Question 1

When workers indifference curves are drawn for wage rates versus injury risk

Accepted Answer

A)  the indifference curves slope downwards because a higher wage is required to accept a higher risk of injury. 
B)  the indifference curves slope upwards because a higher wage is required to accept a higher risk of injury. 
C)  utility increases as a worker moves to the right along an indifference curve. 
D)  utility decreases as a worker moves to the right along an indifference curve. 
A)  the indifference curves slope downwards because a higher wage is required to accept a higher risk of injury. 
B)  the indifference curves slope upwards because a higher wage is required to accept a higher risk of injury. 
C)  utility increases as a worker moves to the right along an indifference curve. 
D)  utility decreases as a worker moves to the right along an indifference curve.

Question 2

Worker X is paid $20,000 more in a dangerous job than what Worker X could make in safe jobs. Worker X values the job characteristic of safety at $15,000. If the government makes Worker X's job safe and if safe jobs continue to pay their current wage, then, assuming markets are competitive and wages can easily adjust

Accepted Answer

A)  Worker X will be $20,000 worse off. 
B)  Worker X will be $15,000 better off. 
C)  Worker X will be $5000 worse off. 
D)  Worker X will be $20,000 better off. 
A)  Worker X will be $20,000 worse off. 
B)  Worker X will be $15,000 better off. 
C)  Worker X will be $5000 worse off. 
D)  Worker X will be $20,000 better off.

Question 3

One problem with using worker willingness-to-pay figures to set safety standards is that

Accepted Answer

A)  the utility of other parties may be affected by worker safety levels. 
B)  workers' preferences can not be translated into monetary terms. 
C)  the use of safety equipment will decrease workers' utility. 
D)  willingness-to-pay figures usually decrease over time. 
A)  the utility of other parties may be affected by worker safety levels. 
B)  workers' preferences can not be translated into monetary terms. 
C)  the use of safety equipment will decrease workers' utility. 
D)  willingness-to-pay figures usually decrease over time.

Question 4

The offer curve describes

Accepted Answer

A)  different wage offers a firm will make to workers of different education levels. 
B)  different wage-and-risk level offers made by different firms. 
C)  different wage-and-risk levels available to one firm. 
D)  different risk levels associated with the same wage level. 
A)  different wage offers a firm will make to workers of different education levels. 
B)  different wage-and-risk level offers made by different firms. 
C)  different wage-and-risk levels available to one firm. 
D)  different risk levels associated with the same wage level.

Question 5

Mothers with young children work fewer hours than mothers with older children. Which of the following could explain this?

Accepted Answer

A)  Young children cost more in real goods and services. 
B)  Mothers with young children have husbands that make less. 
C)  Mothers with young children have flatter utility isoquants (where household time is on the horizontal axis). 
D)  Mothers with young children have steeper utility isoquants (where household time is on the horizontal axis). 
A)  Young children cost more in real goods and services. 
B)  Mothers with young children have husbands that make less. 
C)  Mothers with young children have flatter utility isoquants (where household time is on the horizontal axis). 
D)  Mothers with young children have steeper utility isoquants (where household time is on the horizontal axis).

Question 6

A firm offers the optimal mix of wages and benefits. It is paying $5 an hour in wages and $3 in benefits. The minimum wage is then increased from $5.15 to $7 an hour. Assume all workers have the same utility curves (and have the usual shape). If the firm continues to spend $8 an hour on workers, then

Accepted Answer

A)  workers will be better off. 
B)  workers will be as well off as before. 
C)  workers will be worse off. 
D)  it is impossible to determine if workers are better or worse off without knowing if benefits are a normal or inferior good. 
A)  workers will be better off. 
B)  workers will be as well off as before. 
C)  workers will be worse off. 
D)  it is impossible to determine if workers are better or worse off without knowing if benefits are a normal or inferior good.

Question 7

Holding all other factors constant, workers who are strongly averse to risk will tend to have jobs paying

Accepted Answer

A)  average wages. 
B)  below average wages. 
C)  above average wages. 
D)  at least average wages. 
A)  average wages. 
B)  below average wages. 
C)  above average wages. 
D)  at least average wages.

Question 8

With the assumptions made in our model, OSHA standards that decrease risk levels in the workplace should establish the allowable risk levels

Accepted Answer

A)  to ensure the highest degree of health and safety protection for all workers. 
B)  so that they will not result in higher costs/lower profits for employers. 
C)  by focusing on jobs currently paying the largest compensating wage differentials. 
D)  by weighing the costs of safety programs against the value workers or other beneficiaries attached to the benefits of reduced risk. 
A)  to ensure the highest degree of health and safety protection for all workers. 
B)  so that they will not result in higher costs/lower profits for employers. 
C)  by focusing on jobs currently paying the largest compensating wage differentials. 
D)  by weighing the costs of safety programs against the value workers or other beneficiaries attached to the benefits of reduced risk.

Question 9

Firm A's isoprofit curves are flatter than those of firm B. Therefore,

Accepted Answer

A)  firm A will be willing to pay a larger compensating differential than firm B. 
B)  firm B will be willing to pay a larger compensating differential than firm A. 
C)  both firms will pay the same compensating differential, but firm B will have higher profits than firm A. 
D)  risk is more costly to reduce in firm A than in firm B. 
A)  firm A will be willing to pay a larger compensating differential than firm B. 
B)  firm B will be willing to pay a larger compensating differential than firm A. 
C)  both firms will pay the same compensating differential, but firm B will have higher profits than firm A. 
D)  risk is more costly to reduce in firm A than in firm B.

Question 10

A mandated change in vesting to make all workers become fully vested sooner would

Accepted Answer

A)  increase utility of all workers. 
B)  increase utility of workers who plan to stay with a company for the length of their time in the labor force. 
C)  probably cause firms affected by the legislation to decrease wages. 
D)  probably cause firms not affected by the legislation to increase wages. 
A)  increase utility of all workers. 
B)  increase utility of workers who plan to stay with a company for the length of their time in the labor force. 
C)  probably cause firms affected by the legislation to decrease wages. 
D)  probably cause firms not affected by the legislation to increase wages.

Question 11

When talking about compensating wage differentials, we relax our earlier assumption of

Accepted Answer

A)  utility maximization by workers. 
B)  profit maximization by firms. 
C)  income maximization by workers. 
D)  identical non-pecuniary benefits. 
A)  utility maximization by workers. 
B)  profit maximization by firms. 
C)  income maximization by workers. 
D)  identical non-pecuniary benefits.

Question 12

If workers on the third shift make $1 per hour more than workers on the first shift, then

Accepted Answer

A)  working during the day is worth less than $1 per hour to all workers. 
B)  working during the day is worth exactly $1 per hour to all first shift workers. 
C)  working during the day is worth more than $1 per hour to all third shift workers. 
D)  working during the day is worth at least $1 per hour to all first shift workers. 
A)  working during the day is worth less than $1 per hour to all workers. 
B)  working during the day is worth exactly $1 per hour to all first shift workers. 
C)  working during the day is worth more than $1 per hour to all third shift workers. 
D)  working during the day is worth at least $1 per hour to all first shift workers.

Question 13

If predictable layoffs prevent workers from working as many hours as they desire, then we would expect to see

Accepted Answer

A)  increased wages to workers in industries with predictable layoffs. 
B)  decreased wages to workers in industries with predictable layoffs. 
C)  average wages in industries with predictable layoffs. 
D)  either increased or decreased wages in industries with predictable layoffs. 
A)  increased wages to workers in industries with predictable layoffs. 
B)  decreased wages to workers in industries with predictable layoffs. 
C)  average wages in industries with predictable layoffs. 
D)  either increased or decreased wages in industries with predictable layoffs.

Question 14

If a firm reduces the risk in its workplace, then

Accepted Answer

A)  the firm will be able to pay higher wages. 
B)  the firm will be able to increase profits. 
C)  the firm will likely pay lower wages to make up for the cost of increased safety. 
D)  the firm will see a decrease in total costs. 
A)  the firm will be able to pay higher wages. 
B)  the firm will be able to increase profits. 
C)  the firm will likely pay lower wages to make up for the cost of increased safety. 
D)  the firm will see a decrease in total costs.

Question 15

Assume that all workers prefer to work 40 hours a week at a given wage. If real estate jobs asks workers to rotate between working 20 hours a week and 60 hours a week, which of these workers is likely to work for the lowest relative average hourly pay in real estate?

Accepted Answer

A)  workers with large income effects 
B)  workers with small income effects 
C)  workers with large substitution effects 
D)  workers with small substitution effects 
A)  workers with large income effects 
B)  workers with small income effects 
C)  workers with large substitution effects 
D)  workers with small substitution effects

When workers indifference curves are drawn for wage rates versus injury risk

One problem with using worker willingness-to-pay figures to set safety standards is that

The offer curve describes

Mothers with young children work fewer hours than mothers with older children. Which of the following could explain this?

Holding all other factors constant, workers who are strongly averse to risk will tend to have jobs paying

With the assumptions made in our model, OSHA standards that decrease risk levels in the workplace should establish the allowable risk levels

Firm A's isoprofit curves are flatter than those of firm B. Therefore,

A mandated change in vesting to make all workers become fully vested sooner would

When talking about compensating wage differentials, we relax our earlier assumption of

If workers on the third shift make $1 per hour more than workers on the first shift, then

If predictable layoffs prevent workers from working as many hours as they desire, then we would expect to see

If a firm reduces the risk in its workplace, then

Assume that all workers prefer to work 40 hours a week at a given wage. If real estate jobs asks workers to rotate between working 20 hours a week and 60 hours a week, which of these workers is likely to work for the lowest relative average hourly pay in real estate?

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters

Exam 8: Compensating Wage Differentials and Labor Markets

When workers indifference curves are drawn for wage rates versus injury risk

One problem with using worker willingness-to-pay figures to set safety standards is that

The offer curve describes

Mothers with young children work fewer hours than mothers with older children. Which of the following could explain this?

Holding all other factors constant, workers who are strongly averse to risk will tend to have jobs paying

With the assumptions made in our model, OSHA standards that decrease risk levels in the workplace should establish the allowable risk levels

Firm A's isoprofit curves are flatter than those of firm B. Therefore,

A mandated change in vesting to make all workers become fully vested sooner would

When talking about compensating wage differentials, we relax our earlier assumption of

If workers on the third shift make $1 per hour more than workers on the first shift, then

If predictable layoffs prevent workers from working as many hours as they desire, then we would expect to see

If a firm reduces the risk in its workplace, then

Assume that all workers prefer to work 40 hours a week at a given wage. If real estate jobs asks workers to rotate between working 20 hours a week and 60 hours a week, which of these workers is likely to work for the lowest relative average hourly pay in real estate?

Introduction

Overview of the Labor Market

The Demand for Labor

Labor Demand Elasticities

Frictions in the Labor Market

Supply of Labor to the Economy: the Decision to Work

Labor Supply: Household Production, the Family, and the Life Cycle

Investments in Human Capital: Education and Training

Worker Mobility: Migration, Immigration, and Turnover

Pay and Productivity: Wage Determination Within the Firm

Gender, Race, and Ethnicity in the Labor Market

Unions and the Labor Market

Unemployment

Inequality in Earnings

The Labor Market Effects of International Trade and Production Sharing

Filters