Question 1

According to the signaling theory of education, better-educated workers

Accepted Answer

A) are likely to be high-ability workers. 
B) improve their marginal productivity through education. 
C) are in scarce supply in less developed countries. 
D) can only find low-skilled jobs due to technology. 
A) are likely to be high-ability workers. 
B) improve their marginal productivity through education. 
C) are in scarce supply in less developed countries. 
D) can only find low-skilled jobs due to technology.

Question 2

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Accepted Answer

A) True 
 B)False

Question 3

Explain the role of job experience in explaining the differences between the average wages of men and women.

Accepted Answer

Women, who have primary responsibility f

Question 4

Workers with more human capital on average earn substantially higher pay than workers with less human capital in

Accepted Answer

A) most countries but not in the United States. 
B) the United States but not in most other countries. 
C) the United States and in most other countries. 
D) None of the above is correct; the evidence fails to indicate that human capital is a significant factor in determining earnings anywhere in the world. 
A) most countries but not in the United States. 
B) the United States but not in most other countries. 
C) the United States and in most other countries. 
D) None of the above is correct; the evidence fails to indicate that human capital is a significant factor in determining earnings anywhere in the world.

Question 5

Suppose that a company hires recent college graduates for two types of jobs, sales people and credit analysts. The hours worked and skill levels are the same for both positions. The sales people get to travel to several desirable locations, whereas the credit analysts do not leave the home office. When comparing the salaries of the two positions, it is likely that the company pays the

Accepted Answer

A) sales people less as a compensating differential. 
B) credit analysts less as a compensating differential. 
C) same salary for both positions because they require the same skill level. 
D) same salary for both positions because it would be illegal to do otherwise. 
A) sales people less as a compensating differential. 
B) credit analysts less as a compensating differential. 
C) same salary for both positions because they require the same skill level. 
D) same salary for both positions because it would be illegal to do otherwise.

Question 6

In discussing discrimination and the wage differences that exist between men and women and between blacks and whites, it has been said that "the disease is political even if the symptom is economic." What does this mean?

Accepted Answer

A) Wage differences persist because the political system has failed to enact laws to equalize wages among all groups. 
B) Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards. 
C) Wage differences exist because of the differences in the political views of the different groups. 
D) Wage differences exist because the political system is biased against paying compensating differentials. 
A) Wage differences persist because the political system has failed to enact laws to equalize wages among all groups. 
B) Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards. 
C) Wage differences exist because of the differences in the political views of the different groups. 
D) Wage differences exist because the political system is biased against paying compensating differentials.

Question 7

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 8

How does the theory of efficiency wages explain above-equilibrium wages?

Accepted Answer

A) Employers are forced by competition to pay higher wages in efficient markets. 
B) Employers give their workers a higher wage in the hope that it will lead to increased productivity. 
C) Workers get higher wages when they prove they are increasing their productivity. 
D) Workers demand higher wages to compensate for poor fringe benefits. 
A) Employers are forced by competition to pay higher wages in efficient markets. 
B) Employers give their workers a higher wage in the hope that it will lead to increased productivity. 
C) Workers get higher wages when they prove they are increasing their productivity. 
D) Workers demand higher wages to compensate for poor fringe benefits.

Question 9

A cutting-edge biotech firm is hiring recent college graduates. To attract the very best applicants and to increase worker effort the firm is paying a wage 20% higher than the market wage for entry level employees in this industry. What is the term for the wage paid in this example?

Accepted Answer

The answer of A cutting-edge biotech firm is hiring recent...

Question 10

In general, the higher a person's education level,

Accepted Answer

A) the higher the person's earnings. 
B) the more physically attractive the person is likely to be. 
C) the more socially outgoing the person is likely to be. 
D) All of the above are correct. 
A) the higher the person's earnings. 
B) the more physically attractive the person is likely to be. 
C) the more socially outgoing the person is likely to be. 
D) All of the above are correct.

Question 11

In the early 20th century, segregation of street cars made streetcar companies

Accepted Answer

A) more profitable and was supported by private streetcar companies. 
B) more profitable but was opposed by private streetcar companies. 
C) less profitable but was supported by private streetcar companies. 
D) less profitable and was opposed by private streetcar companies. 
A) more profitable and was supported by private streetcar companies. 
B) more profitable but was opposed by private streetcar companies. 
C) less profitable but was supported by private streetcar companies. 
D) less profitable and was opposed by private streetcar companies.

Question 12

Discrimination by a manager in the hiring process may be consistent with the decision to maximize profits if

Accepted Answer

A) customers are willing to pay higher prices in order to maintain the discrimination. 
B) the discrimination is based on race but not gender. 
C) the discrimination is based on gender but not race. 
D) Discrimination is never consistent with profit maximization. 
A) customers are willing to pay higher prices in order to maintain the discrimination. 
B) the discrimination is based on race but not gender. 
C) the discrimination is based on gender but not race. 
D) Discrimination is never consistent with profit maximization.

Question 13

If an employer pays a man a higher wage than a woman, the employer

Accepted Answer

A) is discriminating against the woman but is still maximizing profit. 
B) is not discriminating against the woman. 
C) may or may not be discriminating against the woman. 
D) is discriminating against the woman and is not maximizing profit. 
A) is discriminating against the woman but is still maximizing profit. 
B) is not discriminating against the woman. 
C) may or may not be discriminating against the woman. 
D) is discriminating against the woman and is not maximizing profit.

Question 14

A compensating differential is a difference in wages due to higher levels of education or other forms of human capital.

Accepted Answer

A) True 
 B)False

Question 15

In the early 20th century, streetcars in many southern cities required that white passengers sit in the front of the car while black passengers sat in the back. The firms that ran the streetcars were

Accepted Answer

A) in favor of the segregation laws because they lowered costs and increased profits. 
B) against the segregation laws because they increased costs and lowered profits. 
C) lobbied local governments to enact such laws because their customers were willing to pay more for service in order to maintain the segregation. 
D) concerned about the effects of smoking. Since blacks smoked more than whites, they were supportive of the segregation laws. 
A) in favor of the segregation laws because they lowered costs and increased profits. 
B) against the segregation laws because they increased costs and lowered profits. 
C) lobbied local governments to enact such laws because their customers were willing to pay more for service in order to maintain the segregation. 
D) concerned about the effects of smoking. Since blacks smoked more than whites, they were supportive of the segregation laws.

Question 16

Figure 19-5  
-Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, what is the surplus of labor if a minimum wage of $8 per hour is imposed on this market?

Accepted Answer

A) 100 
B) 200 
C) 300 
D) 400 
A) 100 
B) 200 
C) 300 
D) 400

Question 17

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the last five years. As a result of this investment, economists who adhere to the human capital view of education would predict

Accepted Answer

A) rising wages as labor productivity is enhanced. 
B) falling wages as the labor market is saturated with too many educated workers. 
C) the marginal productivity of capital would not be affected. 
D) the marginal productivity of labor would not be affected. 
A) rising wages as labor productivity is enhanced. 
B) falling wages as the labor market is saturated with too many educated workers. 
C) the marginal productivity of capital would not be affected. 
D) the marginal productivity of labor would not be affected.

Question 18

Jay was just drafted by a professional baseball team, and was offered a record-breaking contract because of his potential. This is an example of

Accepted Answer

A) a human capital differential. 
B) a compensating differential. 
C) signaling theory. 
D) the superstar phenomenon. 
A) a human capital differential. 
B) a compensating differential. 
C) signaling theory. 
D) the superstar phenomenon.

Question 19

Figure 19-6​  
-Refer to Figure 19-6. This figure depicts labor demand and supply for the widget industry. The equilibrium market wage is $15. Suppose a labor union forms and subsequently negotiates an hourly wage of $25.00. Which of the following statements is true?

Accepted Answer

A) Widget workers benefit from having a higher wage. 
B) Widget firms benefit from receiving a higher profit. 
C) Widget firms will not hire any workers as a result. 
D) There is no impact on the labor market from the higher negotiated wage. 
A) Widget workers benefit from having a higher wage. 
B) Widget firms benefit from receiving a higher profit. 
C) Widget firms will not hire any workers as a result. 
D) There is no impact on the labor market from the higher negotiated wage.

Question 20

Professional underwater divers are known to have high wages and work an average of only 20 hours per week. Which of the following would push the divers' wages higher?

Accepted Answer

A) The job is simple. 
B) The job is fun. 
C) The job is very dangerous. 
D) The job does not require specialized training. 
A) The job is simple. 
B) The job is fun. 
C) The job is very dangerous. 
D) The job does not require specialized training.

Exam 19: Earnings and Discrimination

According to the signaling theory of education, better-educated workers

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Explain the role of job experience in explaining the differences between the average wages of men and women.

Workers with more human capital on average earn substantially higher pay than workers with less human capital in

In discussing discrimination and the wage differences that exist between men and women and between blacks and whites, it has been said that "the disease is political even if the symptom is economic." What does this mean?

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

How does the theory of efficiency wages explain above-equilibrium wages?

A cutting-edge biotech firm is hiring recent college graduates. To attract the very best applicants and to increase worker effort the firm is paying a wage 20% higher than the market wage for entry level employees in this industry. What is the term for the wage paid in this example?

In general, the higher a person's education level,

In the early 20th century, segregation of street cars made streetcar companies

Discrimination by a manager in the hiring process may be consistent with the decision to maximize profits if

If an employer pays a man a higher wage than a woman, the employer

A compensating differential is a difference in wages due to higher levels of education or other forms of human capital.

In the early 20th century, streetcars in many southern cities required that white passengers sit in the front of the car while black passengers sat in the back. The firms that ran the streetcars were

Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, what is the surplus of labor if a minimum wage of $8 per hour is imposed on this market?

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the last five years. As a result of this investment, economists who adhere to the human capital view of education would predict

Jay was just drafted by a professional baseball team, and was offered a record-breaking contract because of his potential. This is an example of

Figure 19-6​ -Refer to Figure 19-6. This figure depicts labor demand and supply for the widget industry. The equilibrium market wage is $15. Suppose a labor union forms and subsequently negotiates an hourly wage of $25.00. Which of the following statements is true?

Professional underwater divers are known to have high wages and work an average of only 20 hours per week. Which of the following would push the divers' wages higher?

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 Markets for the Factors of Production

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Figure 19-6 -Refer to Figure 19-6. This figure depicts labor demand and supply for the widget industry. The equilibrium market wage is $15. Suppose a labor union forms and subsequently negotiates an hourly wage of $25.00. Which of the following statements is true?