Question 1

The basic neoclassical theory of the labour market predicts that:

Accepted Answer

A)  wages are determined entirely by market supply 
B)  workers are compensated according to their contribution to the social value of society 
C)  workers earn a wage equal to the value they contribute to the economy 
D)  wages are determined entirely by firms that demand labour services 
A)  wages are determined entirely by market supply 
B)  workers are compensated according to their contribution to the social value of society 
C)  workers earn a wage equal to the value they contribute to the economy 
D)  wages are determined entirely by firms that demand labour services C

Question 2

Economists are skeptical about the idea that discrimination is employer-driven for which of the following reasons?

Accepted Answer

A)  discrimination does not exist in markets 
B)  holding productivity constant, a profit-maximising employer will hire the cheapest labour available 
C)  rational employers are profit maximisers 
D)  all of the above 
A)  discrimination does not exist in markets 
B)  holding productivity constant, a profit-maximising employer will hire the cheapest labour available 
C)  rational employers are profit maximisers 
D)  all of the above C

Question 3

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by:

Accepted Answer

A)  productivity 
B)  experience 
C)  gender 
D)  any of the above 
A)  productivity 
B)  experience 
C)  gender 
D)  any of the above C

Question 4

Hardworking employees generally do which of the following? (i) they earn a higher wage than lazy employees
(ii) they have higher marginal products
(iii) they have more natural beauty

Accepted Answer

A)  (i) and (ii) 
B)  (i) and (iii) 
C)  (i), (ii) and (iii) 
D)  (ii) and (iii) 
A)  (i) and (ii) 
B)  (i) and (iii) 
C)  (i), (ii) and (iii) 
D)  (ii) and (iii)

Question 5

A union's major source of power is its:

Accepted Answer

A)  charismatic and experienced leader 
B)  ability to withhold labour 
C)  ability to bargain for shorter working weeks 
D)  ability to shift the demand curve for labour to the right 
A)  charismatic and experienced leader 
B)  ability to withhold labour 
C)  ability to bargain for shorter working weeks 
D)  ability to shift the demand curve for labour to the right

Question 6

The ownership of human capital:

Accepted Answer

A)  is not generally transferable 
B)  is easily transferable to multiple individuals 
C)  is typically embodied in related physical capital 
D)  may be subject to government restrictions on transferability 
A)  is not generally transferable 
B)  is easily transferable to multiple individuals 
C)  is typically embodied in related physical capital 
D)  may be subject to government restrictions on transferability

Question 7

Why can Roger Federer command a high sponsorship bonus?

Accepted Answer

Superstars arise in markets that have t

Question 8

Forestry worker wages are often higher than other low-skilled work because of the higher risks of injury or death.

Accepted Answer

A) True 
 B)False

Question 9

The high incomes for superstars in the movie market can be attributed to the fact that:

Accepted Answer

A)  there are not many good substitutes for the product offered 
B)  people who become superstars have the best publicists 
C)  superstars are very lucky individuals 
D)  there are a lot less good movies being made at the moment 
A)  there are not many good substitutes for the product offered 
B)  people who become superstars have the best publicists 
C)  superstars are very lucky individuals 
D)  there are a lot less good movies being made at the moment

Question 10

Hypotheses described in the text, and that have been proposed to explain the rising wage gap between skilled and unskilled workers:

Accepted Answer

A)  may be reasonable explanations for a country whose technology and participation in world markets have remained constant over the relevant time period 
B)  may be complementary to one another 
C)  must be mutually exclusive 
D)  are, in fact, the only possible explanations for the observed wage gap 
A)  may be reasonable explanations for a country whose technology and participation in world markets have remained constant over the relevant time period 
B)  may be complementary to one another 
C)  must be mutually exclusive 
D)  are, in fact, the only possible explanations for the observed wage gap

Question 11

From the perspective of market demand, human capital investment is reflected in:

Accepted Answer

A)  a firm's willingness to pay more for more productive workers 
B)  a decrease in labour demand 
C)  a decrease in the marginal product of labour 
D)  all of the above 
A)  a firm's willingness to pay more for more productive workers 
B)  a decrease in labour demand 
C)  a decrease in the marginal product of labour 
D)  all of the above

Question 12

Economists generally agree that:

Accepted Answer

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

Question 13

'The market for school teachers is clearly inefficient; if they were paid the value of marginal product, wages would be much higher'. Evaluate this statement.

Accepted Answer

The 'value' in value of marginal product

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

The alternative to human capital theory that explains why people invest in education argues that:

Accepted Answer

A)  schooling just acts as a signal of future ability 
B)  university is a place to network with future workers 
C)  productivity is not linked to wages 
D)  people cannot be considered as 'capital' 
A)  schooling just acts as a signal of future ability 
B)  university is a place to network with future workers 
C)  productivity is not linked to wages 
D)  people cannot be considered as 'capital'

Question 16

Identify the statement below that would be an investment in human capital?

Accepted Answer

A)  a new fishing boat that can carry more crew 
B)  a university degree 
C)  the purchase of a larger trawling net to enhance labour productivity 
D)  all of the above 
A)  a new fishing boat that can carry more crew 
B)  a university degree 
C)  the purchase of a larger trawling net to enhance labour productivity 
D)  all of the above

Question 17

How does the theory of efficiency wages explain above-equilibrium wages?

Accepted Answer

A)  employers are forced to pay higher wages in efficient markets 
B)  workers get a rise in wage when they prove they are increasing their productivity 
C)  employers give their workers a higher wage in the hope that it will lead to increased productivity 
D)  workers demand higher wages to compensate for poor fringe benefits 
A)  employers are forced to pay higher wages in efficient markets 
B)  workers get a rise in wage when they prove they are increasing their productivity 
C)  employers give their workers a higher wage in the hope that it will lead to increased productivity 
D)  workers demand higher wages to compensate for poor fringe benefits

Question 18

Evidence of differences in average wages of Aboriginal workers compared to white workers:

Accepted Answer

A)  is solely indicative of differences in productivity between races 
B)  does not alone provide conclusive evidence of discrimination 
C)  is seldom used to provide evidence of discriminatory bias 
D)  provides conclusive evidence of broad patterns of discrimination on the basis of race 
A)  is solely indicative of differences in productivity between races 
B)  does not alone provide conclusive evidence of discrimination 
C)  is seldom used to provide evidence of discriminatory bias 
D)  provides conclusive evidence of broad patterns of discrimination on the basis of race

Question 19

Economists who study labour markets have discovered that:

Accepted Answer

A)  only about five per cent of wage differences are related to chance 
B)  ability, effort and chance are likely to be significant contributors to wage differences 
C)  ability is not difficult to measure, but is largely insignificant in explaining wage differences 
D)  work effort is difficult to measure, but is not likely to contribute much to an explanation of wage differences 
A)  only about five per cent of wage differences are related to chance 
B)  ability, effort and chance are likely to be significant contributors to wage differences 
C)  ability is not difficult to measure, but is largely insignificant in explaining wage differences 
D)  work effort is difficult to measure, but is not likely to contribute much to an explanation of wage differences

Question 20

When workers form a labour union, the result will likely be which of the following? (i) an increased demand for labour
(ii) a surplus of labour
(iii) increased unemployment

Accepted Answer

A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii) 
A)  (i) and (ii) 
B)  (ii) and (iii) 
C)  (i) and (iii) 
D)  (i), (ii) and (iii)

Exam 20: Earnings, Unions and Discrimination

The basic neoclassical theory of the labour market predicts that:

Economists are skeptical about the idea that discrimination is employer-driven for which of the following reasons?

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by:

Hardworking employees generally do which of the following? (i) they earn a higher wage than lazy employees (ii) they have higher marginal products (iii) they have more natural beauty

A union's major source of power is its:

The ownership of human capital:

Why can Roger Federer command a high sponsorship bonus?

Forestry worker wages are often higher than other low-skilled work because of the higher risks of injury or death.

The high incomes for superstars in the movie market can be attributed to the fact that:

Hypotheses described in the text, and that have been proposed to explain the rising wage gap between skilled and unskilled workers:

From the perspective of market demand, human capital investment is reflected in:

Economists generally agree that:

'The market for school teachers is clearly inefficient; if they were paid the value of marginal product, wages would be much higher'. Evaluate this statement.

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

The alternative to human capital theory that explains why people invest in education argues that:

Identify the statement below that would be an investment in human capital?

How does the theory of efficiency wages explain above-equilibrium wages?

Evidence of differences in average wages of Aboriginal workers compared to white workers:

Economists who study labour markets have discovered that:

When workers form a labour union, the result will likely be which of the following? (i) an increased demand for labour (ii) a surplus of labour (iii) increased unemployment

Ten Lessons From 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

Business Strategy

Competition Policy

Monopolistic Competition

The Markets for the Factors of Production

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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