Question 1

Which of the following statements is not correct?

Accepted Answer

A) If a firm discriminates by paying short workers less than tall workers, the firm may be able to compete in the market if the firm's customers also prefer taller workers to shorter workers. 
B) If the government passes regulations that prevent shorter workers from working in higher paying jobs, taller workers may continue to earn higher wages than shorter workers. 
C) Government regulation that prohibits discrimination is economically necessary because market forces support discrimination. 
D) Competitive markets will eliminate discrimination in wages over time unless customer preferences also reflect discrimination and/or government intervention promotes discrimination. 
A) If a firm discriminates by paying short workers less than tall workers, the firm may be able to compete in the market if the firm's customers also prefer taller workers to shorter workers. 
B) If the government passes regulations that prevent shorter workers from working in higher paying jobs, taller workers may continue to earn higher wages than shorter workers. 
C) Government regulation that prohibits discrimination is economically necessary because market forces support discrimination. 
D) Competitive markets will eliminate discrimination in wages over time unless customer preferences also reflect discrimination and/or government intervention promotes discrimination.

Question 2

Which of the following theories would suggest that attending school does not improve productivity but that high-ability people are more likely to stay in school?

Accepted Answer

A) physical-capital theory 
B) human-capital theory 
C) signaling theory 
D) neoclassical theory 
A) physical-capital theory 
B) human-capital theory 
C) signaling theory 
D) neoclassical theory

Question 3

A plumber who specializes in cleaning plugged sewer lines is typically paid a higher wage than a plumber who works on installing water systems in new residential housing. Which of the following would push the wages of plumbers who work on sewer lines higher?

Accepted Answer

A) Plumbers who work on new residential housing require more training than plumbers working on sewer lines. 
B) Plumbing jobs that involve sewer lines are likely to have a high element of personal satisfaction. 
C) Plumbers who work with sewer lines are more likely to work the day shift. 
D) plumbers who work with sewer lines are likely to be perceived as having a "dirty" job. 
A) Plumbers who work on new residential housing require more training than plumbers working on sewer lines. 
B) Plumbing jobs that involve sewer lines are likely to have a high element of personal satisfaction. 
C) Plumbers who work with sewer lines are more likely to work the day shift. 
D) plumbers who work with sewer lines are likely to be perceived as having a "dirty" job.

Question 4

The theory of education that states firms use educational attainment as a way of sorting between high-ability and low-ability workers is called

Accepted Answer

The answer of The theory of education that states firms...

Question 5

Economists who study labor markets have discovered that

Accepted Answer

A) only about 5 percent of wage differences are related to chance. 
B) ability is not difficult to measure but is largely insignificant in explaining wage differences. 
C) work effort is difficult to measure but is not likely to contribute much to an explanation of wage differences. 
D) ability, effort, and chance are likely to be significant contributors to wage differences. 
A) only about 5 percent of wage differences are related to chance. 
B) ability is not difficult to measure but is largely insignificant in explaining wage differences. 
C) work effort is difficult to measure but is not likely to contribute much to an explanation of wage differences. 
D) ability, effort, and chance are likely to be significant contributors to wage differences.

Question 6

If an employer's behavior is supportive of the theory of efficiency wages, the employer would

Accepted Answer

A) raise wages in an effort to increase worker effort. 
B) raise wages in an effort to increase worker turnover. 
C) decrease wages in an effort to increase worker effort. 
D) decrease wages in an effort to increase worker turnover. 
A) raise wages in an effort to increase worker effort. 
B) raise wages in an effort to increase worker turnover. 
C) decrease wages in an effort to increase worker effort. 
D) decrease wages in an effort to increase worker turnover.

Question 7

Suppose that a college student receives an offer for a summer internship with a stock brokerage firm. Unfortunately for the student, the internship is unpaid. Is it ever economically beneficial to accept an unpaid job?

Accepted Answer

A) Yes, because the experience gained during the internship would increase the student's human capital. 
B) No, because the opportunity cost is too high. 
C) No, because the student is signaling to future employers that he or she is willing to accept low wages. 
D) Yes, because accepting an unpaid job signals to future employers that the student has stable personal finances. 
A) Yes, because the experience gained during the internship would increase the student's human capital. 
B) No, because the opportunity cost is too high. 
C) No, because the student is signaling to future employers that he or she is willing to accept low wages. 
D) Yes, because accepting an unpaid job signals to future employers that the student has stable personal finances.

Question 8

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

Accepted Answer

A) human-capital and price-fixing 
B) human-capital and signaling 
C) wage-differential and signaling 
D) wage-differential and compensating-differentials 
A) human-capital and price-fixing 
B) human-capital and signaling 
C) wage-differential and signaling 
D) wage-differential and compensating-differentials

Question 9

Why would a wage differential due to discrimination in hiring be unlikely to persist in a competitive labor market?

Accepted Answer

A) There is a cost advantage for firms that do not discriminate. 
B) Workers who are victims of discrimination will eventually drop out of the labor market. 
C) Competing firms will hire fewer of the workers who are temporarily victimized by discrimination. 
D) Discrimination cannot exist in markets. 
A) There is a cost advantage for firms that do not discriminate. 
B) Workers who are victims of discrimination will eventually drop out of the labor market. 
C) Competing firms will hire fewer of the workers who are temporarily victimized by discrimination. 
D) Discrimination cannot exist in markets.

Question 10

Cheryl is a professor at a local university. She hired a student from the university to babysit for her children and paid the student a wage higher than the typical wage paid to babysitters in her area to ensure the babysitter's reliability and that attention is paid to her children. What is the name for this above-equilibrium wage?

Accepted Answer

The answer of Cheryl is a professor at a local...

Question 11

Which of the following could explain the changing gap in income between unskilled and skilled workers in the United States?

Accepted Answer

A) International trade has decreased the domestic demand for skilled labor and increased the domestic demand for unskilled labor. 
B) Certain technological changes such as the introduction of computers have increased the domestic demand for skilled labor and decreased the domestic demand for unskilled labor. 
C) Both a and b are correct. 
D) Neither a nor b is correct. 
A) International trade has decreased the domestic demand for skilled labor and increased the domestic demand for unskilled labor. 
B) Certain technological changes such as the introduction of computers have increased the domestic demand for skilled labor and decreased the domestic demand for unskilled labor. 
C) Both a and b are correct. 
D) Neither a nor b is correct.

Question 12

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

Accepted Answer

customer d

Question 13

If firms are competitive, then labor-market discrimination

Accepted Answer

A) cannot exist in either the short run or the long run. 
B) will be more of a problem than if the market were monopolistic or imperfectly competitive. 
C) likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies. 
D) likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms. 
A) cannot exist in either the short run or the long run. 
B) will be more of a problem than if the market were monopolistic or imperfectly competitive. 
C) likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies. 
D) likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.

Question 14

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Accepted Answer

A) "We encourage our employees to enroll in night classes to improve their on-the-job productivity." 
B) "We encourage our employees to participate in online seminars to learn new skills." 
C) "We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs." 
D) "When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow-through to finish what they start." 
A) "We encourage our employees to enroll in night classes to improve their on-the-job productivity." 
B) "We encourage our employees to participate in online seminars to learn new skills." 
C) "We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs." 
D) "When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow-through to finish what they start."

Question 15

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. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, then there will be an

Accepted Answer

A) excess demand of 50 labor hours. 
B) excess demand of 20 labor hours. 
C) excess supply of 20 labor hours. 
D) excess supply of 50 labor hours. 
A) excess demand of 50 labor hours. 
B) excess demand of 20 labor hours. 
C) excess supply of 20 labor hours. 
D) excess supply of 50 labor hours.

Question 16

Human capital is

Accepted Answer

A) an important determinant of wages, but it does not affect the production of goods and services. 
B) an important determinant of wages, and it affects the production of goods and services. 
C) a specific type of physical capital made by humans rather than machines. 
D) very different from physical capital in that physical capital represents an investment, while human capital does not represent an investment. 
A) an important determinant of wages, but it does not affect the production of goods and services. 
B) an important determinant of wages, and it affects the production of goods and services. 
C) a specific type of physical capital made by humans rather than machines. 
D) very different from physical capital in that physical capital represents an investment, while human capital does not represent an investment.

Question 17

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the

Accepted Answer

A) higher-paying job has a compensating wage differential of $3 per hour. 
B) higher-paying job has a compensating wage differential of $25 per hour. 
C) higher-paying job is intrinsically more attractive than the lower-paying job. 
D) factory is discriminating against Sally because she is a woman. 
A) higher-paying job has a compensating wage differential of $3 per hour. 
B) higher-paying job has a compensating wage differential of $25 per hour. 
C) higher-paying job is intrinsically more attractive than the lower-paying job. 
D) factory is discriminating against Sally because she is a woman.

Question 18

Which of the following is least likely to be the reason women are underrepresented in the economics profession?

Accepted Answer

A) labor market discrimination 
B) the choice of women to select other occupations 
C) cultural bias in primary and secondary education 
D) the inability of women to solve problems in economics 
A) labor market discrimination 
B) the choice of women to select other occupations 
C) cultural bias in primary and secondary education 
D) the inability of women to solve problems in economics

Question 19

The theory of efficiency wages suggests that firms may pay above-equilibrium wages

Accepted Answer

A) to reduce employee turnover. 
B) to prevent unions from recruiting members. 
C) to reduce the need for minimum wage laws. 
D) to increase the demand for better-skilled workers. 
A) to reduce employee turnover. 
B) to prevent unions from recruiting members. 
C) to reduce the need for minimum wage laws. 
D) to increase the demand for better-skilled workers.

Question 20

Which of the following statements is not correct?

Accepted Answer

A) If the signaling theory of education is correct, additional schooling does not affect worker productivity but rather signals a correlation between natural ability and education. 
B) The theory of efficiency wages suggests that firms pay higher wages to workers in order to induce workers to be more productive. 
C) Discrimination against workers of a certain race or ethnicity is often in conflict with a firm's desire to maximize profits. 
D) The theory of compensating wage differentials reflects the different skills, abilities, and productivity of workers. 
A) If the signaling theory of education is correct, additional schooling does not affect worker productivity but rather signals a correlation between natural ability and education. 
B) The theory of efficiency wages suggests that firms pay higher wages to workers in order to induce workers to be more productive. 
C) Discrimination against workers of a certain race or ethnicity is often in conflict with a firm's desire to maximize profits. 
D) The theory of compensating wage differentials reflects the different skills, abilities, and productivity of workers.

Exam 19: Earnings and Discrimination

Which of the following statements is not correct?

Which of the following theories would suggest that attending school does not improve productivity but that high-ability people are more likely to stay in school?

A plumber who specializes in cleaning plugged sewer lines is typically paid a higher wage than a plumber who works on installing water systems in new residential housing. Which of the following would push the wages of plumbers who work on sewer lines higher?

The theory of education that states firms use educational attainment as a way of sorting between high-ability and low-ability workers is called

Economists who study labor markets have discovered that

If an employer's behavior is supportive of the theory of efficiency wages, the employer would

Suppose that a college student receives an offer for a summer internship with a stock brokerage firm. Unfortunately for the student, the internship is unpaid. Is it ever economically beneficial to accept an unpaid job?

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

Why would a wage differential due to discrimination in hiring be unlikely to persist in a competitive labor market?

Which of the following could explain the changing gap in income between unskilled and skilled workers in the United States?

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

If firms are competitive, then labor-market discrimination

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

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. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, then there will be an

Human capital is

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the

Which of the following is least likely to be the reason women are underrepresented in the economics profession?

The theory of efficiency wages suggests that firms may pay above-equilibrium wages

Which of the following statements is not correct?

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. If a labor union forms within the widget industry and subsequently negotiates an hourly wage of $20.00, then there will be an