Question 1

Even when the labour market was efficient, wage differentials could still occur.

Accepted Answer

A) True 
 B)False

Question 2

If a firm is in a competitive product market but practices discrimination when hiring workers, then it:

Accepted Answer

A) will survive, if it increases production and captures a larger market share 
B) will eventually earn zero economic profits 
C) will be less profitable than firms that don't discriminate and may not survive 
D) will survive as long as it is willing to have a smaller market share 
A) will survive, if it increases production and captures a larger market share 
B) will eventually earn zero economic profits 
C) will be less profitable than firms that don't discriminate and may not survive 
D) will survive as long as it is willing to have a smaller market share

Question 3

The neoclassical theory of the labour market suggests that wages are governed by labour supply and labour demand.

Accepted Answer

A) True 
 B)False

Question 4

From the perspective of market demand, human capital investment is reflected in:

Accepted Answer

A) a firm's willingness to pay more for more productive workers 
B) a decrease in labour demand 
C) a decrease in the marginal product of labour 
D) all of the above 
A) a firm's willingness to pay more for more productive workers 
B) a decrease in labour demand 
C) a decrease in the marginal product of labour 
D) all of the above

Question 5

Suppose the market for industrial workers has recently unionised and successfully negotiated a mandatory breaks every two hours.The market has the usual characteristics, with downward sloping demand and upward sloping supply.Which of the following statements regarding unionisation is true?
(i) mandatory breaks means each worker becomes less productive, shifting labour demand downwards
(ii) mandatory breaks means each worker becomes less productive, lowering the value of the marginal product of labour
(iii) mandatory breaks increases the non-monetary benefits of industrial work, leading to an increase in labour supply

Accepted Answer

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

Question 6

Evidence suggests that the cause of increased wages from obtaining a university education:

Accepted Answer

A) is mostly due to increases in human capital 
B) is mostly due to the signalling value of a degree 
C) is mostly due to scarcity effects 
D) is inconclusive: it is an open question as to the relative size of the human capital and signalling effects 
A) is mostly due to increases in human capital 
B) is mostly due to the signalling value of a degree 
C) is mostly due to scarcity effects 
D) is inconclusive: it is an open question as to the relative size of the human capital and signalling effects

Question 7

Given that there are statistical differences in human capital across both age groups and gender, then this is likely to:

Accepted Answer

A) explain all of the differences in average wage rates across age classifications 
B) explain some of the differences in average wage rates across gender classifications 
C) be unrelated to wage rate differences across gender classifications, since both men and women are required to complete requirements for a high-school certificate 
D) explain none of the differences in average wage rates across gender classifications 
A) explain all of the differences in average wage rates across age classifications 
B) explain some of the differences in average wage rates across gender classifications 
C) be unrelated to wage rate differences across gender classifications, since both men and women are required to complete requirements for a high-school certificate 
D) explain none of the differences in average wage rates across gender classifications

Question 8

Students who are required to finish more schooling have been found to:

Accepted Answer

A) be happier with their career choices 
B) be more likely to feel the effects of minimum wage increases 
C) suffer from unemployment volatility 
D) earn a higher wage 
A) be happier with their career choices 
B) be more likely to feel the effects of minimum wage increases 
C) suffer from unemployment volatility 
D) earn a higher wage

Question 9

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Accepted Answer

A) True 
 B)False

Question 10

All differences in wages that are not accounted for by differences in human capital investment are likely to be a result of discrimination.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the human capital of workers is:

Accepted Answer

A) likely to decrease their value of marginal product 
B) likely to increase their value of marginal product 
C) not likely to change their value of marginal product 
D) a waste of resources for most jobs 
A) likely to decrease their value of marginal product 
B) likely to increase their value of marginal product 
C) not likely to change their value of marginal product 
D) a waste of resources for most jobs

Question 12

Refer to the information provided.If some consumers in the market for a haircut have a strong preference for having their hair cut by a barber that is not going bald, then:

Accepted Answer

A) a competitive market equilibrium is not consistent with the wage difference between bald and non-bald barbers 
B) the difference in wages will eventually disappear, since a haircut is a homogeneous good 
C) barbershops that hire barbers with hair will always be much more profitable 
D) barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers that have a strong preference for non-bald barbers 
A) a competitive market equilibrium is not consistent with the wage difference between bald and non-bald barbers 
B) the difference in wages will eventually disappear, since a haircut is a homogeneous good 
C) barbershops that hire barbers with hair will always be much more profitable 
D) barbershops that hire barbers with hair will be able to charge a higher price for a haircut to those consumers that have a strong preference for non-bald barbers

Question 13

Which of the following would represent a cost of compulsory education?
(i) reduced crime rates
(ii) the fact that students being compelled to attend school may interfere with the learning of more serious students
(iii) lost wages that a dropout could earn waiting on tables at the local cafe

Accepted Answer

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

Question 14

Wages never deviate from the balance of supply and demand in the market for labour.

Accepted Answer

A) True 
 B)False

Question 15

An increase in safety standards does not directly raise the wage of employees, however a neoclassical analysis of labour markets suggests it will decrease total employment.What mechanism drives this result?

Accepted Answer

A) an increase in safety standards leads to more people wishing to enter the labour force 
B) higher safety costs decrease the value of the marginal product of labour, leading to a downward shift in demand 
C) higher safety costs decrease the value of the marginal product of labour, leading to an upward shift in demand 
D) the labour supply curve shifts inwards in response to safer working conditions 
A) an increase in safety standards leads to more people wishing to enter the labour force 
B) higher safety costs decrease the value of the marginal product of labour, leading to a downward shift in demand 
C) higher safety costs decrease the value of the marginal product of labour, leading to an upward shift in demand 
D) the labour supply curve shifts inwards in response to safer working conditions

Question 16

Which of the following theories suggests that education is correlated with natural ability?

Accepted Answer

A) human capital theory 
B) signalling theory 
C) the theory of compensating differential 
D) cost allocation theory 
A) human capital theory 
B) signalling theory 
C) the theory of compensating differential 
D) cost allocation theory

Question 17

A comparable worth law is likely to:

Accepted Answer

A) have an adverse affect on the employment of women in some occupations that are considered underpaid 
B) enhance the efficiency of markets in allocating scarce labour resources 
C) lower the wages in occupations that have been traditionally dominated by women 
D) increase employment of women in traditional occupations dominated by male workers 
A) have an adverse affect on the employment of women in some occupations that are considered underpaid 
B) enhance the efficiency of markets in allocating scarce labour resources 
C) lower the wages in occupations that have been traditionally dominated by women 
D) increase employment of women in traditional occupations dominated by male workers

Question 18

The fact that workers receive different wages is likely caused by:

Accepted Answer

A) government regulation that restricts the free movement of wages 
B) the fact that some firms make more money than others 
C) conditions of supply and demand in different labour markets 
D) stronger unions in some industries 
A) government regulation that restricts the free movement of wages 
B) the fact that some firms make more money than others 
C) conditions of supply and demand in different labour markets 
D) stronger unions in some industries

Question 19

The 'beauty premium' can be explained by the fact that:

Accepted Answer

A) beauty acts as an implicit signal of innate intelligence 
B) beautiful people are likely to reflect 'good breeding' 
C) marginal productivity in all occupations has a physical dimension 
D) in some occupations, physical attractiveness of a worker may enhance the value of their marginal product 
A) beauty acts as an implicit signal of innate intelligence 
B) beautiful people are likely to reflect 'good breeding' 
C) marginal productivity in all occupations has a physical dimension 
D) in some occupations, physical attractiveness of a worker may enhance the value of their marginal product

Question 20

Suppose an individual who left school at 16 earns more than a surgeon with 10 years of tertiary education.Such an outcome suggests:

Accepted Answer

A) that there is some kind of market failure 
B) human capital does not have high returns 
C) that chance and natural ability can be just as important as human capital in determining wages 
D) the early school lever must have a high level of job satisfaction 
A) that there is some kind of market failure 
B) human capital does not have high returns 
C) that chance and natural ability can be just as important as human capital in determining wages 
D) the early school lever must have a high level of job satisfaction

Exam 20: Earnings, Unions and Discrimination

Even when the labour market was efficient, wage differentials could still occur.

If a firm is in a competitive product market but practices discrimination when hiring workers, then it:

The neoclassical theory of the labour market suggests that wages are governed by labour supply and labour demand.

From the perspective of market demand, human capital investment is reflected in:

Evidence suggests that the cause of increased wages from obtaining a university education:

Given that there are statistical differences in human capital across both age groups and gender, then this is likely to:

Students who are required to finish more schooling have been found to:

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

All differences in wages that are not accounted for by differences in human capital investment are likely to be a result of discrimination.

An increase in the human capital of workers is:

Refer to the information provided.If some consumers in the market for a haircut have a strong preference for having their hair cut by a barber that is not going bald, then:

Which of the following would represent a cost of compulsory education? (i) reduced crime rates (ii) the fact that students being compelled to attend school may interfere with the learning of more serious students (iii) lost wages that a dropout could earn waiting on tables at the local cafe

Wages never deviate from the balance of supply and demand in the market for labour.

An increase in safety standards does not directly raise the wage of employees, however a neoclassical analysis of labour markets suggests it will decrease total employment.What mechanism drives this result?

Which of the following theories suggests that education is correlated with natural ability?

A comparable worth law is likely to:

The fact that workers receive different wages is likely caused by:

The 'beauty premium' can be explained by the fact that:

Suppose an individual who left school at 16 earns more than a surgeon with 10 years of tertiary education.Such an outcome suggests:

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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