Question 1

Which of the following is the primary source of rapid growth in the real earnings of workers?

Accepted Answer

A) strong unions 
B) government regulation of labor markets 
C) rapid growth in worker productivity 
D) increases in the minimum wage 
A) strong unions 
B) government regulation of labor markets 
C) rapid growth in worker productivity 
D) increases in the minimum wage

Question 2

Evidence suggests that education raises the earnings of the workforce mainly by

Accepted Answer

A) increasing the marginal productivity of labor. 
B) keeping young people out of the labor force,thereby reducing the supply of labor. 
C) teaching workers how to demand more pay. 
D) teaching people to read and write,although education beyond this point does not seem to increase worker productivity. 
A) increasing the marginal productivity of labor. 
B) keeping young people out of the labor force,thereby reducing the supply of labor. 
C) teaching workers how to demand more pay. 
D) teaching people to read and write,although education beyond this point does not seem to increase worker productivity.

Question 3

Which one of the following is most likely to reduce the mobility of labor between jobs?

Accepted Answer

A) an increase in the minimum wage 
B) legislation relaxing licensing requirements for entry into many occupations 
C) the taxation of unemployment compensation in the same manner as income from other sources 
D) both b and c above 
A) an increase in the minimum wage 
B) legislation relaxing licensing requirements for entry into many occupations 
C) the taxation of unemployment compensation in the same manner as income from other sources 
D) both b and c above

Question 4

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

Accepted Answer

A) worker preferences are an important source of earning differentials. 
B) economics ranks one set of worker preferences as more desirable than another. 
C) some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. 
D) skill levels of laborers are a minor consideration in wage rate determination. 
A) worker preferences are an important source of earning differentials. 
B) economics ranks one set of worker preferences as more desirable than another. 
C) some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. 
D) skill levels of laborers are a minor consideration in wage rate determination.

Question 5

When comparisons are made between the earnings of whites and minorities with the same age,quantity of schooling,marital status,sector of employment,union and industry status,regional location,and annual hours worked,recent studies indicate that

Accepted Answer

A) the corrected earnings of minority men are about two-thirds the earnings of white men. 
B) earnings differentials between whites and minorities are due almost exclusively to employment discrimination. 
C) the corrected earnings of Mexican-Americans,Asian-Americans,and American Indians were between 7 and 9 percent less than the earnings of similar white men. 
D) most minority men now have higher earnings than white men. 
A) the corrected earnings of minority men are about two-thirds the earnings of white men. 
B) earnings differentials between whites and minorities are due almost exclusively to employment discrimination. 
C) the corrected earnings of Mexican-Americans,Asian-Americans,and American Indians were between 7 and 9 percent less than the earnings of similar white men. 
D) most minority men now have higher earnings than white men.

Question 6

The tournament pay explanation is useful in an attempt to explain why

Accepted Answer

A) some corporate executives earn amounts higher than their marginal revenue product. 
B) very few people actually earn the minimum wage. 
C) political entrepreneurs can generate campaign contributions from businesses outside of their districts. 
D) people with only a high school education earn less than those with college degrees. 
A) some corporate executives earn amounts higher than their marginal revenue product. 
B) very few people actually earn the minimum wage. 
C) political entrepreneurs can generate campaign contributions from businesses outside of their districts. 
D) people with only a high school education earn less than those with college degrees.

Question 7

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

Accepted Answer

A) discrimination by customers is the most common type of economic discrimination. 
B) differences in human capital and job characteristics must be important in explaining the differences in wages. 
C) firms apparently are not profit maximizers. 
D) the market has failed to properly allocate wages to different workers. 
A) discrimination by customers is the most common type of economic discrimination. 
B) differences in human capital and job characteristics must be important in explaining the differences in wages. 
C) firms apparently are not profit maximizers. 
D) the market has failed to properly allocate wages to different workers.

Question 8

Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D. ,why are college professors paid less than other occupations that require similar or lesser amounts of human capital?

Accepted Answer

If being a college professor is consider

Question 9

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

Accepted Answer

A) worker preferences are an important source of earning differentials. 
B) economics ranks one set of worker preferences as more desirable than another. 
C) some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. 
D) skill levels of laborers are a minor consideration in wage rate determination. 
A) worker preferences are an important source of earning differentials. 
B) economics ranks one set of worker preferences as more desirable than another. 
C) some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. 
D) skill levels of laborers are a minor consideration in wage rate determination.

Question 10

Which of the following is the clearest evidence of employment discrimination against minority employees?

Accepted Answer

A) the average wage of minority workers is lower than the average wage of whites. 
B) the average hours worked by minority employees exceeds the hours worked by whites. 
C) the mean number of years of schooling of minority workers is lower than that of whites. 
D) the average wages of minority employees are lower than the average wages of whites with similar productivity characteristics. 
A) the average wage of minority workers is lower than the average wage of whites. 
B) the average hours worked by minority employees exceeds the hours worked by whites. 
C) the mean number of years of schooling of minority workers is lower than that of whites. 
D) the average wages of minority employees are lower than the average wages of whites with similar productivity characteristics.

Question 11

In an environment of tournament pay,it is quite likely that marginally more productive employees will receive

Accepted Answer

A) less than their marginal revenue product,while less productive employees receive more than theirs. 
B) more than their marginal revenue product,while less productive employees receive less than theirs. 
C) more than their marginal revenue product,as do less productive employees. 
D) less than their marginal revenue product,as do less productive employees. 
A) less than their marginal revenue product,while less productive employees receive more than theirs. 
B) more than their marginal revenue product,while less productive employees receive less than theirs. 
C) more than their marginal revenue product,as do less productive employees. 
D) less than their marginal revenue product,as do less productive employees.

Question 12

Proponents of the view that the higher rate of productivity growth since 1996 is part of a long-run trend argue it is a result of

Accepted Answer

A) a continuing increase in the use of computers and other kinds of information technology. 
B) employers forcing more output from workers,who have become victims of new technologies. 
C) the shrinkage of the labor force,so that output per worker is rising. 
D) the rise of employment in the highly productive manufacturing sector. 
A) a continuing increase in the use of computers and other kinds of information technology. 
B) employers forcing more output from workers,who have become victims of new technologies. 
C) the shrinkage of the labor force,so that output per worker is rising. 
D) the rise of employment in the highly productive manufacturing sector.

Question 13

Sue: "I much prefer eating at the El Grande Mexican Restaurant to the others in town because all of their employees are Mexican and speak Spanish.It gives the place a real 'authentic' feel." Which of the following is true about the above statement?

Accepted Answer

A) This is an example of customer-based discrimination for one group of employees over another. 
B) Despite customer preferences,we would expect the restaurants in town to hire equally from all racial and ethnic groups. 
C) If many customers felt the same way Sue does,there would be pressure for firms to satisfy this consumer preference in their hiring. 
D) Both a and c are correct. 
A) This is an example of customer-based discrimination for one group of employees over another. 
B) Despite customer preferences,we would expect the restaurants in town to hire equally from all racial and ethnic groups. 
C) If many customers felt the same way Sue does,there would be pressure for firms to satisfy this consumer preference in their hiring. 
D) Both a and c are correct.

Question 14

Which of the following is true?

Accepted Answer

A) Automated production processes are generally adopted regardless of whether they reduce costs. 
B) Automated production processes eliminate jobs and,thereby,endanger our future living standards. 
C) Cost-reducing automated production techniques will expand output directly and/or release scarce resources for the expansion of output in other areas. 
D) Use of the most advanced technology will always minimize the cost of a productive activity. 
A) Automated production processes are generally adopted regardless of whether they reduce costs. 
B) Automated production processes eliminate jobs and,thereby,endanger our future living standards. 
C) Cost-reducing automated production techniques will expand output directly and/or release scarce resources for the expansion of output in other areas. 
D) Use of the most advanced technology will always minimize the cost of a productive activity.

Question 15

When employment discrimination results from the personal prejudices of employers,economic theory suggests that

Accepted Answer

A) competitive forces will tend to reduce discrimination. 
B) the wages of employees who are discriminated against will rise. 
C) an employer who discriminates will have the same costs as those who do not discriminate. 
D) discrimination by an employer will reduce production costs since the employer can pay lower wages. 
A) competitive forces will tend to reduce discrimination. 
B) the wages of employees who are discriminated against will rise. 
C) an employer who discriminates will have the same costs as those who do not discriminate. 
D) discrimination by an employer will reduce production costs since the employer can pay lower wages.

Question 16

Which of the following is most likely to cause the productivity of labor to increase?

Accepted Answer

A) higher money wages. 
B) an increase in the proportion of the workforce that belongs to a labor union. 
C) more flexible working hours and improved retirement plans. 
D) a higher rate of investment in human and nonhuman capital. 
A) higher money wages. 
B) an increase in the proportion of the workforce that belongs to a labor union. 
C) more flexible working hours and improved retirement plans. 
D) a higher rate of investment in human and nonhuman capital.

Question 17

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not.Other things equal,you would expect wages to be ____ in Burger King because ____.

Accepted Answer

A) higher;Burger King employees are more productive 
B) lower;McDonald's employees are more productive 
C) higher;Burger King is a more prestigious place to work 
D) lower;Burger King has more favorable working conditions 
A) higher;Burger King employees are more productive 
B) lower;McDonald's employees are more productive 
C) higher;Burger King is a more prestigious place to work 
D) lower;Burger King has more favorable working conditions

Question 18

Which of the following is true?

Accepted Answer

A) When workers are more productive,the demand for their services will be higher. 
B) In order to earn a large income,one must provide large benefits to others. 
C) High productivity (a large output per hour worked)is the key to high earnings for both individuals and countries. 
D) All of the above are true. 
A) When workers are more productive,the demand for their services will be higher. 
B) In order to earn a large income,one must provide large benefits to others. 
C) High productivity (a large output per hour worked)is the key to high earnings for both individuals and countries. 
D) All of the above are true.

Question 19

The difference between the earnings of construction workers who work on bridges and skyscrapers and those who work on highways is most likely due to

Accepted Answer

A) differences in education requirements. 
B) differences in unionization rates. 
C) a compensating differential. 
D) apprenticeship requirements. 
A) differences in education requirements. 
B) differences in unionization rates. 
C) a compensating differential. 
D) apprenticeship requirements.

Question 20

Under a tournament pay scheme,the pay gap between a few "winners" (those who receive big promotions)and other employees exceeds the productivity differences between these two groups.The reason firms might use such a scheme is that they

Accepted Answer

A) overestimate the productivity of those who receive big promotions and inadvertently pay them "too much." 
B) gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees. 
C) hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages. 
D) hope to raise the productivity of all other workers,who will work harder trying to gain a big promotion. 
A) overestimate the productivity of those who receive big promotions and inadvertently pay them "too much." 
B) gain tax advantages by paying a few workers large salaries and using fringe benefits to compensate the rest of the employees. 
C) hope to raise the productivity of those who receive big promotions because marginal productivity adjusts to equal wages. 
D) hope to raise the productivity of all other workers,who will work harder trying to gain a big promotion.

Exam 26: Earnings, productivity, and the Job Market

Which of the following is the primary source of rapid growth in the real earnings of workers?

Evidence suggests that education raises the earnings of the workforce mainly by

Which one of the following is most likely to reduce the mobility of labor between jobs?

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

When comparisons are made between the earnings of whites and minorities with the same age,quantity of schooling,marital status,sector of employment,union and industry status,regional location,and annual hours worked,recent studies indicate that

The tournament pay explanation is useful in an attempt to explain why

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D. ,why are college professors paid less than other occupations that require similar or lesser amounts of human capital?

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

Which of the following is the clearest evidence of employment discrimination against minority employees?

In an environment of tournament pay,it is quite likely that marginally more productive employees will receive

Proponents of the view that the higher rate of productivity growth since 1996 is part of a long-run trend argue it is a result of

Sue: "I much prefer eating at the El Grande Mexican Restaurant to the others in town because all of their employees are Mexican and speak Spanish.It gives the place a real 'authentic' feel." Which of the following is true about the above statement?

Which of the following is true?

When employment discrimination results from the personal prejudices of employers,economic theory suggests that

Which of the following is most likely to cause the productivity of labor to increase?

Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not.Other things equal,you would expect wages to be ____ in Burger King because ____.

Which of the following is true?

The difference between the earnings of construction workers who work on bridges and skyscrapers and those who work on highways is most likely due to

Under a tournament pay scheme,the pay gap between a few "winners" (those who receive big promotions)and other employees exceeds the productivity differences between these two groups.The reason firms might use such a scheme is that they

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Assume that Burger King employees work in an air-conditioned environment while McDonalds employees do not.Other things equal,you would expect wages to be in Burger King because .