Question 1

Which of the following examples best describes the signaling theory of education?

Accepted Answer

A) The hiring manager offers a job to a recent college graduate because she is more beautiful than the rest of the applicants. 
B) The hiring manager offers a job to a recent college graduate because she is expected to be more productive than other applicants due to her educational attainment. 
C) The hiring manager offers a job to a recent college graduate because the hiring manager has a bias toward people with college degrees. 
D) The hiring manager offers a job to a recent college graduate because education is correlated with natural ability. 
A) The hiring manager offers a job to a recent college graduate because she is more beautiful than the rest of the applicants. 
B) The hiring manager offers a job to a recent college graduate because she is expected to be more productive than other applicants due to her educational attainment. 
C) The hiring manager offers a job to a recent college graduate because the hiring manager has a bias toward people with college degrees. 
D) The hiring manager offers a job to a recent college graduate because education is correlated with natural ability.

Question 2

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A) race, ethnic group, sex, age, or other personal characteristics. 
B) qualifications, experience, or job preferences. 
C) levels of human capital. 
D) All of the above are correct. 
A) race, ethnic group, sex, age, or other personal characteristics. 
B) qualifications, experience, or job preferences. 
C) levels of human capital. 
D) All of the above are correct.

Question 3

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, we would expect Tom not to offer which of the following company benefits?

Accepted Answer

A) employer-matching 401k retirement plan contributions 
B) tuition reimbursement for workers who take college classes 
C) on-site day care 
D) health insurance 
A) employer-matching 401k retirement plan contributions 
B) tuition reimbursement for workers who take college classes 
C) on-site day care 
D) health insurance

Question 4

The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests

Accepted Answer

A) schooling acts only as a signal of ability. 
B) humans cannot be considered "capital." 
C) productivity is not linked to wages. 
D) ability, effort, and chance matter more. 
A) schooling acts only as a signal of ability. 
B) humans cannot be considered "capital." 
C) productivity is not linked to wages. 
D) ability, effort, and chance matter more.

Question 5

Which of the following statements is not correct?

Accepted Answer

A) Competitive markets tend to limit the impact of discrimination on wages. 
B) Differences in earnings of whites and blacks or men and women provide clear evidence of discrimination. 
C) Some differences in earnings are attributable to discrimination based on race, sex, or other factors. 
D) Profit-maximizing behavior can reduce discriminatory wage differentials. 
A) Competitive markets tend to limit the impact of discrimination on wages. 
B) Differences in earnings of whites and blacks or men and women provide clear evidence of discrimination. 
C) Some differences in earnings are attributable to discrimination based on race, sex, or other factors. 
D) Profit-maximizing behavior can reduce discriminatory wage differentials.

Question 6

Differences in human capital among groups of workers is possibly a reflection of past discrimination.

Accepted Answer

A) True 
 B)False

Question 7

Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home 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 8

Discrimination is an emotionally charged issue that is impossible to study objectively.

Accepted Answer

A) True 
 B)False

Question 9

The signaling theory of education maintains that workers who complete specific levels of education enhance their productivity through education.

Accepted Answer

A) True 
 B)False

Question 10

Offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics is called

Accepted Answer

A) a compensating differential. 
B) an efficiency wage. 
C) discrimination. 
D) compensating variation. 
A) a compensating differential. 
B) an efficiency wage. 
C) discrimination. 
D) compensating variation.

Question 11

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the

Accepted Answer

A) signaling view of education. 
B) natural-ability view of education. 
C) unmeasured-variables view of education. 
D) human-capital view of education. 
A) signaling view of education. 
B) natural-ability view of education. 
C) unmeasured-variables view of education. 
D) human-capital view of education.

Question 12

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.

Question 13

Marcia is a white 23-year-old female, and Joan is a black 23-year-old female. Both Marcia and Joan were economics majors, and they graduated from the same college in the same year with the same GPA. Marcia and Joan both got identical jobs at a brokerage firm after graduating from college. They both work equally hard. Marcia earns $38,000 a year, and Joan earns $30,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A) Marcia has less human capital than Joan. 
B) Marcia receives a compensating wage differential that Joan does not. 
C) Joan has been discriminated against because she is black. 
D) Marcia has been discriminated against because she is white. 
A) Marcia has less human capital than Joan. 
B) Marcia receives a compensating wage differential that Joan does not. 
C) Joan has been discriminated against because she is black. 
D) Marcia has been discriminated against because she is white.

Question 14

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Accepted Answer

A) The manager discriminates against women. 
B) Allen works the undesirable early morning shift. 
C) Allen has more experience and so more human capital. 
D) All of the above could be correct. 
A) The manager discriminates against women. 
B) Allen works the undesirable early morning shift. 
C) Allen has more experience and so more human capital. 
D) All of the above could be correct.

Question 15

Between 1975 and 2011, the wage gap between women with a high school education and women with a college education increased. In particular, in 2011 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) 70% more than women with a high school education. 
D) 81% 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) 70% more than women with a high school education. 
D) 81% more than women with a high school education.

Question 16

Figure 19-5  
-Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded 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

Figure 19-2  
-Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium wage is $10. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $12.50, then there will be an excess

Accepted Answer

A) demand of 100 workers. 
B) demand of 300 workers. 
C) supply of 100 workers. 
D) supply of 300 workers. 
A) demand of 100 workers. 
B) demand of 300 workers. 
C) supply of 100 workers. 
D) supply of 300 workers.

Question 18

If government regulations make a certain job less dangerous, then we'd expect that the supply of labor for that job would

Accepted Answer

A) increase, which by itself would raise the wage for that job. 
B) increase, which by itself would reduce the wage for that job. 
C) decrease, which by itself would raise the wage for that job. 
D) decrease, which by itself would reduce the wage for that job. 
A) increase, which by itself would raise the wage for that job. 
B) increase, which by itself would reduce the wage for that job. 
C) decrease, which by itself would raise the wage for that job. 
D) decrease, which by itself would reduce the wage for that job.

Question 19

Which of the following is an example of discrimination in the labor market?

Accepted Answer

A) Women earn less than men because women are more likely to be employed in occupations that pay less, such as elementary school teachers rather than electrical engineers. 
B) Women earn less than men because women have, on average, fewer years of experience in the labor force because women, on average, periodically leave the labor force to raise children. 
C) A pharmaceutical sales company pays women less than men because the company's customers, physicians and pharmacists, say that they prefer to deal with men rather than women. 
D) All of the above are examples of discrimination. 
A) Women earn less than men because women are more likely to be employed in occupations that pay less, such as elementary school teachers rather than electrical engineers. 
B) Women earn less than men because women have, on average, fewer years of experience in the labor force because women, on average, periodically leave the labor force to raise children. 
C) A pharmaceutical sales company pays women less than men because the company's customers, physicians and pharmacists, say that they prefer to deal with men rather than women. 
D) All of the above are examples of discrimination.

Question 20

The signaling theory of education is most similar to the

Accepted Answer

A) human capital theory of education. 
B) discrimination theory of advertising. 
C) signaling theory of advertising. 
D) efficiency wage theory of labor economics. 
A) human capital theory of education. 
B) discrimination theory of advertising. 
C) signaling theory of advertising. 
D) efficiency wage theory of labor economics.

Exam 19: Earnings and Discrimination

Which of the following examples best describes the signaling theory of education?

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, we would expect Tom not to offer which of the following company benefits?

The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests

Which of the following statements is not correct?

Differences in human capital among groups of workers is possibly a reflection of past discrimination.

Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home is an example of

Discrimination is an emotionally charged issue that is impossible to study objectively.

The signaling theory of education maintains that workers who complete specific levels of education enhance their productivity through education.

Offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics is called

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the

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

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Between 1975 and 2011, the wage gap between women with a high school education and women with a college education increased. In particular, in 2011 women with a college degree earned about

Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded of labor if a minimum wage of $8 per hour is imposed on this market?

Figure 19-2 -Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. The original equilibrium wage is $10. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $12.50, then there will be an excess

If government regulations make a certain job less dangerous, then we'd expect that the supply of labor for that job would

Which of the following is an example of discrimination in the labor market?

The signaling theory of education is most similar to the

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

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