Question 1

According to the economist Roback, the early 20th century:

Accepted Answer

A) segregation of black and white customers in streetcars was supported by the railroad companies 
B) segregation of black and white customers in streetcars was opposed by the government 
C) segregation of black and white customers in streetcars was made mandatory by the government with the support of railroad companies 
D) segregation of black and white customers in streetcars was made mandatory by the government against the wishes of railroad companies 
A) segregation of black and white customers in streetcars was supported by the railroad companies 
B) segregation of black and white customers in streetcars was opposed by the government 
C) segregation of black and white customers in streetcars was made mandatory by the government with the support of railroad companies 
D) segregation of black and white customers in streetcars was made mandatory by the government against the wishes of railroad companies

Question 2

Refer to the information provided.Why might an economist be sceptical of Billy's discrimination complaint?

Accepted Answer

A) in a competitive market, employers pay employees based on their value to the firm 
B) discrimination leads to profit maximisation 
C) only cost minimisers practice discrimination 
D) through anti-trust laws, discriminating firms can be penalised with large fees 
A) in a competitive market, employers pay employees based on their value to the firm 
B) discrimination leads to profit maximisation 
C) only cost minimisers practice discrimination 
D) through anti-trust laws, discriminating firms can be penalised with large fees

Question 3

Even when university education in Australia was free, not everyone got a degree.Which of the following is one possible reason for why some people would get degrees while others would not?

Accepted Answer

A) although free in a monetary sense getting a degree takes time and effort, the cost of which will be lower for high-skilled people than low-skilled people 
B) the human capital effects of university have been shown to be small, corresponding to only small increases in wages 
C) the benefits of education are likely to be higher for low-ability people than for high-ability, and so high-ability would not find it profitable to attend university 
D) none of the above 
A) although free in a monetary sense getting a degree takes time and effort, the cost of which will be lower for high-skilled people than low-skilled people 
B) the human capital effects of university have been shown to be small, corresponding to only small increases in wages 
C) the benefits of education are likely to be higher for low-ability people than for high-ability, and so high-ability would not find it profitable to attend university 
D) none of the above

Question 4

Technology is an important factor in explaining the high incomes of superstars because:

Accepted Answer

A) technology is available which can limit access to the superstars 
B) only technologically literate superstars can earn super incomes 
C) technology accounts for differences in incomes within all occupations 
D) technology makes it possible for the best producer to supply every customer at low cost 
A) technology is available which can limit access to the superstars 
B) only technologically literate superstars can earn super incomes 
C) technology accounts for differences in incomes within all occupations 
D) technology makes it possible for the best producer to supply every customer at low cost

Question 5

Unions are analogous to monopolies insofar as that the only way to raise prices (wages) is to lower output (employment).

Accepted Answer

A) True 
 B)False

Question 6

Employers may discriminate because of asymmetric information about the quality of workers.

Accepted Answer

A) True 
 B)False

Question 7

A person will only invest in education if it leads to a higher wage.

Accepted Answer

A) True 
 B)False

Question 8

Evidence suggests that business owners are generally:

Accepted Answer

A) more interested in making a profit than in discriminating against a particular group 
B) more interested in discrimination than in making a profit 
C) unable to determine the link between discrimination and profitability 
D) only interested in profits when discrimination is illegal 
A) more interested in making a profit than in discriminating against a particular group 
B) more interested in discrimination than in making a profit 
C) unable to determine the link between discrimination and profitability 
D) only interested in profits when discrimination is illegal

Question 9

Evidence of differences in average wages of women compared to men:

Accepted Answer

A) provides conclusive evidence of broad patterns of discrimination on the basis of gender 
B) are solely indicative of differences in productivity between genders 
C) does not provide conclusive evidence of discrimination 
D) is seldom used to provide evidence of discriminatory bias 
A) provides conclusive evidence of broad patterns of discrimination on the basis of gender 
B) are solely indicative of differences in productivity between genders 
C) does not provide conclusive evidence of discrimination 
D) is seldom used to provide evidence of discriminatory bias

Question 10

Economists who are critical of comparable worth proposals are likely to argue which of the following?
(i) the competitive market is the best mechanism for setting wages
(ii) a gender wage gap is not by itself evidence of discrimination
(iii) implementation of a comparable worth program would have many of the same effects as minimum wage legislation

Accepted Answer

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

Question 11

When the supply of workers is scarce, one would predict that market wages would be:

Accepted Answer

A) determined solely by factors that affect demand 
B) determined outside the domain of the neoclassical theory 
C) high, other things being equal 
D) low, other things being equal 
A) determined solely by factors that affect demand 
B) determined outside the domain of the neoclassical theory 
C) high, other things being equal 
D) low, other things being equal

Question 12

A union's major source of power is its:

Accepted Answer

A) charismatic and experienced leader 
B) ability to withhold labour 
C) ability to bargain for shorter working weeks 
D) ability to shift the demand curve for labour to the right 
A) charismatic and experienced leader 
B) ability to withhold labour 
C) ability to bargain for shorter working weeks 
D) ability to shift the demand curve for labour to the right

Question 13

Suppose the minimum time taken to get a university degree is increased from three years to six years.Under the signalling view of education this is likely to lead to:
(i) all employers being able to better distinguish high-ability job applicants from low-ability applicants
(ii) top-tier employers (eg.investment banks, law firms) being able to better distinguish high-ability job applicants from low-ability applicants
(iii) an increase in human capital and a corresponding increasing in the marginal product of labour

Accepted Answer

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

Question 14

'The market for school teachers is clearly inefficient; if they were paid the value of marginal product, wages would be much higher'.Evaluate this statement.

Accepted Answer

The 'value' in value of marginal product

Question 15

On the basis of knowledge obtained in her economics class, Sarah is likely to conclude that:

Accepted Answer

A) if the summer camp job doesn't require any special skills, the wage offer is likely to be lower than otherwise 
B) the lifeguard job is likely to be more fun than the summer camp job, so its wage is likely to be higher 
C) the summer camp job requires some night shift work, so wages are likely to be lower 
D) all of the above are true 
A) if the summer camp job doesn't require any special skills, the wage offer is likely to be lower than otherwise 
B) the lifeguard job is likely to be more fun than the summer camp job, so its wage is likely to be higher 
C) the summer camp job requires some night shift work, so wages are likely to be lower 
D) all of the above are true

Question 16

What are efficiency wages? Explain how they may make a firm more profitable.

Accepted Answer

Efficiency wages are above-equilibrium w

Question 17

Which of the following attributes could be important in determining a waitress's productivity?

Accepted Answer

A) physical appearance 
B) mental capacity 
C) heredity and upbringing 
D) all of the above 
A) physical appearance 
B) mental capacity 
C) heredity and upbringing 
D) all of the above

Question 18

There are relatively few women employed as nuclear physicists.This is possibly evidence of which of the following?
(i) labour market discrimination against women
(ii) self-selection of females into other occupations
(iii) cultural bias away from science for girls in primary and secondary education

Accepted Answer

A) (i) and (ii) only 
B) (i) and (iii) only 
C) (ii) and (iii) only 
D) (i), (ii) and (iii) are all possible explanations 
A) (i) and (ii) only 
B) (i) and (iii) only 
C) (ii) and (iii) only 
D) (i), (ii) and (iii) are all possible explanations

Question 19

Sarah, a university student, is trying to consider what she should do for summer employment.Two recruiters show up at her university in search of summer workers.Recruiter A is looking for lifeguards to patrol the beach.Recruiter B is looking for workers to staff positions at a summer youth camp.On the basis of knowledge obtained in her economics class, Sarah is likely to conclude that:

Accepted Answer

A) the large pool of applicants for the lifeguard job will likely lead to a high wage 
B) the small pool of applicants for the summer camp job will likely lead to a high wage 
C) the lifeguard job is likely to be more fun than the summer camp job 
D) all of the above are true 
A) the large pool of applicants for the lifeguard job will likely lead to a high wage 
B) the small pool of applicants for the summer camp job will likely lead to a high wage 
C) the lifeguard job is likely to be more fun than the summer camp job 
D) all of the above are true

Question 20

Empirical evidence based on analysis of education attainment suggests that:

Accepted Answer

A) innate ability is the most important determinant of wages 
B) students in states with compulsory schooling laws did not have higher wages than those in other states 
C) almost all wages can be explained by factors linked to the signalling theory 
D) education does increase the marginal productivity of workers 
A) innate ability is the most important determinant of wages 
B) students in states with compulsory schooling laws did not have higher wages than those in other states 
C) almost all wages can be explained by factors linked to the signalling theory 
D) education does increase the marginal productivity of workers

Exam 20: Earnings, Unions and Discrimination

According to the economist Roback, the early 20th century:

Refer to the information provided.Why might an economist be sceptical of Billy's discrimination complaint?

Even when university education in Australia was free, not everyone got a degree.Which of the following is one possible reason for why some people would get degrees while others would not?

Technology is an important factor in explaining the high incomes of superstars because:

Unions are analogous to monopolies insofar as that the only way to raise prices (wages) is to lower output (employment).

Employers may discriminate because of asymmetric information about the quality of workers.

A person will only invest in education if it leads to a higher wage.

Evidence suggests that business owners are generally:

Evidence of differences in average wages of women compared to men:

When the supply of workers is scarce, one would predict that market wages would be:

A union's major source of power is its:

'The market for school teachers is clearly inefficient; if they were paid the value of marginal product, wages would be much higher'.Evaluate this statement.

On the basis of knowledge obtained in her economics class, Sarah is likely to conclude that:

What are efficiency wages? Explain how they may make a firm more profitable.

Which of the following attributes could be important in determining a waitress's productivity?

There are relatively few women employed as nuclear physicists.This is possibly evidence of which of the following? (i) labour market discrimination against women (ii) self-selection of females into other occupations (iii) cultural bias away from science for girls in primary and secondary education

Empirical evidence based on analysis of education attainment suggests that:

Ten Lessons From 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

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

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 Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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