Question 1

Which of the following is an example of compensating differentials affecting wages?

Accepted Answer

A) a lawyer receiving a higher wage than a cleaner as the supply of lawyers is less than the supply of cleaners 
B) a highly educated civil engineer receiving a higher wage than his peers as she has a higher value of marginal product of labour 
C) a doctor foregoing $100 000 in income to volunteer in a developing country 
D) workers who work nightshift being paid the same as workers who work during the day 
A) a lawyer receiving a higher wage than a cleaner as the supply of lawyers is less than the supply of cleaners 
B) a highly educated civil engineer receiving a higher wage than his peers as she has a higher value of marginal product of labour 
C) a doctor foregoing $100 000 in income to volunteer in a developing country 
D) workers who work nightshift being paid the same as workers who work during the day

Question 2

Doppelsöldners were sixteenth century German soldiers that received double pay for fighting in the front of their unit.The likely difference in wages was caused by:

Accepted Answer

A) doppelsöldners having more expensive uniforms 
B) an archaic custom with no market explanation 
C) doppelsöldners belonged to a union and other soldiers did not 
D) doppelsöldners having a more dangerous job than other soldiers 
A) doppelsöldners having more expensive uniforms 
B) an archaic custom with no market explanation 
C) doppelsöldners belonged to a union and other soldiers did not 
D) doppelsöldners having a more dangerous job than other soldiers

Question 3

Professional cricket players have very large differences in the salaries that is best explained by:

Accepted Answer

A) chance 
B) the team the player is contracted to 
C) natural ability 
D) the number of sports cars the player owns 
A) chance 
B) the team the player is contracted to 
C) natural ability 
D) the number of sports cars the player owns

Question 4

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

Accepted Answer

A) if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise 
B) if the lifeguard job has a requirement for special training or certification, this would tend to increase the wage offer 
C) wages are unlikely to be affected by job requirements 
D) since the lifeguard job would expose him to skin cancer, the wage is likely to be low 
A) if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise 
B) if the lifeguard job has a requirement for special training or certification, this would tend to increase the wage offer 
C) wages are unlikely to be affected by job requirements 
D) since the lifeguard job would expose him to skin cancer, the wage is likely to be low

Question 5

The fact that wage differentials continue to exist across different groups of workers has led economists to believe that:

Accepted Answer

A) discrimination is in fact a very large economic problem 
B) firms apparently are not profit maximisers 
C) differences in human capital and job characteristics must be important in explaining the differences in wages 
D) the market has failed to properly allocate wages to different workers 
A) discrimination is in fact a very large economic problem 
B) firms apparently are not profit maximisers 
C) differences in human capital and job characteristics must be important in explaining the differences in wages 
D) the market has failed to properly allocate wages to different workers

Question 6

Women tend to expect to work more years of their life than they used to.This new development in work expectations has led to which of the following?

Accepted Answer

A) increased female enrollment in higher education and increased relative earnings of female workers 
B) increased female enrollment in higher education and decreased relative earnings of female workers 
C) decreased female enrollment in higher education and increased relative earnings of female workers 
D) decreased female enrollment in higher education and decreased relative earnings of female workers 
A) increased female enrollment in higher education and increased relative earnings of female workers 
B) increased female enrollment in higher education and decreased relative earnings of female workers 
C) decreased female enrollment in higher education and increased relative earnings of female workers 
D) decreased female enrollment in higher education and decreased relative earnings of female workers

Question 7

Economists who study labour markets have discovered that:

Accepted Answer

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

Question 8

Which of the following will impact on the marginal product of an individual?

Accepted Answer

A) lower natural ability 
B) a tendency to work hard 
C) going to college 
D) all of the above 
A) lower natural ability 
B) a tendency to work hard 
C) going to college 
D) all of the above

Question 9

Suppose a forestry firm has just two types of jobs.One requires an education and the other does not.The differences in the wages is high enough to provide workers with a reasonable return on their investment in education.It is likely that:

Accepted Answer

A) the firm will increase the wage rate for the job that requires an education 
B) the supply of workers for the job that requires an education will rise 
C) the firm's demand for workers for the job that an requires education will rise 
D) all of the above will occur 
A) the firm will increase the wage rate for the job that requires an education 
B) the supply of workers for the job that requires an education will rise 
C) the firm's demand for workers for the job that an requires education will rise 
D) all of the above will occur

Question 10

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

Accepted Answer

A) productivity 
B) experience 
C) gender 
D) any of the above 
A) productivity 
B) experience 
C) gender 
D) any of the above

Question 11

Evidence of discrimination is most apparent when one compares wages among broad groups.

Accepted Answer

A) True 
 B)False

Question 12

Business firms that pay salespeople a percentage of the sales they make are attempting to reward:

Accepted Answer

A) comparable worth 
B) years of experience 
C) years of schooling 
D) work effort 
A) comparable worth 
B) years of experience 
C) years of schooling 
D) work effort

Question 13

For a given wage, which of the following statements is true?

Accepted Answer

A) the supply of labour for easy jobs exceeds that for difficult jobs 
B) the supply of labour for fun jobs exceeds that for dull jobs 
C) the supply of labour for safe jobs exceeds that for dangerous jobs 
D) all of the above 
A) the supply of labour for easy jobs exceeds that for difficult jobs 
B) the supply of labour for fun jobs exceeds that for dull jobs 
C) the supply of labour for safe jobs exceeds that for dangerous jobs 
D) all of the above

Question 14

The fact that doctors are paid more than professors is an example of a compensating differential.

Accepted Answer

A) True 
 B)False

Question 15

Given that workers differ in terms of ability and effort, firms are likely to pay people different wages even in the absence of discrimination.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following theories explains why increased education translates to higher wages?

Accepted Answer

A) human capital theory only 
B) signalling theory only 
C) both human capital and signalling theory 
D) none of the above 
A) human capital theory only 
B) signalling theory only 
C) both human capital and signalling theory 
D) none of the above

Question 17

When workers form a labour union, the result will likely be which of the following?
(i) an increased demand for labour
(ii) a surplus of labour
(iii) increased unemployment

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 18

Which of the following statements would weaken the discrimination complaint against Eddy's Hardware?

Accepted Answer

A) cowboys are more productive than farm boys 
B) cowboys are generally less educated in the field of hardware 
C) cowboys are hard workers 
D) all of the above 
A) cowboys are more productive than farm boys 
B) cowboys are generally less educated in the field of hardware 
C) cowboys are hard workers 
D) all of the above

Question 19

Who do you think would be paid more? Michael Clarke, one of Australia's best cricketers, or a highly-educated rural GP doctor? (Note: there is no right answer; looking for discussion of factors that influence wages)

Accepted Answer

a GP doctor commands a high wage as he/s

Question 20

Professional underwater divers are known to have high wages and work an average of only 20 hours a week.The high wages are partly explained by the fact that the job:

Accepted Answer

A) does not require a university degree 
B) is likely to be very dangerous 
C) is likely to be very dull 
D) is likely to be fun 
A) does not require a university degree 
B) is likely to be very dangerous 
C) is likely to be very dull 
D) is likely to be fun

Exam 20: Earnings, Unions and Discrimination

Which of the following is an example of compensating differentials affecting wages?

Doppelsöldners were sixteenth century German soldiers that received double pay for fighting in the front of their unit.The likely difference in wages was caused by:

Professional cricket players have very large differences in the salaries that is best explained by:

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

The fact that wage differentials continue to exist across different groups of workers has led economists to believe that:

Women tend to expect to work more years of their life than they used to.This new development in work expectations has led to which of the following?

Economists who study labour markets have discovered that:

Which of the following will impact on the marginal product of an individual?

Suppose a forestry firm has just two types of jobs.One requires an education and the other does not.The differences in the wages is high enough to provide workers with a reasonable return on their investment in education.It is likely that:

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

Evidence of discrimination is most apparent when one compares wages among broad groups.

Business firms that pay salespeople a percentage of the sales they make are attempting to reward:

For a given wage, which of the following statements is true?

The fact that doctors are paid more than professors is an example of a compensating differential.

Given that workers differ in terms of ability and effort, firms are likely to pay people different wages even in the absence of discrimination.

Which of the following theories explains why increased education translates to higher wages?

When workers form a labour union, the result will likely be which of the following? (i) an increased demand for labour (ii) a surplus of labour (iii) increased unemployment

Which of the following statements would weaken the discrimination complaint against Eddy's Hardware?

Who do you think would be paid more? Michael Clarke, one of Australia's best cricketers, or a highly-educated rural GP doctor? (Note: there is no right answer; looking for discussion of factors that influence wages)

Professional underwater divers are known to have high wages and work an average of only 20 hours a week.The high wages are partly explained by the fact that the job:

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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