Question 1

An individual who possesses a specialized skill that is difficult to execute will

Accepted Answer

A) necessarily receive wages considerably higher than those who lack this skill. 
B) receive a wage determined by the number of other persons possessing this skill. 
C) receive a high wage only when this skill is in great demand relative to its supply. 
D) receive a wage rate that is lower than similarly productive individuals who lack this skill. 
A) necessarily receive wages considerably higher than those who lack this skill. 
B) receive a wage determined by the number of other persons possessing this skill. 
C) receive a high wage only when this skill is in great demand relative to its supply. 
D) receive a wage rate that is lower than similarly productive individuals who lack this skill.

Question 2

The real wages of workers will tend to be high when

Accepted Answer

A) output per worker is high. 
B) capital is scarce. 
C) industries are automating at a slow rate. 
D) profits are low. 
A) output per worker is high. 
B) capital is scarce. 
C) industries are automating at a slow rate. 
D) profits are low.

Question 3

Suppose that an employer hires workers with blue eyes and workers with brown eyes.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blue-eyed workers lower wages than brown-eyed workers?

Accepted Answer

A) The employer will be just as cost efficient as a nondiscriminating employer. 
B) The employer will face higher costs than a nondiscriminating employer. 
C) The employer will have lower costs. 
D) The employer will have higher profits. 
E) Both a and c are correct. 
A) The employer will be just as cost efficient as a nondiscriminating employer. 
B) The employer will face higher costs than a nondiscriminating employer. 
C) The employer will have lower costs. 
D) The employer will have higher profits. 
E) Both a and c are correct.

Question 4

Wages in the United States are higher than wages in China primarily because

Accepted Answer

A) worker productivity is higher in the United States. 
B) in the United States,less capital is required per employee. 
C) China has more natural resources that employees can work with. 
D) the United States has more people and,therefore,a larger number of skilled workers. 
A) worker productivity is higher in the United States. 
B) in the United States,less capital is required per employee. 
C) China has more natural resources that employees can work with. 
D) the United States has more people and,therefore,a larger number of skilled workers.

Question 5

In a market economy,which of the following is most important if one is going to achieve high earnings?

Accepted Answer

A) hard work 
B) provision of goods and/or services that others value highly 
C) having a graduate degree in a field like history or sociology 
D) membership in a labor union 
A) hard work 
B) provision of goods and/or services that others value highly 
C) having a graduate degree in a field like history or sociology 
D) membership in a labor union

Question 6

If large numbers of young Americans thought the life of a cowhand was great (despite the hardships),we would expect

Accepted Answer

A) an increase in the wages of cowhands. 
B) a decrease in the wages of cowhands because supply would be enlarged. 
C) no impact on wages,which are determined by supply and demand,not preferences. 
D) a decrease in the wages of cowhands because demand would be reduced. 
A) an increase in the wages of cowhands. 
B) a decrease in the wages of cowhands because supply would be enlarged. 
C) no impact on wages,which are determined by supply and demand,not preferences. 
D) a decrease in the wages of cowhands because demand would be reduced.

Question 7

Which of the following is most likely to reduce the nominal market wage in a job category?

Accepted Answer

A) The job requires employees to work the night shift from 11 p.m.to 7 a.m. 
B) The job is prestigious,and the work is quite interesting. 
C) The job is widely viewed as dangerous. 
D) The job requires employees to move from city to city quite often. 
A) The job requires employees to work the night shift from 11 p.m.to 7 a.m. 
B) The job is prestigious,and the work is quite interesting. 
C) The job is widely viewed as dangerous. 
D) The job requires employees to move from city to city quite often.

Question 8

Assume that empirical evidence shows a difference in mean earnings between two groups,say,majority and minority workers.What conclusion may be drawn?

Accepted Answer

A) The group with the lower earnings is being discriminated against. 
B) The group with the lower earnings is less productive. 
C) The group with the lower earnings has less human capital. 
D) Any of the above statements could,either partially or entirely,explain this difference. 
A) The group with the lower earnings is being discriminated against. 
B) The group with the lower earnings is less productive. 
C) The group with the lower earnings has less human capital. 
D) Any of the above statements could,either partially or entirely,explain this difference.

Question 9

Millionaires tend to be older than the general population because

Accepted Answer

A) older workers generally have more education than younger workers. 
B) many achieve millionaire status by saving from a relatively modest income,and this will take a lengthy period of time. 
C) the earnings of most people peak during the retirement phase of life. 
D) older people have less to do,and therefore,they have more time to come up with innovative ideas. 
A) older workers generally have more education than younger workers. 
B) many achieve millionaire status by saving from a relatively modest income,and this will take a lengthy period of time. 
C) the earnings of most people peak during the retirement phase of life. 
D) older people have less to do,and therefore,they have more time to come up with innovative ideas.

Question 10

Compared to the general population,millionaires are more likely to be

Accepted Answer

A) well-educated. 
B) relatively old. 
C) self-employed. 
D) all of the above. 
E) only b and c above. 
A) well-educated. 
B) relatively old. 
C) self-employed. 
D) all of the above. 
E) only b and c above.

Question 11

When earnings differentials are adjusted for such factors as age,education,and marital status,the

Accepted Answer

A) differential between the earnings of white males and those of minority males increases. 
B) differential between the earnings of white males and those of minority males decreases. 
C) corrected earnings of minority males are equal to those of similar white men. 
D) corrected earnings of minority males are greater than those of similar white men. 
A) differential between the earnings of white males and those of minority males increases. 
B) differential between the earnings of white males and those of minority males decreases. 
C) corrected earnings of minority males are equal to those of similar white men. 
D) corrected earnings of minority males are greater than those of similar white men.

Question 12

If all persons had identical preferences and productivity factors (ability,skill level,education,experience,etc. ),the highest paying jobs would be the most

Accepted Answer

A) prestigious. 
B) convenient. 
C) undesirable. 
D) easily learned. 
A) prestigious. 
B) convenient. 
C) undesirable. 
D) easily learned.

Question 13

As far as contributions to a professional sports team's bottom line are concerned,players generally receive

Accepted Answer

A) about what they are worth. 
B) about half of what they are worth. 
C) about twice what they are worth. 
D) about ten times more than what they are worth. 
A) about what they are worth. 
B) about half of what they are worth. 
C) about twice what they are worth. 
D) about ten times more than what they are worth.

Question 14

Which of the following is true?

Accepted Answer

A) employers who discriminate against blacks and other minorities will have lower costs than rival firms that hire employees strictly on the basis of productivity. 
B) after adjusting for factors such as education,experience,and location,the earnings of black men are almost identical to the earnings of white men. 
C) if minority and white employees in a skill category are equally productive,the profit motive provides employers with a strong incentive to hire minority employees if they are available at a lower wage. 
D) the empirical evidence indicates that the earnings gap between whites and blacks is entirely the result of worker preference. 
A) employers who discriminate against blacks and other minorities will have lower costs than rival firms that hire employees strictly on the basis of productivity. 
B) after adjusting for factors such as education,experience,and location,the earnings of black men are almost identical to the earnings of white men. 
C) if minority and white employees in a skill category are equally productive,the profit motive provides employers with a strong incentive to hire minority employees if they are available at a lower wage. 
D) the empirical evidence indicates that the earnings gap between whites and blacks is entirely the result of worker preference.

Question 15

In an economy in which the skills,preferences,and motivations of workers vary widely,equality of wage rates would

Accepted Answer

A) lead to shortages and surpluses of resources and the use of involuntary methods of achieving work participation. 
B) result in a variety of product prices,but overall GDP would be unaffected. 
C) be efficient if the wages were fixed at a high enough level. 
D) reduce the productive incentives of high-skill workers,an effect that would be offset by the increased work effort of low-skill workers. 
A) lead to shortages and surpluses of resources and the use of involuntary methods of achieving work participation. 
B) result in a variety of product prices,but overall GDP would be unaffected. 
C) be efficient if the wages were fixed at a high enough level. 
D) reduce the productive incentives of high-skill workers,an effect that would be offset by the increased work effort of low-skill workers.

Question 16

The linkage between high productivity and high earnings is vitally important because

Accepted Answer

A) it provides individuals with a strong incentive to develop skills and engage in activities that others value highly. 
B) high productivity (a large output per hour worked)is the key to high living standards. 
C) it brings the self-interest of individuals into harmony with economic progress. 
D) all of the above are true. 
A) it provides individuals with a strong incentive to develop skills and engage in activities that others value highly. 
B) high productivity (a large output per hour worked)is the key to high living standards. 
C) it brings the self-interest of individuals into harmony with economic progress. 
D) all of the above are true.

Question 17

Which of the following best explains why productive workers can command high wages?

Accepted Answer

A) the bargaining power of labor unions. 
B) the presence of minimum wage legislation. 
C) wage and price controls that reflect the political power of labor organizations. 
D) competition among employers for productive workers. 
A) the bargaining power of labor unions. 
B) the presence of minimum wage legislation. 
C) wage and price controls that reflect the political power of labor organizations. 
D) competition among employers for productive workers.

Question 18

If a firm refuses to hire any minorities due to a personal prejudice,its profits will

Accepted Answer

A) increase markedly. 
B) decrease. 
C) not be affected. 
D) increase slightly. 
A) increase markedly. 
B) decrease. 
C) not be affected. 
D) increase slightly.

Question 19

New technological advancements,such as robots are

Accepted Answer

A) harmful because they put people out of work. 
B) helpful because they improve worker productivity. 
C) harmful because robots are likely to have electrical problems which could cause injuries to people. 
D) both a and c above. 
A) harmful because they put people out of work. 
B) helpful because they improve worker productivity. 
C) harmful because robots are likely to have electrical problems which could cause injuries to people. 
D) both a and c above.

Question 20

(I)Differences in worker productivity are one major reason why individual earnings differ.
(II)Even if all workers were identical,differences in the desirability of jobs would still cause earnings differentials.

Accepted Answer

A) Both I and II are true. 
B) I is true;II is false. 
C) I is false;II is true. 
D) Both I and II are false. 
A) Both I and II are true. 
B) I is true;II is false. 
C) I is false;II is true. 
D) Both I and II are false.

Exam 26: Earnings, productivity, and the Job Market

An individual who possesses a specialized skill that is difficult to execute will

The real wages of workers will tend to be high when

Suppose that an employer hires workers with blue eyes and workers with brown eyes.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blue-eyed workers lower wages than brown-eyed workers?

Wages in the United States are higher than wages in China primarily because

In a market economy,which of the following is most important if one is going to achieve high earnings?

If large numbers of young Americans thought the life of a cowhand was great (despite the hardships),we would expect

Which of the following is most likely to reduce the nominal market wage in a job category?

Assume that empirical evidence shows a difference in mean earnings between two groups,say,majority and minority workers.What conclusion may be drawn?

Millionaires tend to be older than the general population because

Compared to the general population,millionaires are more likely to be

When earnings differentials are adjusted for such factors as age,education,and marital status,the

If all persons had identical preferences and productivity factors (ability,skill level,education,experience,etc. ),the highest paying jobs would be the most

As far as contributions to a professional sports team's bottom line are concerned,players generally receive

Which of the following is true?

In an economy in which the skills,preferences,and motivations of workers vary widely,equality of wage rates would

The linkage between high productivity and high earnings is vitally important because

Which of the following best explains why productive workers can command high wages?

If a firm refuses to hire any minorities due to a personal prejudice,its profits will

New technological advancements,such as robots are

(I)Differences in worker productivity are one major reason why individual earnings differ. (II)Even if all workers were identical,differences in the desirability of jobs would still cause earnings differentials.

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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