Question 1

A prestigious private high school requires each of its teachers to have a Ph.D.in the subject they teach.This requirement is likely to

Accepted Answer

A)  increase the supply of teachers to this school. 
B)  increase wages for teachers at the private school relative to those at public schools. 
C)  decrease the marginal product of teachers at the private school. 
D)  All of the above are correct. 
A)  increase the supply of teachers to this school. 
B)  increase wages for teachers at the private school relative to those at public schools. 
C)  decrease the marginal product of teachers at the private school. 
D)  All of the above are correct.

Question 2

It is argued that competitive markets provide a "natural remedy" to discriminatory wage practices.Which of the following is widely recognized as a potential limit to the potency of that natural remedy?

Accepted Answer

A)  Governments sometimes mandate discriminatory practices. 
B)  Some employees have a lot of job experience; others have little job experience. 
C)  In a discriminatory environment, a competitive firm that takes prices and wages as given has nothing to gain from any particular choice it makes regarding who to hire or which customers to serve. 
D)  Not all firms exhibit social responsibility in sufficient measure to counter discriminatory wage practices. 
A)  Governments sometimes mandate discriminatory practices. 
B)  Some employees have a lot of job experience; others have little job experience. 
C)  In a discriminatory environment, a competitive firm that takes prices and wages as given has nothing to gain from any particular choice it makes regarding who to hire or which customers to serve. 
D)  Not all firms exhibit social responsibility in sufficient measure to counter discriminatory wage practices.

Question 3

Which of the following statements represents the idea behind signaling in education?

Accepted Answer

A)  Education can turn an unproductive person into a productive person. 
B)  Education increases the marginal productivity of naturally productive workers. 
C)  The more naturally productive people are more inclined to educate themselves. 
D)  All of the above are correct. 
A)  Education can turn an unproductive person into a productive person. 
B)  Education increases the marginal productivity of naturally productive workers. 
C)  The more naturally productive people are more inclined to educate themselves. 
D)  All of the above are correct.

Question 4

A 1990 study of the market for collectable baseball cards suggested

Accepted Answer

A)  there was no evidence of price discrimination on the basis of player position (hitter versus pitcher). 
B)  markets in which the product price is low are not typically characterized by consumer-driven race discrimination. 
C)  cards for white players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable black players. 
D)  cards for black players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable white players. 
A)  there was no evidence of price discrimination on the basis of player position (hitter versus pitcher). 
B)  markets in which the product price is low are not typically characterized by consumer-driven race discrimination. 
C)  cards for white players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable black players. 
D)  cards for black players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable white players.

Question 5

Philip is an average contractor in town,and he earns $40,000 a year.Billy is the best contractor in town,and he earns $480,000 a year.Philip's contracting services

Accepted Answer

A)  are valued more by the market relative to Billy's and that explains why his income is higher than Billy's. 
B)  are valued less by the market relative to Billy's and that explains why his income is higher than Billy's. 
C)  are valued less by the market relative to Billy's and that explains why his income is lower than Billy's. 
D)  are more expensive because he receives a compensating differential. 
A)  are valued more by the market relative to Billy's and that explains why his income is higher than Billy's. 
B)  are valued less by the market relative to Billy's and that explains why his income is higher than Billy's. 
C)  are valued less by the market relative to Billy's and that explains why his income is lower than Billy's. 
D)  are more expensive because he receives a compensating differential.

Question 6

Which of the following would be considered human capital?

Accepted Answer

A)  the financial capital a person earns over a lifetime of investing 
B)  the machinery a worker uses to produce a product 
C)  the training a worker receives when starting a new job 
D)  the break room in a factory where employees go to have coffee 
A)  the financial capital a person earns over a lifetime of investing 
B)  the machinery a worker uses to produce a product 
C)  the training a worker receives when starting a new job 
D)  the break room in a factory where employees go to have coffee

Question 7

The market wage could be higher than the equilibrium wage if a worker

Accepted Answer

A)  belongs to a labor union. 
B)  is covered by a minimum-wage law. 
C)  is paid an efficiency wage. 
D)  All of the above are correct. 
A)  belongs to a labor union. 
B)  is covered by a minimum-wage law. 
C)  is paid an efficiency wage. 
D)  All of the above are correct.

Question 8

Discrimination is a reflection of some people's prejudice against certain groups in society.

Accepted Answer

A) True 
 B)False

Question 9

If we were to observe above-equilibrium wages in a particular labor market,then a possible explanation might be that

Accepted Answer

A)  the theory of efficiency wages holds true for that market. 
B)  there is a powerful labor union representing workers in that market. 
C)  workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market. 
D)  All of the above are correct. 
A)  the theory of efficiency wages holds true for that market. 
B)  there is a powerful labor union representing workers in that market. 
C)  workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market. 
D)  All of the above are correct.

Question 10

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

Accepted Answer

A)  increased. 
B)  decreased. 
C)  remained constant. 
D)  first increased by a small percent, then decreased by a large percent. 
A)  increased. 
B)  decreased. 
C)  remained constant. 
D)  first increased by a small percent, then decreased by a large percent.

Question 11

The idea of paying workers an efficiency wage is that

Accepted Answer

A)  doing so is more efficient than paying them the market wage. 
B)  paying workers less gives them the incentive to work harder. 
C)  workers and management gain at the expense of the stockholders of the company. 
D)  workers have the incentive to work harder, thus increasing their marginal productivity. 
A)  doing so is more efficient than paying them the market wage. 
B)  paying workers less gives them the incentive to work harder. 
C)  workers and management gain at the expense of the stockholders of the company. 
D)  workers have the incentive to work harder, thus increasing their marginal productivity.

Question 12

Studies of professional sports teams suggest that,in sports,racial discrimination is

Accepted Answer

A)  rare. 
B)  common and that owners of teams are largely to blame. 
C)  common and that customers (fans) are largely to blame. 
D)  None of the above is correct; there are no reliable studies of discrimination in sports due to the difficulties inherent in measuring athletes' productivity. 
A)  rare. 
B)  common and that owners of teams are largely to blame. 
C)  common and that customers (fans) are largely to blame. 
D)  None of the above is correct; there are no reliable studies of discrimination in sports due to the difficulties inherent in measuring athletes' productivity.

Question 13

On average,electricians who work on dangerous high-voltage power lines earn more per hour than similarly skilled electricians who don't work on dangerous high-voltage power lines.The difference in pay is 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 14

The theory of efficiency wages challenges the assumption that

Accepted Answer

A)  workers are efficient. 
B)  workers have an incentive to shirk their responsibilities to their employers. 
C)  wages must always adjust to balance labor supply and labor demand. 
D)  firms sometimes choose to pay their workers above-equilibrium wages. 
A)  workers are efficient. 
B)  workers have an incentive to shirk their responsibilities to their employers. 
C)  wages must always adjust to balance labor supply and labor demand. 
D)  firms sometimes choose to pay their workers above-equilibrium wages.

Question 15

A computer is an example of human capital.

Accepted Answer

A) True 
 B)False

Question 16

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

Accepted Answer

A)  the inability to calculate wage differentials. 
B)  the inability to see changes in the wage differentials over a period of time. 
C)  the difficulty in measuring productivity differences between workers. 
D)  the difficulty in measuring female labor-force participation. 
A)  the inability to calculate wage differentials. 
B)  the inability to see changes in the wage differentials over a period of time. 
C)  the difficulty in measuring productivity differences between workers. 
D)  the difficulty in measuring female labor-force participation.

Question 17

Efficiency wages may decrease employee turnover.

Accepted Answer

A) True 
 B)False

Question 18

Evidence of discrimination in labor markets

Accepted Answer

A)  applies only to race and gender. 
B)  is conclusively identified in large differences in average wages rates between men and women. 
C)  is difficult to verify by reference to differences in average wage rates. 
D)  is more easily identified on the basis of race than gender. 
A)  applies only to race and gender. 
B)  is conclusively identified in large differences in average wages rates between men and women. 
C)  is difficult to verify by reference to differences in average wage rates. 
D)  is more easily identified on the basis of race than gender.

Question 19

Scenario 19-3
In the small town of Hamilton, Montana, there is a local hardware store called Eddy's Hardware. There are only two types of workers who apply for jobs at Eddy's Hardware: cowboys and farm boys. Local politicians have received numerous complaints that Eddy's Hardware is practicing wage discrimination against cowboys. Eddy's Hardware denies the complaint and says the store is only trying to maximize profit.
-Refer to Scenario 19-3.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 work longer hours than farm boys and their effort is greater. 
C)  Cowboys are generally less educated than farm boys in the field of hardware. 
D)  All of the above would weaken the discrimination complaint. 
A)  Cowboys are more productive than farm boys. 
B)  Cowboys work longer hours than farm boys and their effort is greater. 
C)  Cowboys are generally less educated than farm boys in the field of hardware. 
D)  All of the above would weaken the discrimination complaint.

Question 20

In the presence of discrimination by customers,

Accepted Answer

A)  market forces nevertheless always work to prevent discriminatory wage differentials. 
B)  discriminatory wage differentials can exist, but only if firms refrain from maximizing their profits. 
C)  discriminatory wage differentials can exist, but only if government reinforces customers' practices by passing laws that mandate discrimination. 
D)  discriminatory wage differentials can exist, even in the absence of discriminatory practices by firms or by government. 
A)  market forces nevertheless always work to prevent discriminatory wage differentials. 
B)  discriminatory wage differentials can exist, but only if firms refrain from maximizing their profits. 
C)  discriminatory wage differentials can exist, but only if government reinforces customers' practices by passing laws that mandate discrimination. 
D)  discriminatory wage differentials can exist, even in the absence of discriminatory practices by firms or by government.

Exam 19: Earnings and Discrimination.

A prestigious private high school requires each of its teachers to have a Ph.D.in the subject they teach.This requirement is likely to

It is argued that competitive markets provide a "natural remedy" to discriminatory wage practices.Which of the following is widely recognized as a potential limit to the potency of that natural remedy?

Which of the following statements represents the idea behind signaling in education?

A 1990 study of the market for collectable baseball cards suggested

Philip is an average contractor in town,and he earns $40,000 a year.Billy is the best contractor in town,and he earns $480,000 a year.Philip's contracting services

Which of the following would be considered human capital?

The market wage could be higher than the equilibrium wage if a worker

Discrimination is a reflection of some people's prejudice against certain groups in society.

If we were to observe above-equilibrium wages in a particular labor market,then a possible explanation might be that

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

The idea of paying workers an efficiency wage is that

Studies of professional sports teams suggest that,in sports,racial discrimination is

On average,electricians who work on dangerous high-voltage power lines earn more per hour than similarly skilled electricians who don't work on dangerous high-voltage power lines.The difference in pay is attributed to

The theory of efficiency wages challenges the assumption that

A computer is an example of human capital.

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

Efficiency wages may decrease employee turnover.

Evidence of discrimination in labor markets

In the presence of discrimination by customers,

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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