Question 1

The statement that "the rich get richer,and the poor get poorer" is supported by evidence of an expanding wage gap between high-skill and low-skill workers.

Accepted Answer

A) True 
 B)False

Question 2

Jo and Flo are identical twins who attended grammar school through high school together.Jo got a job after high school,and Flo got a job after graduating from college.Jo earns $36,000 a year,and Flo earns $69,000 a year.Select the best explanation for this wage difference.

Accepted Answer

A)  Jo has less human capital than Flo. 
B)  Flo has less human capital than Jo. 
C)  Jo has received a compensating differential 
D)  Flo has received a compensating differential. 
A)  Jo has less human capital than Flo. 
B)  Flo has less human capital than Jo. 
C)  Jo has received a compensating differential 
D)  Flo has received a compensating differential.

Question 3

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Accepted Answer

A) True 
 B)False

Question 4

Wage differences that can't be explained by the number of years of training could result from

Accepted Answer

A)  demand but not supply. 
B)  supply but not demand. 
C)  compensating differentials. 
D)  the marginal product of capital. 
A)  demand but not supply. 
B)  supply but not demand. 
C)  compensating differentials. 
D)  the marginal product of capital.

Question 5

Workers who work the night shift are often paid more than those who do identical work on the day shift.This is referred to as a

Accepted Answer

A)  discriminatory wage practice. 
B)  compensating differential. 
C)  wage inequity. 
D)  a market inefficiency. 
A)  discriminatory wage practice. 
B)  compensating differential. 
C)  wage inequity. 
D)  a market inefficiency.

Question 6

Economists generally agree that

Accepted Answer

A)  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 labor markets. 
C)  discrimination is exclusively an economic,rather than political,phenomenon. 
D)  most of the wage differentials observed in the U.S.economy are due to discrimination. 
A)  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 labor markets. 
C)  discrimination is exclusively an economic,rather than political,phenomenon. 
D)  most of the wage differentials observed in the U.S.economy are due to discrimination.

Question 7

Of the theories listed below,which do the best job of explaining why educated people are paid more than uneducated people?

Accepted Answer

A)  human-capital and price-fixing 
B)  human-capital and signaling 
C)  wage-differential and derived-demand 
D)  cost-allocation and compensating differentials 
A)  human-capital and price-fixing 
B)  human-capital and signaling 
C)  wage-differential and derived-demand 
D)  cost-allocation and compensating differentials

Question 8

Bill and Phil are identical twins who attended grammar school through college together.Bill took a job as an engineer who does not have to travel out of the state.Phil took a job as an engineer who must travel out of state once a week.Bill earns $105,000 a year,and Phil earns $185,000 a year.Select the best explanation for this wage difference.

Accepted Answer

A)  Phil has more human capital relative to Bill. 
B)  Phill has less human capital relative to Bill. 
C)  Phil receives a higher wage to compensate for the disagreeable nature of business travel. 
D)  Bill's lower salary supports the signaling theory of education. 
A)  Phil has more human capital relative to Bill. 
B)  Phill has less human capital relative to Bill. 
C)  Phil receives a higher wage to compensate for the disagreeable nature of business travel. 
D)  Bill's lower salary supports the signaling theory of education.

Question 9

When an employer pays the cost of educating a worker,it is likely that the employer

Accepted Answer

A)  is demonstrating altruistic motives. 
B)  is pursuing some objective other than profit-maximization. 
C)  hopes to recapture its investment in the form of increased labor productivity. 
D)  receives reimbursement from the government for the cost of the education. 
A)  is demonstrating altruistic motives. 
B)  is pursuing some objective other than profit-maximization. 
C)  hopes to recapture its investment in the form of increased labor productivity. 
D)  receives reimbursement from the government for the cost of the education.

Question 10

Since 1995,global manufacturing employment has declined,yet global industrial output has risen.

Accepted Answer

A) True 
 B)False

Question 11

Figure 19-3
The manufacturing labor market.  
-Refer to Figure 19-3.Suppose the manufacturing labor market,which is non-unionized,is in equilibrium at a wage equal to $30.Suppose now that the AFL-CIO (a labor organization)organizes the workers in the manufacturing market and negotiates a wage of $38 per hour.After the workers become unionized,how many workers do manufacturing firms collectively hire?

Accepted Answer

A)  130 workers 
B)  150 workers 
C)  170 workers 
D)  There is not enough information to determine the number of workers. 
A)  130 workers 
B)  150 workers 
C)  170 workers 
D)  There is not enough information to determine the number of workers.

Question 12

Suppose that consumers suddenly prefer to do business with left-handed workers instead of right-handed workers.We would expect that the marginal revenue product of

Accepted Answer

A)  left-handed workers would rise,which would increase the demand for left-handed workers.This will increase the number of left-handed workers employed,which will in turn increase the marginal product of left-handed workers. 
B)  left-handed workers would rise,which would increase the demand for left-handed workers.This will increase the number of left-handed workers employed,which will in turn reduce the marginal product of left-handed workers. 
C)  right-handed workers would rise,which would increase the demand for right-handed workers.This will increase the number of right-handed workers employed,which will in turn increase the marginal product of right-handed workers. 
D)  right-handed workers would fall,which would reduce the demand for right-handed workers.This will reduce the number of right-handed workers employed,which will in turn reduce the marginal product of right-handed workers. 
A)  left-handed workers would rise,which would increase the demand for left-handed workers.This will increase the number of left-handed workers employed,which will in turn increase the marginal product of left-handed workers. 
B)  left-handed workers would rise,which would increase the demand for left-handed workers.This will increase the number of left-handed workers employed,which will in turn reduce the marginal product of left-handed workers. 
C)  right-handed workers would rise,which would increase the demand for right-handed workers.This will increase the number of right-handed workers employed,which will in turn increase the marginal product of right-handed workers. 
D)  right-handed workers would fall,which would reduce the demand for right-handed workers.This will reduce the number of right-handed workers employed,which will in turn reduce the marginal product of right-handed workers.

Question 13

After graduating from college,you receive job offers from five different accounting firms.All 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 14

In empirical analyses of factors that help explain wages,

Accepted Answer

A)  effort and ability are not likely to contribute to large differences in wages in the U.S.economy. 
B)  economists typically find that measurable factors explain less than half of the variation in wages. 
C)  economists typically find few factors that are not explicitly measurable. 
D)  unmeasurable influences on wage differences are found to be quite small. 
A)  effort and ability are not likely to contribute to large differences in wages in the U.S.economy. 
B)  economists typically find that measurable factors explain less than half of the variation in wages. 
C)  economists typically find few factors that are not explicitly measurable. 
D)  unmeasurable influences on wage differences are found to be quite small.

Question 15

In order to explain the widening gap in earnings between skilled and unskilled workers in recent years,economists have proposed two hypotheses.One hypothesis emphasizes

Accepted Answer

A)  compensating differentials. 
B)  the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C)  the decreasing importance of labor unions. 
D)  the increasing importance of international trade. 
A)  compensating differentials. 
B)  the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C)  the decreasing importance of labor unions. 
D)  the increasing importance of international trade.

Question 16

By definition,there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A)  race,ethnic group,sex,age,or other personal characteristics. 
B)  qualifications,experience,or job preferences. 
C)  the levels of human capital. 
D)  All of the above are correct. 
A)  race,ethnic group,sex,age,or other personal characteristics. 
B)  qualifications,experience,or job preferences. 
C)  the levels of human capital. 
D)  All of the above are correct.

Question 17

The "beauty premium" can be explained by the fact that

Accepted Answer

A)  marginal productivity in all occupations has a physical dimension. 
B)  in some occupations,physical attractiveness of workers may enhance the value of their marginal product. 
C)  beauty acts as an implicit signal of innate intelligence. 
D)  beautiful people are likely to reflect "good breeding." 
A)  marginal productivity in all occupations has a physical dimension. 
B)  in some occupations,physical attractiveness of workers may enhance the value of their marginal product. 
C)  beauty acts as an implicit signal of innate intelligence. 
D)  beautiful people are likely to reflect "good breeding."

Question 18

A study of segregated streetcars in the southern United States in the early twentieth century found which of the following?

Accepted Answer

A)  Firms that ran the streetcars were more interested in segregating customers by race than profits. 
B)  The firms that ran the streetcars were unanimous in their support of laws that required segregation of races. 
C)  Before the passage of laws that mandated segregation of races on streetcars,segregation of smokers and nonsmokers was more common than segregation of races. 
D)  Segregation based on gender was more common than race at first. 
A)  Firms that ran the streetcars were more interested in segregating customers by race than profits. 
B)  The firms that ran the streetcars were unanimous in their support of laws that required segregation of races. 
C)  Before the passage of laws that mandated segregation of races on streetcars,segregation of smokers and nonsmokers was more common than segregation of races. 
D)  Segregation based on gender was more common than race at first.

Question 19

Suppose that an employer hires workers with brown hair and workers with blond hair.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blonde workers lower wages than brunette workers?

Accepted Answer

A)  The employer will be just as efficient as a nondiscriminating employer. 
B)  The employer will face higher costs than firms that focus only on maximizing profits. 
C)  The employer will immediately go out of business because discrimination is illegal. 
D)  The employer will face union strikes. 
A)  The employer will be just as efficient as a nondiscriminating employer. 
B)  The employer will face higher costs than firms that focus only on maximizing profits. 
C)  The employer will immediately go out of business because discrimination is illegal. 
D)  The employer will face union strikes.

Question 20

In the early twentieth century,racial segregation of streetcars in the southern cities was largely opposed by

Accepted Answer

A)  streetcar firms. 
B)  government officials. 
C)  Sherman antitrust laws. 
D)  consumers. 
A)  streetcar firms. 
B)  government officials. 
C)  Sherman antitrust laws. 
D)  consumers.

Exam 19: Earnings and Discrimination

The statement that "the rich get richer,and the poor get poorer" is supported by evidence of an expanding wage gap between high-skill and low-skill workers.

Jo and Flo are identical twins who attended grammar school through high school together.Jo got a job after high school,and Flo got a job after graduating from college.Jo earns $36,000 a year,and Flo earns $69,000 a year.Select the best explanation for this wage difference.

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Wage differences that can't be explained by the number of years of training could result from

Workers who work the night shift are often paid more than those who do identical work on the day shift.This is referred to as a

Economists generally agree that

Of the theories listed below,which do the best job of explaining why educated people are paid more than uneducated people?

When an employer pays the cost of educating a worker,it is likely that the employer

Since 1995,global manufacturing employment has declined,yet global industrial output has risen.

Suppose that consumers suddenly prefer to do business with left-handed workers instead of right-handed workers.We would expect that the marginal revenue product of

In empirical analyses of factors that help explain wages,

In order to explain the widening gap in earnings between skilled and unskilled workers in recent years,economists have proposed two hypotheses.One hypothesis emphasizes

By definition,there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

The "beauty premium" can be explained by the fact that

A study of segregated streetcars in the southern United States in the early twentieth century found which of the following?

Suppose that an employer hires workers with brown hair and workers with blond hair.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blonde workers lower wages than brunette workers?

In the early twentieth century,racial segregation of streetcars in the southern cities was largely opposed by

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

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

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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