Question 1

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers in the United States offer two main hypotheses. Both hypotheses

Accepted Answer

A)  suggest that, over time, the demand for unskilled labor has risen relative to the demand for skilled labor. 
B)  suggest that, over time, the demand for skilled labor has risen relative to the demand for unskilled labor. 
C)  emphasize the shrinking importance of international trade in recent years. 
D)  emphasize the growing importance of women and teenagers in the workforce in recent years. 
A)  suggest that, over time, the demand for unskilled labor has risen relative to the demand for skilled labor. 
B)  suggest that, over time, the demand for skilled labor has risen relative to the demand for unskilled labor. 
C)  emphasize the shrinking importance of international trade in recent years. 
D)  emphasize the growing importance of women and teenagers in the workforce in recent years.

Question 2

Explain the role that consumers play in perpetuating discrimination in labor markets.

Accepted Answer

Consumers are able to exercise their bia

Question 3

"The customer is always right" explains

Accepted Answer

A)  the higher wages paid to members of a union. 
B)  compensating differentials. 
C)  persistent wage discrimination based on consumer preferences. 
D)  All of the above are correct. 
A)  the higher wages paid to members of a union. 
B)  compensating differentials. 
C)  persistent wage discrimination based on consumer preferences. 
D)  All of the above are correct.

Question 4

If the signaling theory of education is correct,

Accepted Answer

A)  workers with more years of formal schooling will earn less than workers with fewer years of formal schooling. 
B)  additional years of formal schooling do not increase a worker's productivity. 
C)  workers with more years of formal schooling are less likely to be affected by ability, effort, and chance. 
D)  men are more likely to earn more than women because men are more likely to have graduated from college. 
A)  workers with more years of formal schooling will earn less than workers with fewer years of formal schooling. 
B)  additional years of formal schooling do not increase a worker's productivity. 
C)  workers with more years of formal schooling are less likely to be affected by ability, effort, and chance. 
D)  men are more likely to earn more than women because men are more likely to have graduated from college.

Question 5

Cory has just graduated from veterinary school. He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher. The higher salary to work with larger animals is an example of

Accepted Answer

A)  a compensating differential. 
B)  signaling theory. 
C)  an efficiency wage. 
D)  efficient union bargaining. 
A)  a compensating differential. 
B)  signaling theory. 
C)  an efficiency wage. 
D)  efficient union bargaining.

Question 6

Differences in human capital among workers can often be attributed to social or political processes rather than economic processes.

Accepted Answer

A) True 
 B)False

Question 7

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers offer two main hypotheses:

Accepted Answer

A)  one hypothesis emphasizes education, and the other emphasizes compensating differentials. 
B)  one hypothesis emphasizes education, and the other international trade. 
C)  one hypothesis emphasizes international trade, and the other emphasizes technology. 
D)  one hypothesis emphasizes technology, and the other emphasizes compensating differentials. 
A)  one hypothesis emphasizes education, and the other emphasizes compensating differentials. 
B)  one hypothesis emphasizes education, and the other international trade. 
C)  one hypothesis emphasizes international trade, and the other emphasizes technology. 
D)  one hypothesis emphasizes technology, and the other emphasizes compensating differentials.

Question 8

Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?

Accepted Answer

A)  Some workers are members in unions. 
B)  Some firms pay efficiency wages; others do not. 
C)  Some customers are discriminatory in their buying habits. 
D)  Some employees have accumulated more human capital than other employees. 
A)  Some workers are members in unions. 
B)  Some firms pay efficiency wages; others do not. 
C)  Some customers are discriminatory in their buying habits. 
D)  Some employees have accumulated more human capital than other employees.

Question 9

Jake and Zach are identical twins who attended grammar school through college together. Jake took a job as an engineer who does not have to travel out of the state. Zach took a job as an engineer who must travel out of state once a week. Jake earns $125,000 a year, and Zach earns $155,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)  Zach puts in less effort than Jake. 
B)  Zach has less human capital than Jake. 
C)  Zach receives a higher wage to compensate for the disagreeable nature of business travel. 
D)  Jake's lower salary supports the signaling theory of education. 
A)  Zach puts in less effort than Jake. 
B)  Zach has less human capital than Jake. 
C)  Zach receives a higher wage to compensate for the disagreeable nature of business travel. 
D)  Jake's lower salary supports the signaling theory of education.

Question 10

Regarding wage differences among various groups of workers - blacks and whites, men and women, etc. - most economists believe that

Accepted Answer

A)  no such differences are evident from the available data. 
B)  most of the differences are attributable to discrimination. 
C)  some of the wage differences are attributable to discrimination, but there is disagreement about how much. 
D)  none of the differences are attributable to discrimination. 
A)  no such differences are evident from the available data. 
B)  most of the differences are attributable to discrimination. 
C)  some of the wage differences are attributable to discrimination, but there is disagreement about how much. 
D)  none of the differences are attributable to discrimination.

Question 11

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 12

Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because (i) international trade has altered the relative demand for skilled and unskilled labor.
(ii) changes in technology have altered the relative demand for skilled and unskilled labor.
(iii) the return to education for men has decreased, whereas the return to education for women has increased.

Accepted Answer

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

Question 13

Cheryl is a professor at a local university. She hired a student from the university to babysit for her children and paid the student a wage higher than the typical wage paid to babysitters in her area to ensure the babysitter's reliability and that attention is paid to her children. What is the name for this above-equilibrium wage?

Accepted Answer

The answer of Cheryl is a professor at a local...

Question 14

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Accepted Answer

A)  Every customer in the market wants to enjoy the good supplied by the best producer. 
B)  Technology makes it possible for the best producer to supply every customer at low cost. 
C)  Customers are willing to pay more for entertainment than other services. 
D)  Both a and b are correct. 
A)  Every customer in the market wants to enjoy the good supplied by the best producer. 
B)  Technology makes it possible for the best producer to supply every customer at low cost. 
C)  Customers are willing to pay more for entertainment than other services. 
D)  Both a and b are correct.

Question 15

Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following theories would suggest that attending school does not improve productivity but that high- ability people are more likely to stay in school?

Accepted Answer

A)  physical-capital theory 
B)  human-capital theory 
C)  signaling theory 
D)  neoclassical theory 
A)  physical-capital theory 
B)  human-capital theory 
C)  signaling theory 
D)  neoclassical theory

Question 17

Explain the role of job experience in explaining the differences between the average wages of men and women.

Accepted Answer

Women, who have primary responsibility f

Question 18

A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market discrimination based on which of the following findings?

Accepted Answer

A)  Restaurant customers preferred to be waited on by white waitresses rather than black waitresses. 
B)  Black basketball players earned more than white basketball players. 
C)  Employers were more likely to request interviews with job applicants with "white" names such as Greg than from applicants with "black" names such as Jamal. 
D)  Employers were more likely to request interviews with job applicants with "masculine" names such as Mark than from applicants with "feminine" names such as Lisa. 
A)  Restaurant customers preferred to be waited on by white waitresses rather than black waitresses. 
B)  Black basketball players earned more than white basketball players. 
C)  Employers were more likely to request interviews with job applicants with "white" names such as Greg than from applicants with "black" names such as Jamal. 
D)  Employers were more likely to request interviews with job applicants with "masculine" names such as Mark than from applicants with "feminine" names such as Lisa.

Question 19

The accumulation of investments in people, such as education and on-the-job training, is known as

Accepted Answer

A)  physical capital. 
B)  human capital. 
C)  efficiency wage. 
D)  compensating differentials. 
A)  physical capital. 
B)  human capital. 
C)  efficiency wage. 
D)  compensating differentials.

Question 20

Mary and Mike are twins who attended grammar school through college together. Both twins got jobs in the same department of an accounting firm. They both work equally hard and have received similar performance reviews. Mary earns $62,000 a year, and Mike earns $80,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)  Mary has less human capital than Mike. 
B)  Mary has more human capital than Mike. 
C)  Mike has been discriminated against because he is male. 
D)  Mary has been discriminated against because she is female. 
A)  Mary has less human capital than Mike. 
B)  Mary has more human capital than Mike. 
C)  Mike has been discriminated against because he is male. 
D)  Mary has been discriminated against because she is female.

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers in the United States offer two main hypotheses. Both hypotheses

Explain the role that consumers play in perpetuating discrimination in labor markets.

"The customer is always right" explains

If the signaling theory of education is correct,

Cory has just graduated from veterinary school. He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher. The higher salary to work with larger animals is an example of

Differences in human capital among workers can often be attributed to social or political processes rather than economic processes.

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers offer two main hypotheses:

Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?

Regarding wage differences among various groups of workers - blacks and whites, men and women, etc. - most economists believe that

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.

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages.

Which of the following theories would suggest that attending school does not improve productivity but that high- ability people are more likely to stay in school?

Explain the role of job experience in explaining the differences between the average wages of men and women.

A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market discrimination based on which of the following findings?

The accumulation of investments in people, such as education and on-the-job training, is known as

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

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers in the United States offer two main hypotheses. Both hypotheses

Explain the role that consumers play in perpetuating discrimination in labor markets.

"The customer is always right" explains

If the signaling theory of education is correct,

Cory has just graduated from veterinary school. He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher. The higher salary to work with larger animals is an example of

Differences in human capital among workers can often be attributed to social or political processes rather than economic processes.

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers offer two main hypotheses:

Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?

Regarding wage differences among various groups of workers - blacks and whites, men and women, etc. - most economists believe that

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.

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Since measurable factors such as years of experience and years of education explain less than half of the variation in wages, ability, effort, and chance must play a significant role in determining wages.

Which of the following theories would suggest that attending school does not improve productivity but that high- ability people are more likely to stay in school?

Explain the role of job experience in explaining the differences between the average wages of men and women.

A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market discrimination based on which of the following findings?

The accumulation of investments in people, such as education and on-the-job training, is known as

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