Deck 17: Financial Markets

Question 1

(Table: Sunshine Flower Vase Co.) Refer to the table. If themarket wage for each worker rose from $100 to $125 per day,how many workers would the firm hire?

A)4
B)5
C)6
D)7

Answer 1

C

Question 2

When wages decrease, firms will hire more workers who willbe:

A)assigned to the most important tasks.
B)assigned to the least important tasks.(True Answer )Correct
C)least likely to be laid off.
D)paid wages that are higher than market wages.

Answer 2

B

Question 3

(Table: Excellence Publishing) Refer to the table. Each edited booksells for $50. How many people will the company hire per year asediting staff if the annual salary is $47,000 per staff member?

A)5
B)6
C)7
D)8

Answer 3

C

Question 4

The market wage for workers is:
I) equal to the marginal product of labor
II)determined by the intersection of the firm's demand curvefor labor and the individual's supply curve for labor
III) always greater than the minimum wage.

A)I only
B)I and II only
C)II and III only
D)I, II, and III

Question 5

(Table: Excellence Publishing) Refer to the table. Initially each editedbook sells for $50. Suppose that there is an increase in the demand foredited books, such that each edited book now sells for $70. How manypeople will the company hire per year as editing staff if the salary is$47,000 per staff member?

A)5
B)6
C)7
D)8

Question 6

The marginal product of labor is:

A)the additional output produced by an extra worker.
B)the increase in costs borne by the firm when one extra worker is hired.
C)always greater than the wage earned by one additional worker.
D)the increase in firm revenue when an additional worker is employed.

Question 7

(Figure: Cleaners' Wages) Refer to the figure. How manyworkers will this firm hire at a wage of $29?
Figure: Cleaners' Wages

A)0
B)1
C)2
D)3

Question 8

A firm will hire a worker as long as:

A)the marginal product of labor is greater than or equal to the wage earned by the worker.
B)the wage earned is greater than the marginal product of labor.
C)the worker is not unionized.
D)the worker does not demand OSHA safety regulations.

Question 9

(Table: Sunshine Flower Vase Co.) Refer to the table. If thereis competition from new immigrants that lowers the marketwage for each worker from $100 to $70 per day, how manyworkers would the firm hire?

A)5
B)6
C)7
D)8

Question 10

(Table: Sunshine Flower Vase Co.) Refer to the table. What isthe marginal product of labor for the fifth worker?

A)$1,760
B)$135
C)$180
D)$1,580

Question 11

To maximize profit, a firm will hire workers when the________ in revenue from hiring an additional worker________ the worker's wage.

A)decrease; is less than or equal to
B)decrease; is greater than
C)increase; is greater than
D)increase; is less than or equal to

Question 12

The increase in a firm's revenues created by hiring anadditional worker is called:

A)marginal revenue.
B)marginal revenue of labor.
C)marginal product.
D)marginal product of labor.

Question 13

(Table: Sunshine Flower Vase Co.) Refer to the table. If themarket wage for each worker is $100 per day, how manyworkers will the company hire?

A)4
B)5
C)6
D)7

Question 14

Which of the following statements is TRUE?

A)The market supply of labor is always upward sloping, but an individual's labor supply may not be upward sloping
Throughout its entire range.
B)An individual's supply of labor is always upward sloping, but the market supply of labor may not be upward sloping
Throughout its entire range.
C)Both the market supply of labor and the individual's labor supply will both be upward sloping.
D)Both the market supply of labor and the individual's labor supply may not be upward sloping across their entire
Range.

Question 15

(Table: All-Stars) Refer to the table. A Major League Baseballteam is trying to increase the quality of its pitching staff byhiring all-star quality pitchers. If the team hires three all-starpitchers, what is the going salary for an all-star pitcher?

A)more than $7 million per season
B)between $3 million and $7 million per season (True Answer )Correct
C)less than $3 million per season
D)$42 million per season

Question 16

The market demand curve for labor is based on the:

A)hiring preferences of firms.
B)elasticity of supply of labor.
C)elasticity of demand for labor.
D)marginal product of labor.

Question 17

A firm is willing to hire a worker when the marginal productof labor is:

A)greater than the wage.
B)less than the wage.
C)equal to or less than the wage.
D)efficient.

Question 18

A firm will continue to hire workers as long as:

A)the marginal product of labor is greater than the wage.
B)the marginal product of labor is less than the wage.
C)the value of labor exceeds the firm's production costs.
D)the value of labor exceeds the firm's fixed costs of labor.

Question 19

Marián Hossa was paid $7.4 million by the Detroit Red Wingsfor the 2008-2009 season. We can conclude that:

A)Marián Hossa was overpaid.
B)the Red Wings expected Marián Hossa to increase the team's revenue by at least $7.4 million.
C)the marginal product of labor of Marián Hossa must be less than $7.4 million.
D)the marginal product of labor of Marián Hossa is 0.90 times the marginal cost.

Question 20

Which of the following statements is TRUE?
I) The demand for labor is downward sloping
II)The marginal product of labor declines as a firm hiresmore labor
III) The marginal product of labor is the demand curve forlabor.

A)I only
B)I and II only
C)III only
D)I, II, and III

Question 21

Workers in many foreign countries such as India are paidmuch less for work that is very similar to the work done byworkers in the United States. One reason for this is that:

A)India is a more productive economy.
B)workers in the United States are greedy.
C)India is a less productive economy.
D)workers in India are less materialistic.

Question 22

An individual's labor supply curve:

A)is always upward sloping.
B)is always perfectly inelastic.
C)can be either positively or negatively sloped, or perfectly inelastic.
D)is negatively sloped.

Question 23

Which of the following represents human capital?

A)skills gained while working on the job
B)a college education
C)a government retraining program
D)All of the answers are correct.

Question 24

Which of the following is NOT a possible cause of theincreasing return to college education since the 1980s?

A)The ability to work with computers has made an education more valuable than in times past.
B)The flow of new people into the ranks of the college- educated has been limited.
C)The cost of college education has been skyrocketing.(True Answer )Correct
D)None of the answers is correct.

Question 25

If the market wage for electrical engineers in the United Statesis $50 per hour, then we know that the marginal product ofelectrical engineers is:

A)more than $50 an hour.
B)around $50 an hour.
C)less than $50 an hour.
D)at least $50 an hour.

Question 26

Wages for low-skilled positions are typically higher indeveloped countries than wages for identical positions in less-developed countries. Which of the following explain why this isthe case.I. There is a greater supply of low-skilled labor in less-developed countries
II)There is a greater demand for low-skilled labor indeveloped countries
III) There is a greater demand for low-skilled labor in less-developed countries.

A)I only
B)I and II only
C)I and III only
D)II only

Question 27

The market supply of labor is upward sloping because:

A)an individual might work less when his wage increases.
B)higher wages would attract more workers into the industry.
C)an additional worker hired tends to be more productive.
D)None of the answers is correct.

Question 28

The wages of office cleaners in the United States are ________than the wages of office cleaners in India because ________.

A)less; few Americans want jobs as office cleaners generating a lower supply of office cleaners in the United States
B)less; Indians work more hours
C)greater; American offices are more productive and hence more valuable to keep clean
D)greater; more Indian cleaners are in a union

Question 29

Some workers have higher wages than others because:

A)they have more human capital.
B)they have more access to physical capital.
C)they work harder than others.
D)All of the answers are correct.

Question 30

Compared to a similar job that requires little human capital, ajob that requires a large amount of human capital will likelypay:

A)a lower wage rate.
B)a higher wage rate.
C)the same wage rate.
D)twice the wage rate.

Question 31

The market wage of computer programmers is determined by:

A)the demand for labor.
B)an upward sloping supply curve of labor and a downward sloping demand curve for labor.
C)a downward sloping demand and supply curve of labor.
D)the marginal product of labor and demand curve for labor.

Question 32

Which of the following is most likely to improve theproductivity of workers?

A)federal legislation mandating benefits
B)an increase in unionization
C)an increase in the minimum wage
D)investment in human capital

Question 33

A college education in the United States:

A)has been shown to earn a wage premium.(True Answer )Correct
B)is not counted as human capital.
C)does not lead to any difference in wages as compared to a high school education.
D)does not get the same high wages as it did in the past.

Question 34

The normal shape of the labor market supply curve is:

A)perfectly inelastic.
B)positively sloped.
C)backward bending.
D)unknown.

Question 35

If all people had the same preferences and productivity, thenthe currently highest paying jobs would be the most:

A)easily learned.
B)prestigious.
C)convenient.
D)undesirable.

Question 36

In general, wages are determined:

A)by the skills of the worker regardless of the country he or she works in.
B)by the skills of the worker and the productivity of the entire economy.
C)based on the average wage for all individuals in a particular country.
D)based on the average marginal product of labor of workers in similar countries.

Question 37

Why might an individual's labor supply curve bendbackwards?

A)As wages rise above a threshold level, the individual will decide to work harder.
B)As wages rise above a threshold level, the individual may opt for more leisure time.
C)As wages rise above a threshold level, firms limit the amount of hours that a worker can work.
D)When wages rise, firms hire fewer workers.

Question 38

Workers earn higher wages:
I) when the demand for labor rises in an industry
II)the greater the amount of human capital they possess
III) the more dangerous the job they perform.

A)II only
B)III only
C)II and III only
D)I, II, and III

Question 39

Office cleaners in India earn less than office cleaners in theUnited States because:

A)American office cleaners work harder than Indian office cleaners.
B)American office cleaners possess higher education levels than Indian office cleaners do.
C)the American economy is more productive than the Indian economy.
D)All of the answers are correct.

Question 40

Economic theory suggests that college graduates receivehigher wages than those with only a high school educationbecause:

A)college graduates tend to unionize.
B)the supply of high school graduates is relatively small compared to the supply of college graduates.
C)college graduates must be paid higher wages to help them pay off their college expenses.
D)college graduates are more productive.(True Answer )Correct

Question 41

Which of the following is TRUE?

A)The main reason why wages are high in some countries is the existence of unions in those countries.
B)The wages in unionized jobs tend to be lower than the wages in nonunionized jobs.
C)Unions increase the supply of labor and increase wages as a result.
D)Unions raise wages for some workers and lower wages for other workers.

Question 42

Which of the following statements is TRUE?
I) Union members earn higher wages because unions restrictthe supply of labor
II)Unions are similar to cartels in that they restrictcompetition among workers
III) Countries with more union members earn more thancountries with fewer union members.

A)I and II only
B)I, II, and III
C)II and III only
D)III only

Question 43

Suppose that being an accountant and a musician requiresimilar amounts of skills, education, training, and so forth. Ifaccountants are paid higher wages than musicians:

A)the supply of musicians would increase and the supply of accountants would decrease.
B)the supply of musicians would decrease and the supply of accountants would increase.
C)the supply of both musicians and accountants would increase.
D)the supply of both musicians and accountants would decrease.

Question 44

Why are jobs safer today than they were some decades ago?

A)because workers are wealthier and less willing to take on risk
B)because of the laws enforced by OSHA (Occupational Safety and Health Administration)
C)Market competition has ensured that firms have installed safety procedures.
D)All of the answers are correct.

Question 45

Which of the following is NOT the main driver behind theprocess of improving the quality of American jobs?

A)government regulation
B)labor unionization
C)increasing wealth
D)profit incentive

Question 46

(Figure: Unionized Jobs) Refer to the figure. Which of thefollowing would represent the wage and number of workers ofunionized jobs?

A)W1; N₁
B)W1; N2
C)W₂; N₁
D)W₂; N2

Question 47

Which of the following is NOT the primary method thatunions use to raise wages?

A)restricting their membership
B)threatening to strike unless employers hire union labor
C)reducing the supply of labor to an industry
D)lobbying the government to increase the minimum wage

Question 48

Which of the following statements is FALSE?

A)The returns to college education have been increasing over time.
B)College graduates earn about twice that of high school graduates.
C)There is almost no return to getting more education beyond a bachelor's degree.
D)Grade school deficiencies may limit the number of people entering college, increasing the returns to
Education.

Question 49

A firefighter is likely to earn ________ than a receptionistbecause ________.

A)more; the job is more fun.
B)more; the job is more prestigious.
C)more; the job is more dangerous.
D)less; the job has unattractive characteristics.

Question 50

Working conditions, prestige, location, freedom, variety, andemployee safety are all examples of:

A)sources of wage differentials.
B)tools of employment discrimination.
C)trivial job characteristics.
D)sociological features of labor markets.

Question 51

Which of the following statements is TRUE?

A)Because employers care so much about maximizing profits, they are likely to discriminate against minority
Workers.
B)All else equal, there is no trade-off between risk of job injury and wages.
C)The falling returns to human capital investment for women are due to employer discrimination.
D)The rising returns to human capital may be attributable to the growing importance of advanced technology.(True
Answer )Correct

Question 52

A compensating differential is mainly a cause of a differencein:

A)wages due to differences in working conditions.(True Answer )Correct
B)wages due to differences in human capital.
C)wages due to differences in productivity.
D)All of the answers are correct.

Question 53

Truck drivers who drive on the ice roads in Alaska andCanada (like those on Ice Road Truckers) earn:

A)the same hourly wages as most other professions.
B)a college wage premium.
C)a compensating wage differential.
D)All of the answers are correct.

Question 54

Fishermen who go deep sea crab fishing (like those on TheDeadliest Catch) earn:

A)the same hourly wages as most other professions.
B)a compensating wage differential.
C)a college wage premium.
D)All of the answers are correct.

Question 55

Which of the following best describes the major factor inmaking jobs safer?

A)Labor unions are aggressive in pursuing safety objectives.
B)Increased wealth created by economic growth makes workers less willing to take on excessive risk.(True Answer
)Correct
C)OSHA oversees workplace safety and levies fines.
D)All of the answers are correct.

Question 56

Why are private security guards in Iraq paid more thanprivate security guards in the United States?

A)The security guards in Iraq receive a compensating differential to offset the increased risk of death.(True Answer
)Correct
B)Being a security guard in Iraq is more glamorous than in the United States.
C)Being a security guard in Iraq is likely to lead to better jobs in the future.
D)All of the answers are correct.

Question 57

Which of the following statements is NOT correct?

A)Unions can raise the wages of particular classes of workers.
B)Unions are the fundamental reason why wages are high in the wealthy countries.
C)High wages of physicians are due to the restriction of physician supply.
D)Less unionized Britain has grown more rapidly than the more unionized France.

Question 58

Suppose that the market for window cleaners is in equilibriumat a wage of $16. If window cleaning becomes safer:

A)the demand for window cleaners will increase causing the equilibrium wage to rise above $16.
B)the demand for window cleaners will decrease causing the equilibrium wage to fall below $16.
C)the supply of window cleaners will increase causing the equilibrium wage to fall below $16.
D)the supply of window cleaners will decrease causing the equilibrium wage to fall below $16.

Question 59

Why do similar jobs have similar compensation packages?
I) The law of demand and supply will ensure that the salarieswill be similar over time
II)Wages and ―fun‖ adjust between jobs until compensationpackages are similar
III) Because exactly the same skills are being applied.

A)I only
B)I and II only
C)II and III only
D)I, II, and III

Question 60

One of the most important reasons why job safety increasesover time is:

A)government regulation.
B)changing labor market condition.
C)economic growth.
D)labor unionization.

Question 61

Suppose that there is discrimination against women byemployees at a workplace. Which of the following would bethe likely result(s)?

A)Employers are less likely to hire women.
B)Some men may leave for other jobs if a woman is hired.
C)Fewer women would apply to the job.
D)All of the answers are correct.

Question 62

Evidence suggests that a successful market economy would:

A)succeed by maintaining informal segregation on a widespread basis.
B)succeed by maintaining formal segregation on a limited basis.
C)not succeed without maintaining formal segregation on a widespread basis.
D)not succeed by maintaining formal segregation on a widespread basis.

Question 63

In a market economy discrimination by employers:

A)causes the wages of the discriminated group to fall because of decreased demand for their services.
B)reduces the firm's profits.
C)tends to disappear over time because of the profit motive.
D)All of the answers are correct.

Question 64

How might unions benefit workers?

A)by limiting the number of people who can be hired by firms
B)by striking and stalling production
C)by demanding improved labor/management relations and improving worker safety and work conditions (True Answer
)Correct
D)All of the answers are correct.

Question 65

If a white NBA basketball player generates more fan interestthan an equally capable black basketball player we mightexpect the white player to be paid more, a form of ________discrimination.

A)customer
B)employer
C)employee
D)statistical

Question 66

When it is the customers who drive discrimination, owners:

A)who seek to maximize profit are still inclined to hire undervalued, victimized workers.
B)who seek to maximize profit are inclined to hire overvalued, victimized workers.
C)are not always so keen to hire undervalued, victimized workers.
D)are always keen to hire undervalued, victimized workers.

Question 67

Statistical discrimination is:

A)statistical data of discrimination.
B)applying statistical analysis in discrimination.
C)collecting information to justify hiring individuals.
D)using information about group averages to make conclusions about individuals.

Question 68

Which of the following is the least likely explanation for anincrease in wages needed to attract a given number ofworkers?

A)The job is stressful.
B)The job is dangerous.
C)The employer discriminates.
D)The job is not very prestigious.

Question 69

If a union forms in a market that is currently in equilibrium:

A)wages, employment, and working conditions will improve.
B)wages, employment, and working conditions will decline.
C)wages will increase and employment will remain the same.
D)the number of workers employed may decrease.(True Answer )Correct

Question 70

Which of the following statements is TRUE?
I) Statistical discrimination is based on ill will toward a groupbecause of their race, sex, nationality, or religion
II)Statistical discrimination is judging people by the averagesof the groups to which they belong
III) As better ways of judging people develop, the merit ofusing statistical discrimination rises.

A)I and III only
B)II only
C)I and II only
D)I only

Question 71

Suppose that a firm needs 20 workers, and pays 10 maleworkers $100 per day and 10 female workers $60 a day. Thesewage differences are ________ caused by employerdiscrimination since ________.

A)most likely; the employer could decrease profits by $1,000 per day by hiring all females
B)most likely; the employer could increase profits by $400 per day by hiring all females
C)likely not; the employer could increase profits by $400 per day by hiring all females
D)likely not; the employer could decrease profits by $1,000 per day by hiring all females

Question 72

In a world of perfect information:

A)statistical discrimination would not exist.(True Answer )Correct
B)employers, but not employees, would practice statistical discrimination.
C)employees, but not employers, would practice statistical discrimination.
D)statistical discrimination would be even more important.

Question 73

Unions may ________ the wages of their members but theymight ________ the wages of everyone else.

A)increase; also increase
B)increase; decrease
C)decrease; increase
D)decrease; also decrease

Question 74

One factor lowering wages for women as a group is that:

A)employers discriminate against women.
B)men are more productive than women on average.
C)women tend to have less job experience than men of the same age.
D)All of the answers are correct.

Question 75

The two major types of discrimination are:

A)statistical discrimination and preference-based discrimination.
B)racial discrimination and gender discrimination.
C)age discrimination and disability discrimination.
D)employment discrimination and compensation discrimination.

Question 76

If a firm refuses to hire minorities due to prejudice, its profits:

A)tend to increase.
B)tend not to be affected.
C)tend to decrease.
D)will increase slightly.

Question 77

Women earn less than men because:

A)we live in a patriarchal society.
B)they often interrupt their careers to stay home and raise children and thus have less job experience than men.(True
Answer )Correct
C)fewer and fewer women are graduating from college.
D)women tend to work in more dangerous jobs with inflexible work schedules.

Question 78

What negative impacts can unions have on industries and theeconomy?

A)They can initiate worker strikes and sit-ins which stall production.
B)By limiting the supply of labor in one industry they can cause an increased supply of labor in other industries, which
Causes lower wages in those industries.
C)They can limit firms to hiring only unionized workers, which could stop firms from hiring the labor with the most
Appropriate skills.
D)All of the answers are correct.

Question 79

Which of the following is the most important source ofdifferences in the wages paid to workers?

A)whether workers are unionized or not
B)the size of the labor force
C)productivity per hour
D)discrimination against certain workers

Question 80

Which of the following is NOT a kind of preference-baseddiscrimination?

A)discrimination using statistics
B)discrimination by employers
C)discrimination by customers
D)discrimination by employees