Question 1

The major determinant of an individual's income is

Accepted Answer

A) whether or not his family is wealthy. 
B) his personality-if the coworkers and the boss like him. 
C) how productive he is combined with demand for what he produces. 
D) if he earns a salary or if he is paid by the hour. 
A) whether or not his family is wealthy. 
B) his personality-if the coworkers and the boss like him. 
C) how productive he is combined with demand for what he produces. 
D) if he earns a salary or if he is paid by the hour.

Question 2

The major determinant of an individual's income is

Accepted Answer

A) whether or not her family is wealthy. 
B) how well she gets along with her co-workers and boss. 
C) how productive she is combined with demand for what she produces. 
D) how much she enjoys the work. 
A) whether or not her family is wealthy. 
B) how well she gets along with her co-workers and boss. 
C) how productive she is combined with demand for what she produces. 
D) how much she enjoys the work.

Question 3

Business owners who care only about maximizing profits are

Accepted Answer

A) likely to discriminate against certain groups of workers. 
B) likely to be replaced by discriminating businesses. 
C) more concerned about racial discrimination than gender discrimination. 
D) at an advantage when competing against those who practice employment discrimination. 
A) likely to discriminate against certain groups of workers. 
B) likely to be replaced by discriminating businesses. 
C) more concerned about racial discrimination than gender discrimination. 
D) at an advantage when competing against those who practice employment discrimination.

Question 4

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 5

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 6

Technological progress generally has the effect of

Accepted Answer

A) creating permanently higher levels of unemployment. 
B) freeing resources that can now go to other uses. 
C) lowering the national standard of living. 
D) doing all of the above. 
A) creating permanently higher levels of unemployment. 
B) freeing resources that can now go to other uses. 
C) lowering the national standard of living. 
D) doing all of the above.

Question 7

Wages in the United States are higher than those in Mexico primarily because

Accepted Answer

A) output per worker is higher in Mexico than in the United States. 
B) output per worker is higher in the United States. 
C) the human and physical capital of American workers is lower than that of their Mexican counterparts. 
D) all of the above are correct. 
A) output per worker is higher in Mexico than in the United States. 
B) output per worker is higher in the United States. 
C) the human and physical capital of American workers is lower than that of their Mexican counterparts. 
D) all of the above are correct.

Question 8

Occupations X and Y employ persons with the same productivity. Workers in the two occupations work the same number of hours per day when on the job. Employment is stable throughout the year in X, while Y is characterized by seasonal layoffs. How will the hourly wage rate and annual earnings compare in the two occupations?

Accepted Answer

A) The hourly wage rate will be higher in X, but the annual earnings will be higher for Y. 
B) Both the hourly wage rate and annual earnings will be higher in X. 
C) Both the hourly wage rate and annual earnings will be higher in Y. 
D) The hourly wage rate will be higher in Y, but the annual earnings will likely be higher for X. 
A) The hourly wage rate will be higher in X, but the annual earnings will be higher for Y. 
B) Both the hourly wage rate and annual earnings will be higher in X. 
C) Both the hourly wage rate and annual earnings will be higher in Y. 
D) The hourly wage rate will be higher in Y, but the annual earnings will likely be higher for X.

Question 9

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 10

Sally and Joe recently graduated from college, both majoring in history. Joe took a prestigious job as a legal clerk. Sally took a job as a specialist in fighting forest fires. Both received additional training before entering their jobs. Who will likely earn a higher salary and why?

Accepted Answer

We can identify two reasons that Sally w

Question 11

Other things the same, the wages in an occupation are likely to be higher the more

Accepted Answer

A) dangerous the job. 
B) prestigious the work environment of the occupation. 
C) desirable the location of the job. 
D) pleasant the working conditions. 
A) dangerous the job. 
B) prestigious the work environment of the occupation. 
C) desirable the location of the job. 
D) pleasant the working conditions.

Question 12

Test pilots are paid high wages by airplane makers primarily because

Accepted Answer

A) the demand for labor in this area is very high relative to the demand for labor in other areas of employment. 
B) the demand for labor in this area is very low relative to the demand for labor in other areas of employment. 
C) the demand for labor in this category is highly elastic. 
D) few people possess the required skills and the occupation is very risky. 
A) the demand for labor in this area is very high relative to the demand for labor in other areas of employment. 
B) the demand for labor in this area is very low relative to the demand for labor in other areas of employment. 
C) the demand for labor in this category is highly elastic. 
D) few people possess the required skills and the occupation is very risky.

Question 13

Which of the following is the primary source of cross-country differences in the real earnings of workers?

Accepted Answer

A) differences in natural resource endowments 
B) differences in output per worker 
C) differences in the average number of hours worked 
D) differences in the share of workers that are members of a labor union 
E) access to modern technology 
A) differences in natural resource endowments 
B) differences in output per worker 
C) differences in the average number of hours worked 
D) differences in the share of workers that are members of a labor union 
E) access to modern technology

Question 14

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.

Question 15

Suppose that Japanese and Chinese workers are equally productive, but Japanese workers receive a higher wage than Chinese workers. Then, refusing to hire Chinese workers would

Accepted Answer

A) increase the firm's costs. 
B) decrease the firm's costs. 
C) increase the firm's profits. 
D) decrease the firm's profits. 
E)  do both a and d. 
A) increase the firm's costs. 
B) decrease the firm's costs. 
C) increase the firm's profits. 
D) decrease the firm's profits. 
E)  do both a and d.

Question 16

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 17

(I) Productivity growth in the United States since 1996 has been more rapid than it was during the previous two decades. (II) Economists believe that the more rapid productivity growth since 1996 is in large part due to the computer revolution and related technological innovations.

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.

Question 18

Other things constant, which of the following job characteristics would be most likely to result in a higher pay rate for the job?

Accepted Answer

A) The employer provides low cost child-care services on the premises. 
B) The job is widely viewed as prestigious. 
C) The job requires substantial amounts of stressful out-of-town travel. 
D) The job involves working in pleasant surroundings. 
A) The employer provides low cost child-care services on the premises. 
B) The job is widely viewed as prestigious. 
C) The job requires substantial amounts of stressful out-of-town travel. 
D) The job involves working in pleasant surroundings.

Question 19

Economic theory suggests that the standard of living of American workers would rise if

Accepted Answer

A) technological change increased output per worker. 
B) the minimum wage were doubled. 
C) automation were outlawed. 
D) a larger proportion of the labor force was unionized. 
A) technological change increased output per worker. 
B) the minimum wage were doubled. 
C) automation were outlawed. 
D) a larger proportion of the labor force was unionized.

Question 20

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

Exam 13: Earnings, Productivity, and the Job Market

The major determinant of an individual's income is

The major determinant of an individual's income is

Business owners who care only about maximizing profits are

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

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?

Technological progress generally has the effect of

Wages in the United States are higher than those in Mexico primarily because

Which of the following is true?

Sally and Joe recently graduated from college, both majoring in history. Joe took a prestigious job as a legal clerk. Sally took a job as a specialist in fighting forest fires. Both received additional training before entering their jobs. Who will likely earn a higher salary and why?

Other things the same, the wages in an occupation are likely to be higher the more

Test pilots are paid high wages by airplane makers primarily because

Which of the following is the primary source of cross-country differences in the real earnings of workers?

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

Suppose that Japanese and Chinese workers are equally productive, but Japanese workers receive a higher wage than Chinese workers. Then, refusing to hire Chinese workers would

New technological advancements, such as robots are

(I) Productivity growth in the United States since 1996 has been more rapid than it was during the previous two decades. (II) Economists believe that the more rapid productivity growth since 1996 is in large part due to the computer revolution and related technological innovations.

Other things constant, which of the following job characteristics would be most likely to result in a higher pay rate for the job?

Economic theory suggests that the standard of living of American workers would rise if

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

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Consumer Choice and Elasticity

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-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

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

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

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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