Question 1

It is likely that efficiency wages will decrease employee effort.

Accepted Answer

A) True 
 B)False

Question 2

After graduating from college,you receive job offers from five different accounting firms.All job offers have a different compensation package.Is it irrational for you to accept an offer that doesn't provide the highest level of monetary compensation? Use the concept of compensating differentials to explain your answer.

Accepted Answer

Compensating differentials refer to diff

Question 3

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)  attitude toward the tradeoff between labor and leisure. 
A)  race. 
B)  level of education. 
C)  attitudes toward risk. 
D)  attitude toward the tradeoff between labor and leisure.

Question 4

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

Accepted Answer

A)  Workers in the market are unskilled and not represented by a union, and their wage exceeds both the equilibrium wage and the minimum wage. 
B)  Workers in the market are highly skilled and not represented by a union, and their wage exceeds the minimum wage. 
C)  Workers in the market are highly skilled and represented by a union, and their wage exceeds the equilibrium wage. 
D)  Employers in the market are known for reducing the workers' wage whenever they get an opportunity to do so. 
A)  Workers in the market are unskilled and not represented by a union, and their wage exceeds both the equilibrium wage and the minimum wage. 
B)  Workers in the market are highly skilled and not represented by a union, and their wage exceeds the minimum wage. 
C)  Workers in the market are highly skilled and represented by a union, and their wage exceeds the equilibrium wage. 
D)  Employers in the market are known for reducing the workers' wage whenever they get an opportunity to do so.

Question 5

The superstar phenomenon explains why professional athletes earn more than amateur athletes.

Accepted Answer

A) True 
 B)False

Question 6

Evidence suggests that business owners are generally

Accepted Answer

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

Question 7

Coal mining is a dangerous and dirty job.Suppose someone developed new machinery that made coal mining safer and cleaner; at the same time,suppose it made coal miners more productive.We would expect that the wages of coal miners would

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay exactly the same. 
D)  rise, fall, or stay the same. 
A)  rise. 
B)  fall. 
C)  stay exactly the same. 
D)  rise, fall, or stay the same.

Question 8

A recent law school graduate is considering two offers to practice law,one in California and one in Alabama.The California bar exam is very difficult to pass compared with Alabama's exam.Assuming all other things equal,the attorney would expect

Accepted Answer

A)  to be unable to predict the wage difference between Alabama and California. 
B)  to make a higher wage in California. 
C)  to make a higher wage in Alabama. 
D)  wages in California and Alabama to be identical. 
A)  to be unable to predict the wage difference between Alabama and California. 
B)  to make a higher wage in California. 
C)  to make a higher wage in Alabama. 
D)  wages in California and Alabama to be identical.

Question 9

The fact that movie star Julia Roberts's salary is much higher than the salary earned by the world's best plumber can best be explained by the

Accepted Answer

A)  failure of the market to reward talent fairly. 
B)  fact that wage rates cannot reflect the influence of education properly. 
C)  willingness of some people to accept a lower wage rate in order to do what they like most to do. 
D)  superstar phenomenon. 
A)  failure of the market to reward talent fairly. 
B)  fact that wage rates cannot reflect the influence of education properly. 
C)  willingness of some people to accept a lower wage rate in order to do what they like most to do. 
D)  superstar phenomenon.

Question 10

If,as some economists believe,changes in technology over recent decades have brought about changes in labor markets,then those changes likely have resulted in

Accepted Answer

A)  reduced emphasis on compensating differentials as an explanation for wage differences. 
B)  a reduced emphasis on human-capital differences among workers as an explanation for wage differences. 
C)  a narrowing of the earnings gap between high-skilled workers and low-skilled workers. 
D)  a widening of the earnings gap between high-skilled workers and low-skilled workers. 
A)  reduced emphasis on compensating differentials as an explanation for wage differences. 
B)  a reduced emphasis on human-capital differences among workers as an explanation for wage differences. 
C)  a narrowing of the earnings gap between high-skilled workers and low-skilled workers. 
D)  a widening of the earnings gap between high-skilled workers and low-skilled workers.

Question 11

Economists who study labor markets have documented

Accepted Answer

A)  a general decline in the wages of college graduates over the last decade. 
B)  an increasing trend in U.S. labor markets for employers to pay all costs of education and training. 
C)  a decrease in the earnings gap between low-skill and high-skill workers over the past two decades. 
D)  an increase in the earnings gap between low-skill and high-skill workers over the past two decades. 
A)  a general decline in the wages of college graduates over the last decade. 
B)  an increasing trend in U.S. labor markets for employers to pay all costs of education and training. 
C)  a decrease in the earnings gap between low-skill and high-skill workers over the past two decades. 
D)  an increase in the earnings gap between low-skill and high-skill workers over the past two decades.

Question 12

Explain the role of job experience in explaining the differences between the average wages of men and women.

Accepted Answer

Women,who have primary responsibility fo

Question 13

Over the past several years,the earnings gap between high-skilled and low-skilled workers has widened because

Accepted Answer

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

Question 14

Some economists are skeptical of the argument that employers are responsible for discriminatory wage differences.They argue that market economies provide a natural remedy to employer discrimination,and that remedy is

Accepted Answer

A)  social responsibility. 
B)  the profit motive. 
C)  fear of reprisal from groups that suffer from those wage differences. 
D)  fear of reprisal from government in the form of prosecution. 
A)  social responsibility. 
B)  the profit motive. 
C)  fear of reprisal from groups that suffer from those wage differences. 
D)  fear of reprisal from government in the form of prosecution.

Question 15

The signaling theory of education maintains that workers who complete specific levels of education enhance their productivity through education.

Accepted Answer

A) True 
 B)False

Question 16

Other things equal,a particular job will likely pay a higher wage if it involves

Accepted Answer

A)  danger to the worker. 
B)  personal enjoyment for the worker. 
C)  intellectual stimulation for the worker. 
D)  All of the above are correct. 
A)  danger to the worker. 
B)  personal enjoyment for the worker. 
C)  intellectual stimulation for the worker. 
D)  All of the above are correct.

Question 17

A "technology" hypothesis has been advanced as an explanation for the widening earnings gap between skilled and unskilled workers in the United States.This hypothesis emphasizes the likelihood that technological advances have

Accepted Answer

A)  increased the supply of both skilled and unskilled workers. 
B)  increased the supply of skilled workers and decreased the supply of unskilled workers. 
C)  increased the demand for skilled workers and decreased the demand for unskilled workers. 
D)  decreased the demand for both skilled and unskilled workers. 
A)  increased the supply of both skilled and unskilled workers. 
B)  increased the supply of skilled workers and decreased the supply of unskilled workers. 
C)  increased the demand for skilled workers and decreased the demand for unskilled workers. 
D)  decreased the demand for both skilled and unskilled workers.

Question 18

A difference in wages that reflects differences in the nonpay features of two jobs is called

Accepted Answer

A)  a compensating differential. 
B)  a wage adjustment. 
C)  an efficiency wage. 
D)  a minimum wage. 
A)  a compensating differential. 
B)  a wage adjustment. 
C)  an efficiency wage. 
D)  a minimum wage.

Question 19

Which of these instances would constitute labor-market discrimination? Pat receives a higher wage than James.Pat and James are identical in all of their labor-market characteristics except that

Accepted Answer

A)  Pat is a college graduate, and James has only a high school diploma. 
B)  Pat is a black , and James is white. 
C)  Pat has 15 years of experience at her job, whereas James has only five years of experience. 
D)  Pat is more willing to accept dangerous working conditions than James. 
A)  Pat is a college graduate, and James has only a high school diploma. 
B)  Pat is a black , and James is white. 
C)  Pat has 15 years of experience at her job, whereas James has only five years of experience. 
D)  Pat is more willing to accept dangerous working conditions than James.

Question 20

Jake and Bill are both college graduates.Jake is a patrolman and Bill is a detective in the same police precinct.While Jake's job is inherently more dangerous than Bill's,Bill passed a difficult exam to gain promotion to detective.Bill earns more than Jake because

Accepted Answer

A)  of a compensating differential. 
B)  of efficiency wages. 
C)  of education as a signal. 
D)  Bill has more human capital. 
A)  of a compensating differential. 
B)  of efficiency wages. 
C)  of education as a signal. 
D)  Bill has more human capital.

Exam 19: Earnings and Discrimination.

It is likely that efficiency wages will decrease employee effort.

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

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

The superstar phenomenon explains why professional athletes earn more than amateur athletes.

Evidence suggests that business owners are generally

Coal mining is a dangerous and dirty job.Suppose someone developed new machinery that made coal mining safer and cleaner; at the same time,suppose it made coal miners more productive.We would expect that the wages of coal miners would

A recent law school graduate is considering two offers to practice law,one in California and one in Alabama.The California bar exam is very difficult to pass compared with Alabama's exam.Assuming all other things equal,the attorney would expect

The fact that movie star Julia Roberts's salary is much higher than the salary earned by the world's best plumber can best be explained by the

If,as some economists believe,changes in technology over recent decades have brought about changes in labor markets,then those changes likely have resulted in

Economists who study labor markets have documented

Explain the role of job experience in explaining the differences between the average wages of men and women.

Over the past several years,the earnings gap between high-skilled and low-skilled workers has widened because

Some economists are skeptical of the argument that employers are responsible for discriminatory wage differences.They argue that market economies provide a natural remedy to employer discrimination,and that remedy is

The signaling theory of education maintains that workers who complete specific levels of education enhance their productivity through education.

Other things equal,a particular job will likely pay a higher wage if it involves

A "technology" hypothesis has been advanced as an explanation for the widening earnings gap between skilled and unskilled workers in the United States.This hypothesis emphasizes the likelihood that technological advances have

A difference in wages that reflects differences in the nonpay features of two jobs is called

Which of these instances would constitute labor-market discrimination? Pat receives a higher wage than James.Pat and James are identical in all of their labor-market characteristics except that

Jake and Bill are both college graduates.Jake is a patrolman and Bill is a detective in the same police precinct.While Jake's job is inherently more dangerous than Bill's,Bill passed a difficult exam to gain promotion to detective.Bill earns more than Jake because

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.

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.

Oligopoly.

The Market For the Factors of Production.

Income Inequality and Poverty.

The Theory of Consumer Choice.

Frontiers in Microeconomics.

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