. 
C)  an increase in the productivity of mathematicians. 
D)  an increase in the productivity of physicists. 
A)  a decrease in the productivity of mathematicians. 
B)  an increase in the wage of mathematicians. 
C)  an increase in the productivity of mathematicians. 
D)  an increase in the productivity of physicists.

Question 9

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not. Other things equal, you would expect wages to be ____ in Burger King because ____.

Accepted Answer

A)  higher; Burger King employees are more productive 
B)  lower; McDonald's employees are more productive 
C)  higher; Burger King is a more prestigious place to work 
D)  lower; Burger King has more favorable working conditions 
A)  higher; Burger King employees are more productive 
B)  lower; McDonald's employees are more productive 
C)  higher; Burger King is a more prestigious place to work 
D)  lower; Burger King has more favorable working conditions

Question 10

Which of the following is true?

Accepted Answer

A)  When workers are more productive, the demand for their services will be higher. 
B)  In order to earn a large income, one must provide large benefits to others. 
C)  High productivity (a large output per hour worked) is the key to high earnings for both individuals and countries. 
D)  All of the above are true. 
A)  When workers are more productive, the demand for their services will be higher. 
B)  In order to earn a large income, one must provide large benefits to others. 
C)  High productivity (a large output per hour worked) is the key to high earnings for both individuals and countries. 
D)  All of the above are true.

Question 11

Suppose technological improvements reduced the cost of producing automobiles by 50 percent, causing the price of automobiles to decline by a similar amount. Which of the following would necessarily result from this development?

Accepted Answer

A)  Employment in the automobile industry would decrease. 
B)  Real income would increase. 
C)  Real income would decrease. 
D)  Both a and c are correct. 
A)  Employment in the automobile industry would decrease. 
B)  Real income would increase. 
C)  Real income would decrease. 
D)  Both a and c are correct.

Question 12

Wages in the United States are higher than those in India primarily because

Accepted Answer

A)  the weather is better in the United States. 
B)  a larger proportion of the labor force is unionized in the United States. 
C)  less capital per employee is required in the United States. 
D)  the human and physical capital of American workers exceeds that of their Indian counterparts. 
A)  the weather is better in the United States. 
B)  a larger proportion of the labor force is unionized in the United States. 
C)  less capital per employee is required in the United States. 
D)  the human and physical capital of American workers exceeds that of their Indian counterparts.

Question 13

Which of the following is the clearest evidence of employment discrimination against minority employees?

Accepted Answer

A)  the average wage of minority workers is lower than the average wage of whites. 
B)  the average hours worked by minority employees exceeds the hours worked by whites. 
C)  the mean number of years of schooling of minority workers is lower than that of whites. 
D)  the average wages of minority employees are lower than the average wages of whites with similar productivity characteristics. 
A)  the average wage of minority workers is lower than the average wage of whites. 
B)  the average hours worked by minority employees exceeds the hours worked by whites. 
C)  the mean number of years of schooling of minority workers is lower than that of whites. 
D)  the average wages of minority employees are lower than the average wages of whites with similar productivity characteristics.

Question 14

Which of the following is true?

Accepted Answer

A)  employers who discriminate against blacks and other minorities will have lower costs than rival firms that hire employees strictly on the basis of productivity. 
B)  after adjusting for factors such as education, experience, and location, the earnings of black men are almost identical to the earnings of white men. 
C)  if minority and white employees in a skill category are equally productive, the profit motive provides employers with a strong incentive to hire minority employees if they are available at a lower wage. 
D)  the empirical evidence indicates that the earnings gap between whites and blacks is entirely the result of worker preference. 
A)  employers who discriminate against blacks and other minorities will have lower costs than rival firms that hire employees strictly on the basis of productivity. 
B)  after adjusting for factors such as education, experience, and location, the earnings of black men are almost identical to the earnings of white men. 
C)  if minority and white employees in a skill category are equally productive, the profit motive provides employers with a strong incentive to hire minority employees if they are available at a lower wage. 
D)  the empirical evidence indicates that the earnings gap between whites and blacks is entirely the result of worker preference.

Question 15

Which of the following is true?

Accepted Answer

A)  The majority of millionaires received most of their wealth through an inheritance. 
B)  The percentage of the population that are millionaires in inflation-adjusted dollars has been stable since the 1970s. 
C)  About one-third of millionaires have college degrees. 
D)  More than 75 percent of American millionaires have college degrees. 
A)  The majority of millionaires received most of their wealth through an inheritance. 
B)  The percentage of the population that are millionaires in inflation-adjusted dollars has been stable since the 1970s. 
C)  About one-third of millionaires have college degrees. 
D)  More than 75 percent of American millionaires have college degrees.

Question 16

Economic theory suggests that college graduates receive higher wages than those with only a high school education because

Accepted Answer

A)  college graduates are more productive. 
B)  college graduates must be paid higher wages because their educational costs were higher. 
C)  college graduates have formed stronger unions. 
D)  the supply of high school graduates is small relative to the demand for their labor. 
A)  college graduates are more productive. 
B)  college graduates must be paid higher wages because their educational costs were higher. 
C)  college graduates have formed stronger unions. 
D)  the supply of high school graduates is small relative to the demand for their labor.

Question 17

Under a tournament pay scheme, the pay gap between a few "winners" (those who receive big promotions) and other employees exceeds the productivity differences between these two groups. The reason firms might use such a scheme is that they

Accepted Answer

A)  overestimate the productivity of those who receive big promotions and inadvertently pay them "too much." 
B)  gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees. 
C)  hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages. 
D)  hope to raise the productivity of all other workers, who will work harder trying to gain a big promotion. 
A)  overestimate the productivity of those who receive big promotions and inadvertently pay them "too much." 
B)  gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees. 
C)  hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages. 
D)  hope to raise the productivity of all other workers, who will work harder trying to gain a big promotion.

Question 18

If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect

Accepted Answer

A)  less human capital investment. 
B)  a shortage of workers to fill the least desirable jobs. 
C)  a surplus of workers to fill the easy, desirable jobs. 
D)  all of the above. 
A)  less human capital investment. 
B)  a shortage of workers to fill the least desirable jobs. 
C)  a surplus of workers to fill the easy, desirable jobs. 
D)  all of the above.

Question 19

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

Accepted Answer

A)  competitive forces will tend to reduce discrimination. 
B)  the wages of employees who are discriminated against will rise. 
C)  an employer who discriminates will have the same costs as those who do not discriminate. 
D)  discrimination by an employer will reduce production costs since the employer can pay lower wages. 
A)  competitive forces will tend to reduce discrimination. 
B)  the wages of employees who are discriminated against will rise. 
C)  an employer who discriminates will have the same costs as those who do not discriminate. 
D)  discrimination by an employer will reduce production costs since the employer can pay lower wages.

Question 20

Automated production methods are only attractive when they

Accepted Answer

A)  are undertaken in heavily unionized sectors of the economy. 
B)  reduce per-unit costs. 
C)  replace workers. 
D)  decrease labor productivity. 
A)  are undertaken in heavily unionized sectors of the economy. 
B)  reduce per-unit costs. 
C)  replace workers. 
D)  decrease labor productivity.

Which of the following is most likely to cause the productivity of labor to increase?

Other things the same, the wages in an occupation are likely to be higher the more

The tournament pay explanation is useful in an attempt to explain why

Everything else equal, wages are likely to be higher when

Which of the following would be most likely to cause an increase in the wage rate for a particular job?

Sue: "I much prefer eating at the El Grande Mexican Restaurant to the others in town because all of their employees are Mexican and speak Spanish. It gives the place a real 'authentic' feel." Which of the following is true about the above statement?

Which of the following would cause the demand for mathematicians to increase?

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not. Other things equal, you would expect wages to be in Burger King because .

Which of the following is true?

Suppose technological improvements reduced the cost of producing automobiles by 50 percent, causing the price of automobiles to decline by a similar amount. Which of the following would necessarily result from this development?

Wages in the United States are higher than those in India primarily because

Which of the following is the clearest evidence of employment discrimination against minority employees?

Which of the following is true?

Which of the following is true?

Economic theory suggests that college graduates receive higher wages than those with only a high school education because

Under a tournament pay scheme, the pay gap between a few "winners" (those who receive big promotions) and other employees exceeds the productivity differences between these two groups. The reason firms might use such a scheme is that they

If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

Automated production methods are only attractive when they

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Exam 13: Earnings, Productivity, and the Job Market

Which of the following is most likely to cause the productivity of labor to increase?

Other things the same, the wages in an occupation are likely to be higher the more

The tournament pay explanation is useful in an attempt to explain why

Everything else equal, wages are likely to be higher when

Which of the following would be most likely to cause an increase in the wage rate for a particular job?

Sue: "I much prefer eating at the El Grande Mexican Restaurant to the others in town because all of their employees are Mexican and speak Spanish. It gives the place a real 'authentic' feel." Which of the following is true about the above statement?

Which of the following would cause the demand for mathematicians to increase?

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not. Other things equal, you would expect wages to be ____ in Burger King because ____.

Which of the following is true?

Suppose technological improvements reduced the cost of producing automobiles by 50 percent, causing the price of automobiles to decline by a similar amount. Which of the following would necessarily result from this development?

Wages in the United States are higher than those in India primarily because

Which of the following is the clearest evidence of employment discrimination against minority employees?

Which of the following is true?

Which of the following is true?

Economic theory suggests that college graduates receive higher wages than those with only a high school education because

Under a tournament pay scheme, the pay gap between a few "winners" (those who receive big promotions) and other employees exceeds the productivity differences between these two groups. The reason firms might use such a scheme is that they

If Congress suddenly passes legislation that required all U.S. workers to receive the same annual pay, we would expect

When employment discrimination results from the personal prejudices of employers, economic theory suggests that

Automated production methods are only attractive when they

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Applying the Basics: Special Topics in Economics

Filters

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not. Other things equal, you would expect wages to be in Burger King because .