Question 1

Expenditures on human capital

Accepted Answer

A) reflect an expectation of some future return on the investment. 
B) are generally embodied in a specific individual. 
C) reflect an investment of resources today to raise productivity in the future. 
D) All of the above are correct. 
A) reflect an expectation of some future return on the investment. 
B) are generally embodied in a specific individual. 
C) reflect an investment of resources today to raise productivity in the future. 
D) All of the above are correct. D

Question 2

Economists are skeptical that discrimination is employer driven because (i)	employers are not really interested in maximizing profit.
(ii)	holding productivity constant,a profit-maximizing employer will hire the cheapest labor available.
(iii)	discrimination cannot exist in markets.

Accepted Answer

A) (i) only 
B) (ii) only 
C) (i) and (ii) 
D) (i) and (iii) 
A) (i) only 
B) (ii) only 
C) (i) and (ii) 
D) (i) and (iii) B

Question 3

The fact that some schools direct females away from science and math courses is evidence of

Accepted Answer

A) labor-market discrimination. 
B) discrimination that occurs prior to people entering the labor market. 
C) discrimination by customers. 
D) discrimination by employers. 
A) labor-market discrimination. 
B) discrimination that occurs prior to people entering the labor market. 
C) discrimination by customers. 
D) discrimination by employers. B

Question 4

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Accepted Answer

A) will survive if they increase production and garner a larger market share. 
B) will eventually earn zero economic profits. 
C) will survive as long as they are willing to have a smaller market share. 
D) are likely to eventually go out of business. 
A) will survive if they increase production and garner a larger market share. 
B) will eventually earn zero economic profits. 
C) will survive as long as they are willing to have a smaller market share. 
D) are likely to eventually go out of business.

Question 5

Scenario 19-4
Assume that the labor market for barbers is competitive and that it is differentiated into two groups: barbers who are bald (or going bald) and those who have a full head of hair. Assume that the barbers in this market have identical hair-cutting ability, regardless of whether they are bald or not. Currently the equilibrium wage in the bald barber market is lower than that in the nonbald market. Further assume that the market for haircuts is competitive.
-Refer to Scenario 19-4.Competition in the market for haircuts is consistent with which of the following statements?

Accepted Answer

A) Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers. 
B) All firms that hire only bald barbers will go out of business. 
C) Firms hiring bald barbers will enter the market, increasing the demand for bald barbers. 
D) Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers. 
A) Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers. 
B) All firms that hire only bald barbers will go out of business. 
C) Firms hiring bald barbers will enter the market, increasing the demand for bald barbers. 
D) Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers.

Question 6

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 7

The theory of efficiency wages asserts that

Accepted Answer

A) unions are often successful in forcing employers to pay higher wages. 
B) employers strive to hold wages below equilibrium levels. 
C) employers may find it profitable to pay above-equilibrium wages. 
D) efficient workers actually earn lower wages than those earned by inefficient workers. 
A) unions are often successful in forcing employers to pay higher wages. 
B) employers strive to hold wages below equilibrium levels. 
C) employers may find it profitable to pay above-equilibrium wages. 
D) efficient workers actually earn lower wages than those earned by inefficient workers.

Question 8

Other things equal,when the supply of workers is scarce,one would predict that market wages would be

Accepted Answer

A) relatively high. 
B) relatively low. 
C) determined solely by factors that affect demand. 
D) determined outside the domain of economic theory. 
A) relatively high. 
B) relatively low. 
C) determined solely by factors that affect demand. 
D) determined outside the domain of economic theory.

Question 9

Some economists suggest that international trade has led to an expanding wage gap between high-skill and low-skill workers in the United States.

Accepted Answer

A) True 
 B)False

Question 10

According to the signaling theory of education,better-educated workers (i)	signal their higher marginal productivities.
(ii)	are likely to be high-ability workers.
(iii)	are in scarce supply in less developed countries.

Accepted Answer

A) (i) and (ii) only 
B) (i) and (iii) only 
C) (ii) only 
D) (i), (ii), and (iii) 
A) (i) and (ii) only 
B) (i) and (iii) only 
C) (ii) only 
D) (i), (ii), and (iii)

Question 11

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Accepted Answer

A) the theory of compensating differentials 
B) the efficient-market hypothesis 
C) human-capital theory 
D) signaling theory 
A) the theory of compensating differentials 
B) the efficient-market hypothesis 
C) human-capital theory 
D) signaling theory

Question 12

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Accepted Answer

A) True 
 B)False

Question 13

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

Accepted Answer

A) signaling theory 
B) human-capital theory 
C) physical-capital theory 
D) the efficient-market hypothesis 
A) signaling theory 
B) human-capital theory 
C) physical-capital theory 
D) the efficient-market hypothesis

Question 14

According to evidence provided by the U.S.government,the median black

Accepted Answer

A) woman is paid roughly the same as the median white woman. 
B) woman is paid roughly the same as the median black man. 
C) man is paid 22 percent less than the median white man. 
D) All of the above are correct. 
A) woman is paid roughly the same as the median white woman. 
B) woman is paid roughly the same as the median black man. 
C) man is paid 22 percent less than the median white man. 
D) All of the above are correct.

Question 15

If unskilled labor is relatively plentiful and cheap in many foreign countries,then as the United States expands its trade with these foreign countries,the domestic demand for

Accepted Answer

A) unskilled labor will rise and skilled labor will fall. 
B) skilled labor will rise and unskilled labor will fall. 
C) both skilled and unskilled labor will rise proportionately. 
D) both skilled and unskilled labor will be unaffected, assuming no barriers to free trade. 
A) unskilled labor will rise and skilled labor will fall. 
B) skilled labor will rise and unskilled labor will fall. 
C) both skilled and unskilled labor will rise proportionately. 
D) both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.

Question 16

The wage difference between jobs that require education and those that don't

Accepted Answer

A) is not likely to be related to productivity differences. 
B) is a barrier to obtaining an education. 
C) does not affect the supply of workers in the different labor markets. 
D) encourages workers to bear the cost of acquiring education. 
A) is not likely to be related to productivity differences. 
B) is a barrier to obtaining an education. 
C) does not affect the supply of workers in the different labor markets. 
D) encourages workers to bear the cost of acquiring education.

Question 17

The term "compensating differential" refers to

Accepted Answer

A) the fact that workers who do similar work should be paid the same wage. 
B) the fact that some workers live further from their jobs than do other workers. 
C) a wage difference that is distinguishable on the basis of monetary characteristics. 
D) a wage difference that arises from nonmonetary characteristics of different jobs. 
A) the fact that workers who do similar work should be paid the same wage. 
B) the fact that some workers live further from their jobs than do other workers. 
C) a wage difference that is distinguishable on the basis of monetary characteristics. 
D) a wage difference that arises from nonmonetary characteristics of different jobs.

Question 18

When comparing average wages for black and white workers in the United States,wages paid to black workers have been about 20 percent less than those paid to white workers.

Accepted Answer

A) True 
 B)False

Question 19

Public school teachers are known to have low wages.This is probably because

Accepted Answer

A) public school teacher jobs are easy. 
B) public school teachers are required to be college graduates. 
C) public school teachers need very little money to live. 
D) many people perceive the job of public school teacher to have a high element of personal satisfaction. 
A) public school teacher jobs are easy. 
B) public school teachers are required to be college graduates. 
C) public school teachers need very little money to live. 
D) many people perceive the job of public school teacher to have a high element of personal satisfaction.

Question 20

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Accepted Answer

A) architects' services are not as highly valued by society as are the services of athletes and actors. 
B) only physically attractive people can become superstars, and it would be a coincidence if a highly talented architect were also physically attractive. 
C) government regulations place restrictions on the incomes of architects, but there are no such restrictions on the incomes of athletes or actors. 
D) it is impossible for an architect to supply his or her services at low cost to every customer. 
A) architects' services are not as highly valued by society as are the services of athletes and actors. 
B) only physically attractive people can become superstars, and it would be a coincidence if a highly talented architect were also physically attractive. 
C) government regulations place restrictions on the incomes of architects, but there are no such restrictions on the incomes of athletes or actors. 
D) it is impossible for an architect to supply his or her services at low cost to every customer.

Exam 19: Earnings and Discrimination

Expenditures on human capital

Economists are skeptical that discrimination is employer driven because (i) employers are not really interested in maximizing profit. (ii) holding productivity constant,a profit-maximizing employer will hire the cheapest labor available. (iii) discrimination cannot exist in markets.

The fact that some schools direct females away from science and math courses is evidence of

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Which of the following statements is correct?

The theory of efficiency wages asserts that

Other things equal,when the supply of workers is scarce,one would predict that market wages would be

Some economists suggest that international trade has led to an expanding wage gap between high-skill and low-skill workers in the United States.

According to the signaling theory of education,better-educated workers (i) signal their higher marginal productivities. (ii) are likely to be high-ability workers. (iii) are in scarce supply in less developed countries.

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

According to evidence provided by the U.S.government,the median black

If unskilled labor is relatively plentiful and cheap in many foreign countries,then as the United States expands its trade with these foreign countries,the domestic demand for

The wage difference between jobs that require education and those that don't

The term "compensating differential" refers to

When comparing average wages for black and white workers in the United States,wages paid to black workers have been about 20 percent less than those paid to white workers.

Public school teachers are known to have low wages.This is probably because

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Applications

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

Oligopoly

Monopolistic Competition

The Markets for the Factors of Production

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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