Question 1

A signaling theory of education suggests that educational attainment

Accepted Answer

A) is a signal of high marginal productivity. 
B) is correlated with natural ability. 
C) increases the productivity of low-ability workers. 
D) Both a and b are correct. 
A) is a signal of high marginal productivity. 
B) is correlated with natural ability. 
C) increases the productivity of low-ability workers. 
D) Both a and b are correct.

Question 2

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 3

Which of the following would be considered an investment in human capital?

Accepted Answer

A) ​switching to working the night shift to receive a higher wage 
B) buying a new computer 
C) enrolling in a three-week course to learn more about a specific topic in your line of work 
D) quitting a job for health reasons. 
A) ​switching to working the night shift to receive a higher wage 
B) buying a new computer 
C) enrolling in a three-week course to learn more about a specific topic in your line of work 
D) quitting a job for health reasons.

Question 4

Store clerks are known to have low wages. This is likely to reflect the fact that

Accepted Answer

A) store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. 
B) store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers. 
C) many people perceive the job of store clerk as having significant risk of death on the job. 
D) store clerks are required to have a college degree. 
A) store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. 
B) store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers. 
C) many people perceive the job of store clerk as having significant risk of death on the job. 
D) store clerks are required to have a college degree.

Question 5

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 6

In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes

Accepted Answer

A) compensating differentials. 
B) the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C) technological progress. 
D) the decreasing importance of international trade. 
A) compensating differentials. 
B) the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C) technological progress. 
D) the decreasing importance of international trade.

Question 7

According to economic historians, streetcars in southern cities in the early 1900s were racially segregated because the owners of the firms believed that segregation raised the firms' profits.

Accepted Answer

A) True 
 B)False

Question 8

Evidence from a 1988 study of the market for professional basketball players

Accepted Answer

A) found no evidence of consumer-driven wage discrimination. 
B) found some evidence of consumer-driven wage discrimination. 
C) found that measurement of marginal productivity was very difficult for basketball players. 
D) indicated that sports with strong player associations are unlikely to experience wage discrimination. 
A) found no evidence of consumer-driven wage discrimination. 
B) found some evidence of consumer-driven wage discrimination. 
C) found that measurement of marginal productivity was very difficult for basketball players. 
D) indicated that sports with strong player associations are unlikely to experience wage discrimination.

Question 9

The term "compensating differential" refers to

Accepted Answer

A) the fact that workers who do similar work should be paid the same wage. 
B) the fact that some workers live further from their jobs than do other workers. 
C) a wage difference that is due to unionization of some firms but not others. 
D) a wage difference that arises from nonmonetary characteristics of different jobs. 
A) the fact that workers who do similar work should be paid the same wage. 
B) the fact that some workers live further from their jobs than do other workers. 
C) a wage difference that is due to unionization of some firms but not others. 
D) a wage difference that arises from nonmonetary characteristics of different jobs.

Question 10

Scenario 19-6
Suppose that in the competitive market for auto repair, firms prefer to hire men rather than women. Assume that the women applying for positions have the same skills, experience, and work ethic as the men. As a result of this discrimination, the demand for women is lower than it otherwise would be.
-Refer to Scenario 19-6. If the firms in this market are profit-maximizers and customers do not care if a woman or a man works on their car, what will likely happen?

Accepted Answer

Women will be hired

Question 11

The very high pay earned by the best actors and actresses is partially explained by the fact that

Accepted Answer

A) they benefit from a compensating differential. 
B) moviegoers all want to see the very best actors, not second-rate actors. 
C) they have acting degrees from accredited acting schools. 
D) the supply of good actors is very large. 
A) they benefit from a compensating differential. 
B) moviegoers all want to see the very best actors, not second-rate actors. 
C) they have acting degrees from accredited acting schools. 
D) the supply of good actors is very large.

Question 12

Scenario 19-6​
The after-school tutoring industry is competitive, and so is the labor market for after-school tutors. Suppose male and female tutors have equal experience and skill. Currently, some tutoring centers are biased and will only hire male tutors, while unbiased tutoring centers desire to hire the cheapest tutors and do not care about their genders. As a result, the equilibrium wage for male tutors is higher than that of female tutors.
-Refer to Scenario 19-6. If some families strongly prefer their children to be tutored by male tutors, then

Accepted Answer

A) the difference in male and female tutor wages will eventually disappear. 
B) biased tutoring centers can charge more for tutoring to offset the higher cost of hiring only male tutors 
C) all unbiased tutoring centers will go out of business in the long run. 
D) all biased tutoring centers will make a profit in the short run, but will go out of business in the long run. 
A) the difference in male and female tutor wages will eventually disappear. 
B) biased tutoring centers can charge more for tutoring to offset the higher cost of hiring only male tutors 
C) all unbiased tutoring centers will go out of business in the long run. 
D) all biased tutoring centers will make a profit in the short run, but will go out of business in the long run.

Question 13

First grade teachers who work in Lynn, Massachusetts's (a large, low income city north of Boston) public schools earn more than first grade teachers who work in private schools in more affluent communities north of Boston. Lynn teachers belong to a teachers' union. Which statement best explains the scenario described above?

Accepted Answer

A) Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union. 
B) Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
C) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union. 
D) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
A) Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union. 
B) Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union. 
C) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union. 
D) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union.

Question 14

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 15

Tiffany is a black 21-year-old female, and Danielle is a black 41-year-old female. Both Tiffany and Danielle were accounting majors, and they graduated from the same college with the same GPA - Tiffany in 2013 and Danielle in 1992. Tiffany and Danielle are both auditors at the same accounting firm. Tiffany earns $63,000 a year, and Danielle earns $95,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A) Tiffany has more human capital than Danielle. 
B) Tiffany has less human capital than Danielle. 
C) Tiffany has been discriminated against because she is young. 
D) Danielle has been discriminated against because she is old. 
A) Tiffany has more human capital than Danielle. 
B) Tiffany has less human capital than Danielle. 
C) Tiffany has been discriminated against because she is young. 
D) Danielle has been discriminated against because she is old.

Question 16

A compensating differential refers to differences in pay due to

Accepted Answer

A) productivity levels of workers. 
B) signaling differences of workers. 
C) nonmonetary characteristics of jobs. 
D) All of the above are correct. 
A) productivity levels of workers. 
B) signaling differences of workers. 
C) nonmonetary characteristics of jobs. 
D) All of the above are correct.

Question 17

On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to

Accepted Answer

A) the marginal product of labor. 
B) the marginal product of capital. 
C) diminishing marginal returns. 
D) a compensating differential. 
A) the marginal product of labor. 
B) the marginal product of capital. 
C) diminishing marginal returns. 
D) a compensating differential.

Question 18

Which of the following statements is not correct?

Accepted Answer

A) Male workers with good looks tend to earn more than male workers with average looks 
B) If discriminating wage differentials persist in competitive markets, it is primarily because employers chose to discriminate even in spite of customer preferences. 
C) A higher level of human capital raises a worker's wages. 
D) In competitive markets, workers are paid a wage equal to the value of their marginal product. 
A) Male workers with good looks tend to earn more than male workers with average looks 
B) If discriminating wage differentials persist in competitive markets, it is primarily because employers chose to discriminate even in spite of customer preferences. 
C) A higher level of human capital raises a worker's wages. 
D) In competitive markets, workers are paid a wage equal to the value of their marginal product.

Question 19

Human capital is

Accepted Answer

A) a stock of equipment and structures. 
B) the result of investments workers make in themselves such as on-the-job training. 
C) a difference in wages that arises to offset the nonmonetary characteristics of different jobs. 
D) inversely related to the supply of workers. 
A) a stock of equipment and structures. 
B) the result of investments workers make in themselves such as on-the-job training. 
C) a difference in wages that arises to offset the nonmonetary characteristics of different jobs. 
D) inversely related to the supply of workers.

Question 20

Why do college graduates earn more in wages than workers with only a high school diploma?

Accepted Answer

They have

Exam 19: Earnings and Discrimination

A signaling theory of education suggests that educational attainment

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 would be considered an investment in human capital?

Store clerks are known to have low wages. This is likely to reflect the fact that

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?

In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes

According to economic historians, streetcars in southern cities in the early 1900s were racially segregated because the owners of the firms believed that segregation raised the firms' profits.

Evidence from a 1988 study of the market for professional basketball players

The term "compensating differential" refers to

The very high pay earned by the best actors and actresses is partially explained by the fact that

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

A compensating differential refers to differences in pay due to

On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to

Which of the following statements is not correct?

Human capital is

Why do college graduates earn more in wages than workers with only a high school diploma?

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

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