Question 1

Which set 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 the equilibrium wage. 
B) Workers in the market are highly skilled and not represented by a union, and their wage exceeds the equilibrium wage. 
C) Workers in the market are highly skilled and represented by a union, and their wage exceeds the equilibrium wage. 
D) Workers in the market are unskilled and represented by a union, and their wage exceeds the equilibrium wage. 
A) Workers in the market are unskilled and not represented by a union, and their wage exceeds the equilibrium wage. 
B) Workers in the market are highly skilled and not represented by a union, and their wage exceeds the equilibrium wage. 
C) Workers in the market are highly skilled and represented by a union, and their wage exceeds the equilibrium wage. 
D) Workers in the market are unskilled and represented by a union, and their wage exceeds the equilibrium wage.

Question 2

Other things equal,when the supply of workers is scarce,what would one predict that market wages would be

Accepted Answer

A) relatively high 
B) relatively low 
C) determined solely by factors that affect demand 
D) determined outside the domain of the neoclassical theory 
A) relatively high 
B) relatively low 
C) determined solely by factors that affect demand 
D) determined outside the domain of the neoclassical theory

Question 3

When discrimination occurs as a result of prejudice,market solutions are typically not viable.

Accepted Answer

A) True 
 B)False

Question 4

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and thereby their wages

Accepted Answer

A) the theory of compensating differential 
B) the efficient-market hypothesis 
C) human-capital theory 
D) signalling theory 
A) the theory of compensating differential 
B) the efficient-market hypothesis 
C) human-capital theory 
D) signalling theory

Question 5

If business owners care only about making money,what would be the likely result if they are competing with discriminating businesses

Accepted Answer

A) They are likely to discriminate against certain groups of workers. 
B) They are likely to be replaced by discriminating businesses. 
C) They are very interested in the colour of their employees' skin. 
D) They are at an advantage when competing against those who practice discrimination. 
A) They are likely to discriminate against certain groups of workers. 
B) They are likely to be replaced by discriminating businesses. 
C) They are very interested in the colour of their employees' skin. 
D) They are at an advantage when competing against those who practice discrimination.

Question 6

In discussing discrimination and the wage differences that exist between men and women and between ethnicities,it has been said that "the disease is political even if the symptom is economic." What does this mean

Accepted Answer

A) Wage differences persist because the political system has failed to enact laws to equalize wages among all groups. 
B) Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards. 
C) Wage differences exist because of the differences in the political views of the different groups. 
D) Wage differences exist because the political system is biased against paying compensating differentials. 
A) Wage differences persist because the political system has failed to enact laws to equalize wages among all groups. 
B) Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards. 
C) Wage differences exist because of the differences in the political views of the different groups. 
D) Wage differences exist because the political system is biased against paying compensating differentials.

Question 7

Nemedia and Aquilonia have just started to trade with each other.Nemedia exports goods produced with skilled labour and imports goods made with unskilled labour from Aquilonia.Over time,what would we expect will happen to the wages of skilled and unskilled labour in Nemedia

Accepted Answer

A) The wages of skilled labour in Nemedia will rise, and the wages of unskilled labour in Nemedia will fall. 
B) The wages of skilled labour in Nemedia will fall, and the wages of unskilled labour in Nemedia will rise. 
C) The wages of skilled labour in Nemedia will rise, and the wages of unskilled labour in Nemedia will rise. 
D) The wages of skilled labour in Nemedia will fall, and the wages of unskilled labour in Nemedia will fall. 
A) The wages of skilled labour in Nemedia will rise, and the wages of unskilled labour in Nemedia will fall. 
B) The wages of skilled labour in Nemedia will fall, and the wages of unskilled labour in Nemedia will rise. 
C) The wages of skilled labour in Nemedia will rise, and the wages of unskilled labour in Nemedia will rise. 
D) The wages of skilled labour in Nemedia will fall, and the wages of unskilled labour in Nemedia will fall.

Question 8

What does the term "compensating differential" directly refer to

Accepted Answer

A) the level of wages earned by workers in different jobs 
B) the level of education required for workers in different jobs 
C) the level of safety that workers experience in different jobs 
D) the level of personal and intellectual satisfaction that workers experience in different jobs 
A) the level of wages earned by workers in different jobs 
B) the level of education required for workers in different jobs 
C) the level of safety that workers experience in different jobs 
D) the level of personal and intellectual satisfaction that workers experience in different jobs

Question 9

Which theory does the best job of explaining why educated people are paid more than uneducated people

Accepted Answer

A) the human-capital and price-fixing theories 
B) the human-capital and signalling theories 
C) the wage-differential and common-demand theories 
D) the cost-allocation and derived-demand theories 
A) the human-capital and price-fixing theories 
B) the human-capital and signalling theories 
C) the wage-differential and common-demand theories 
D) the cost-allocation and derived-demand theories

Question 10

Which statement do economists generally agree on

Accepted Answer

A) The human-capital theory provides the best explanation of discriminatory practices. 
B) Differences in average wages do not by themselves provide conclusive evidence about the magnitude of discrimination effects in labour markets. 
C) Discrimination is exclusively an economic, rather than political, phenomenon. 
D) Much of the wage differential observed in the economy is due to discrimination. 
A) The human-capital theory provides the best explanation of discriminatory practices. 
B) Differences in average wages do not by themselves provide conclusive evidence about the magnitude of discrimination effects in labour markets. 
C) Discrimination is exclusively an economic, rather than political, phenomenon. 
D) Much of the wage differential observed in the economy is due to discrimination.

Question 11

Under which circumstance might a competitive market be consistent with a discriminatory wage differential

Accepted Answer

A) The wage differential can be explained by customers' discriminatory preferences. 
B) The wage differential can be explained by a compensating differential. 
C) The wage differential can be explained by differences in human capital. 
D) The wage differential can be explained by differences in efficiency wages. 
A) The wage differential can be explained by customers' discriminatory preferences. 
B) The wage differential can be explained by a compensating differential. 
C) The wage differential can be explained by differences in human capital. 
D) The wage differential can be explained by differences in efficiency wages.

Question 12

After graduating from university,you receive job offers from five different accounting firms.All these 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 13

A compensating differential refers to a difference in wages that arises from nonmonetary characteristics.

Accepted Answer

A) True 
 B)False

Question 14

When is market discrimination evident

Accepted Answer

A) when wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity 
B) when wage rates differ for similar jobs 
C) when consumers prefer to shop at some stores and not at others 
D) when university graduates are paid more than high school graduates 
A) when wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity 
B) when wage rates differ for similar jobs 
C) when consumers prefer to shop at some stores and not at others 
D) when university graduates are paid more than high school graduates

Question 15

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the past five years.As a result of this investment,what would economists who adhere to the human capital view of education likely predict

Accepted Answer

A) rising wages as labour productivity is enhanced 
B) falling wages as the labour market is saturated with too many educated workers 
C) no change in the marginal productivity of capital 
D) no change in the marginal productivity of labour 
A) rising wages as labour productivity is enhanced 
B) falling wages as the labour market is saturated with too many educated workers 
C) no change in the marginal productivity of capital 
D) no change in the marginal productivity of labour

Question 16

If employers are profit maximizers,then what will result

Accepted Answer

A) Competition will eventually eliminate employment discrimination. 
B) Employment discrimination may persist if consumers discriminate. 
C) Employment discrimination will persist because it is generally profitable. 
D) Compensating differentials will not exist. 
A) Competition will eventually eliminate employment discrimination. 
B) Employment discrimination may persist if consumers discriminate. 
C) Employment discrimination will persist because it is generally profitable. 
D) Compensating differentials will not exist.

Question 17

Politicians often point to average wage differentials as evidence of labour market discrimination against ethnic minorities and women; however,economists argue against this approach because they question the validity of the statistics quoted by the politicians.

Accepted Answer

A) True 
 B)False

Question 18

Scenario 19-2
Assume that the labour market for mechanics is competitive and that it is differentiated into two groups: male and female.Assume that the mechanics in this market have vehicle repair ability regardless of whether they are male or female.Currently, the equilibrium wage in the female market is lower than in the male market.Further assume that the market for vehicle repair is competitive.
-Refer to Scenario 19-2.If some consumers in the market for vehicle repair have a strong preference for having their vehicle repaired by a male mechanic,what will result

Accepted Answer

A) The difference in wages will eventually disappear since vehicle repair is a homogeneous good. 
B) Mechanic shops that hire male mechanics will be able to charge a higher price for vehicle repair. 
C) Mechanic shops that hire female mechanics will be much more profitable. 
D) Mechanic shops that hire male mechanics will be much more profitable. 
A) The difference in wages will eventually disappear since vehicle repair is a homogeneous good. 
B) Mechanic shops that hire male mechanics will be able to charge a higher price for vehicle repair. 
C) Mechanic shops that hire female mechanics will be much more profitable. 
D) Mechanic shops that hire male mechanics will be much more profitable.

Question 19

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the analogy between physical and human capital.

Accepted Answer

Capital usually refers to the economy's

Which set of circumstances is likely to provide the best evidence in support of the theory of efficiency wages

Other things equal,when the supply of workers is scarce,what would one predict that market wages would be

When discrimination occurs as a result of prejudice,market solutions are typically not viable.

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and thereby their wages

If business owners care only about making money,what would be the likely result if they are competing with discriminating businesses

In discussing discrimination and the wage differences that exist between men and women and between ethnicities,it has been said that "the disease is political even if the symptom is economic." What does this mean

Nemedia and Aquilonia have just started to trade with each other.Nemedia exports goods produced with skilled labour and imports goods made with unskilled labour from Aquilonia.Over time,what would we expect will happen to the wages of skilled and unskilled labour in Nemedia

What does the term "compensating differential" directly refer to

Which theory does the best job of explaining why educated people are paid more than uneducated people

Which statement do economists generally agree on

Under which circumstance might a competitive market be consistent with a discriminatory wage differential

A compensating differential refers to a difference in wages that arises from nonmonetary characteristics.

When is market discrimination evident

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the past five years.As a result of this investment,what would economists who adhere to the human capital view of education likely predict

If employers are profit maximizers,then what will result

Politicians often point to average wage differentials as evidence of labour market discrimination against ethnic minorities and women; however,economists argue against this approach because they question the validity of the statistics quoted by the politicians.

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Discuss the analogy between physical and human capital.

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 Markets for the Factors of Production

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters

Exam 19: Earnings and Discrimination

Which set of circumstances is likely to provide the best evidence in support of the theory of efficiency wages

Other things equal,when the supply of workers is scarce,what would one predict that market wages would be

When discrimination occurs as a result of prejudice,market solutions are typically not viable.

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and thereby their wages

If business owners care only about making money,what would be the likely result if they are competing with discriminating businesses

In discussing discrimination and the wage differences that exist between men and women and between ethnicities,it has been said that "the disease is political even if the symptom is economic." What does this mean

Nemedia and Aquilonia have just started to trade with each other.Nemedia exports goods produced with skilled labour and imports goods made with unskilled labour from Aquilonia.Over time,what would we expect will happen to the wages of skilled and unskilled labour in Nemedia

What does the term "compensating differential" directly refer to

Which theory does the best job of explaining why educated people are paid more than uneducated people

Which statement do economists generally agree on

Under which circumstance might a competitive market be consistent with a discriminatory wage differential

A compensating differential refers to a difference in wages that arises from nonmonetary characteristics.

When is market discrimination evident

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the past five years.As a result of this investment,what would economists who adhere to the human capital view of education likely predict

If employers are profit maximizers,then what will result

Politicians often point to average wage differentials as evidence of labour market discrimination against ethnic minorities and women; however,economists argue against this approach because they question the validity of the statistics quoted by the politicians.

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Discuss the analogy between physical and human capital.

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 Markets for the Factors of Production

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Filters