Question 1

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A) age. 
B) years of experience. 
C) years of education. 
D) All of the above are forms of discrimination. 
A) age. 
B) years of experience. 
C) years of education. 
D) All of the above are forms of discrimination.

Question 2

Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because

Accepted Answer

A) some of the wage gap is explained by efficiency wages. 
B) differences in years of work experience likely lead to productivity differences between men and women. 
C) compensating differentials usually lead to higher wages for women. 
D) All of the above are correct. 
A) some of the wage gap is explained by efficiency wages. 
B) differences in years of work experience likely lead to productivity differences between men and women. 
C) compensating differentials usually lead to higher wages for women. 
D) All of the above are correct.

Question 3

John has financial assets totaling $1.5 million, and he plans to use these assets to start his own business. Since John owns these funds and will not need to borrow to start his business, these assets are considered human capital.

Accepted Answer

A) True 
 B)False

Question 4

Nurses who work in hospitals often are required to work on weekends, whereas nurses who work in doctors' offices generally only work Monday through Friday. Hospital nurses who must work on weekends are usually paid more than nurses working in doctors' offices for the same work even if they have the same skills and education. This difference in pay is attributed to

Accepted Answer

A) an efficiency wage. 
B) compensating differential. 
C) differences in the marginal product of labor. 
D) differences in human capital. 
A) an efficiency wage. 
B) compensating differential. 
C) differences in the marginal product of labor. 
D) differences in human capital.

Question 5

If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that

Accepted Answer

A) the theory of efficiency wages holds true for that market. 
B) there is a powerful labor union representing workers in that market. 
C) workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market. 
D) All of the above are correct. 
A) the theory of efficiency wages holds true for that market. 
B) there is a powerful labor union representing workers in that market. 
C) workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market. 
D) All of the above are correct.

Question 6

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A) race. 
B) level of education. 
C) attitudes toward risk. 
D) All of the above are forms of discrimination. 
A) race. 
B) level of education. 
C) attitudes toward risk. 
D) All of the above are forms of discrimination.

Question 7

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 8

Figure 19-1  
-Refer to Figure 19-1. Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $8 as shown. Which of the following compensation schemes could the graph be illustrating?

Accepted Answer

A) An efficiency wage. 
B) Discrimination. 
C) A compensating differential. 
D) The superstar phenomenon. 
A) An efficiency wage. 
B) Discrimination. 
C) A compensating differential. 
D) The superstar phenomenon.

Question 9

Which of the following moves the wage above its equilibrium value?

Accepted Answer

A) both compensating differentials and efficiency wages 
B) compensating differentials but not efficiency wages 
C) efficiency wages but not compensating differentials 
D) neither compensating differentials nor efficiency wages 
A) both compensating differentials and efficiency wages 
B) compensating differentials but not efficiency wages 
C) efficiency wages but not compensating differentials 
D) neither compensating differentials nor efficiency wages

Question 10

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

Accepted Answer

A) elementary school teacher who works 9 months of the year 
B) manager in a large firm who earns an annual salary with no potential for bonuses or commissions 
C) salesperson who earns a small base salary plus a percentage of the sales he makes 
D) local television news anchor who works during the day 
A) elementary school teacher who works 9 months of the year 
B) manager in a large firm who earns an annual salary with no potential for bonuses or commissions 
C) salesperson who earns a small base salary plus a percentage of the sales he makes 
D) local television news anchor who works during the day

Question 11

Over the last several years, the earnings gap between workers with college degrees and workers with high school degrees has

Accepted Answer

A) remained roughly constant for both men and women. 
B) widened for both men and women. 
C) widened for men and narrowed for women. 
D) narrowed for men and widened for women. 
A) remained roughly constant for both men and women. 
B) widened for both men and women. 
C) widened for men and narrowed for women. 
D) narrowed for men and widened for women.

Question 12

Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages.

Accepted Answer

A) True 
 B)False

Question 13

"The customer is always right" explains

Accepted Answer

A) the higher wages paid to members of a union. 
B) compensating differentials. 
C) persistent wage discrimination based on consumer preferences. 
D) All of the above are correct. 
A) the higher wages paid to members of a union. 
B) compensating differentials. 
C) persistent wage discrimination based on consumer preferences. 
D) All of the above are correct.

Question 14

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 15

In the signaling theory of education,

Accepted Answer

A) discrimination does not affect wage differentials. 
B) schooling makes workers more productive in the long-run. 
C) schooling makes workers more productive in the short-run. 
D) the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education. 
A) discrimination does not affect wage differentials. 
B) schooling makes workers more productive in the long-run. 
C) schooling makes workers more productive in the short-run. 
D) the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education.

Question 16

Which of the following is an example of a compensating differential?

Accepted Answer

A) Two workers with different undergraduate majors earn different salaries. 
B) Two workers with different years of experience earn different salaries. 
C) Two workers whose jobs entail different risks earn different salaries. 
D) Two workers with different levels of personal attractiveness earn different salaries. 
A) Two workers with different undergraduate majors earn different salaries. 
B) Two workers with different years of experience earn different salaries. 
C) Two workers whose jobs entail different risks earn different salaries. 
D) Two workers with different levels of personal attractiveness earn different salaries.

Question 17

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 18

Which of the following would tend to lessen the wage gap between a country's skilled and unskilled workers?

Accepted Answer

A) technology increases the productivity of unskilled workers more than that of skilled workers 
B) the country increases trade with countries that have a higher proportion of skilled workers 
C) both A and B 
D) neither A nor B 
A) technology increases the productivity of unskilled workers more than that of skilled workers 
B) the country increases trade with countries that have a higher proportion of skilled workers 
C) both A and B 
D) neither A nor B

Question 19

Given that the median male is better paid than the median female, which of the following is a valid explanation for wage differences?

Accepted Answer

A) compensating differentials 
B) differences in human capital 
C) discrimination 
D) All of the above can be a partial explanation. 
A) compensating differentials 
B) differences in human capital 
C) discrimination 
D) All of the above can be a partial explanation.

Question 20

Over the past several years, the earnings gap between high-skilled and low-skilled workers has
(i)narrowed because the demand for unskilled labor has risen over time relative to the demand for skilled labor.
(ii)widened because the demand for skilled labor has risen over time relative to the demand for unskilled labor.
(iii)narrowed because the supply of unskilled labor has risen over time relative to the supply of skilled labor.
(iv)widened because the supply of skilled labor has risen over time relative to the supply of unskilled labor.

Accepted Answer

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

Exam 19: Earnings and Discrimination

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because

John has financial assets totaling $1.5 million, and he plans to use these assets to start his own business. Since John owns these funds and will not need to borrow to start his business, these assets are considered human capital.

If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

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

Figure 19-1 -Refer to Figure 19-1. Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $8 as shown. Which of the following compensation schemes could the graph be illustrating?

Which of the following moves the wage above its equilibrium value?

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

Over the last several years, the earnings gap between workers with college degrees and workers with high school degrees has

Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages.

"The customer is always right" explains

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?

In the signaling theory of education,

Which of the following is an example of a compensating differential?

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

Which of the following would tend to lessen the wage gap between a country's skilled and unskilled workers?

Given that the median male is better paid than the median female, which of the following is a valid explanation for wage differences?

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

Applications: 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

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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