Question 1

A competitive market may be consistent with a discriminatory wage differential if

Accepted Answer

A)  firms' customers have discriminatory preferences. 
B)  the wage differential is explained by a compensating differential. 
C)  the wage differential is explained by differences in human capital. 
D)  All of the above are correct. 
A)  firms' customers have discriminatory preferences. 
B)  the wage differential is explained by a compensating differential. 
C)  the wage differential is explained by differences in human capital. 
D)  All of the above are correct.

Question 2

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better- educated workers who have higher marginal productivities.

Accepted Answer

A) True 
 B)False

Question 3

Unions are often able to sustain wages above the equilibrium wage because they can threaten to

Accepted Answer

The answer of Unions are often able to sustain wages...

Question 4

Human capital refers to the physical tools and equipment that workers use on their jobs to enhance their productivity.

Accepted Answer

A) True 
 B)False

Question 5

Suppose that Philip is the best contractor in town, and he makes $400,000 a year. Suppose that Julia Roberts is the best and highest paid actress in Hollywood, and she makes $13 million per movie. Both are the best in their respective fields of work. One reason for the significant difference in incomes has to do with the nature of the service each offers. Philip's contracting services

Accepted Answer

A)  can be provided to an unlimited number of customers in a year, but Julia's work is sold to only a few individuals in a year. 
B)  can only be provided to a limited number of customers in a year, but Julia's work is sold to millions of individuals in a year - i.e., to anyone who has the willingness and ability to pay for admission to her movies. 
C)  can be provided to a unlimited number of customers in a year, and Julia's work is sold to millions of individuals in a year - i.e., to anyone who has the willingness and ability to pay for admission to her movies. 
D)  can only be provided to a limited number of customers in a year, and Julia's work is sold to only a few individuals in a year. 
A)  can be provided to an unlimited number of customers in a year, but Julia's work is sold to only a few individuals in a year. 
B)  can only be provided to a limited number of customers in a year, but Julia's work is sold to millions of individuals in a year - i.e., to anyone who has the willingness and ability to pay for admission to her movies. 
C)  can be provided to a unlimited number of customers in a year, and Julia's work is sold to millions of individuals in a year - i.e., to anyone who has the willingness and ability to pay for admission to her movies. 
D)  can only be provided to a limited number of customers in a year, and Julia's work is sold to only a few individuals in a year.

Question 6

Who among the following individuals most likely experiences the largest nonmonetary reward as a supplier of labor? Assume all of the four individuals have the same level of education and work the same number of hours per week.

Accepted Answer

A)  Albert, who prefers not to socialize and works at home by himself 
B)  Amy, whose job provides little intellectual and personal satisfaction 
C)  Antoinette, whose preference is to avoid dangerous work but works as a firefighter 
D)  Arnold, who works the night shift but would prefer to work during the day and sleep at night 
A)  Albert, who prefers not to socialize and works at home by himself 
B)  Amy, whose job provides little intellectual and personal satisfaction 
C)  Antoinette, whose preference is to avoid dangerous work but works as a firefighter 
D)  Arnold, who works the night shift but would prefer to work during the day and sleep at night

Question 7

When comparing average wages for black and white men in the United States, wages paid to black men have been about 20 percent less than those paid to white men.

Accepted Answer

A) True 
 B)False

Question 8

Efficiency wages will raise the quantity of labor supplied to the market.

Accepted Answer

A) True 
 B)False

Question 9

Most economists believe that the higher average salaries earned by men in comparison to women arise from

Accepted Answer

A)  discrimination. 
B)  a variety of factors, including differences in human capital and compensating differentials; few economists believe that gender discrimination in earnings exists. 
C)  differences in human capital as the primary reason. 
D)  a variety of factors, including differences in human capital, compensating differentials, and discrimination. 
A)  discrimination. 
B)  a variety of factors, including differences in human capital and compensating differentials; few economists believe that gender discrimination in earnings exists. 
C)  differences in human capital as the primary reason. 
D)  a variety of factors, including differences in human capital, compensating differentials, and discrimination.

Question 10

In 1913, the Ford Motor Company decided to pay its employees $5 a day. This wage was significantly higher than what any other organization offered. Henry Ford believed that this wage would make his employees happier, increase their productivity, and lower employee turnover. Economists would say that Mr. Ford offered his employees

Accepted Answer

A)  a union. 
B)  an efficiency wage. 
C)  a diminishing rate of marginal return. 
D)  a leisure wage. 
A)  a union. 
B)  an efficiency wage. 
C)  a diminishing rate of marginal return. 
D)  a leisure wage.

Question 11

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

Accepted Answer

A)  elementary school teacher who works 9 months of the year 
B)  manager in a large firm who earns an annual salary with no potential for bonuses or commissions 
C)  salesperson who earns a small base salary plus a percentage of the sales he makes 
D)  local television news anchor who works during the day 
A)  elementary school teacher who works 9 months of the year 
B)  manager in a large firm who earns an annual salary with no potential for bonuses or commissions 
C)  salesperson who earns a small base salary plus a percentage of the sales he makes 
D)  local television news anchor who works during the day

Question 12

According to evidence provided by the U.S. government, the median black

Accepted Answer

A)  man earns more than the median black woman. 
B)  woman earns less than the median white woman 
C)  man earns less than the median white man. 
D)  All of the above are correct. 
A)  man earns more than the median black woman. 
B)  woman earns less than the median white woman 
C)  man earns less than the median white man. 
D)  All of the above are correct.

Question 13

Table 19-1
   Source: US Census Bureau and Mankiw's calculations
-Refer to Table 19-1. From 1975 to 2011, the salary gap among women who graduate from college compared to those who complete only high school

Accepted Answer

A)  increased by 35% while the salary gap among men increased by 42%. 
B)  more than doubled while the salary gap among men rose significantly but less than doubled. 
C)  increased, but the salary gap among men decreased. 
D)  decreased, but the salary gap among men increased. 
A)  increased by 35% while the salary gap among men increased by 42%. 
B)  more than doubled while the salary gap among men rose significantly but less than doubled. 
C)  increased, but the salary gap among men decreased. 
D)  decreased, but the salary gap among men increased.

Question 14

The theory of efficiency wages suggests that

Accepted Answer

A)  above-equilibrium wages increase worker productivity. 
B)  workers with higher levels of education earn more than workers with lower levels of education. 
C)  workers signal their high ability to potential employers by completing formal years of schooling. 
D)  union workers earn more than nonunion workers. 
A)  above-equilibrium wages increase worker productivity. 
B)  workers with higher levels of education earn more than workers with lower levels of education. 
C)  workers signal their high ability to potential employers by completing formal years of schooling. 
D)  union workers earn more than nonunion workers.

Question 15

Which of the following is an example of human capital?

Accepted Answer

A)  Machines built by people. 
B)  Formal education acquired in schools. 
C)  On-the-job training. 
D)  Both b and c are correct. 
A)  Machines built by people. 
B)  Formal education acquired in schools. 
C)  On-the-job training. 
D)  Both b and c are correct.

Question 16

Labor-market discrimination is evident when

Accepted Answer

A)  wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity. 
B)  wage rates differ for similar jobs. 
C)  consumers prefer to shop at some stores, and not at others. 
D)  wages reflect workers' human capital. 
A)  wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity. 
B)  wage rates differ for similar jobs. 
C)  consumers prefer to shop at some stores, and not at others. 
D)  wages reflect workers' human capital.

Question 17

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Accepted Answer

A)  "We encourage our employees to enroll in night classes to improve their on­the­job productivity." 
B)  "We encourage our employees to participate in online seminars to learn new skills." 
C)  "We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs." 
D)  "When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow­through to finish what they start." 
A)  "We encourage our employees to enroll in night classes to improve their on­the­job productivity." 
B)  "We encourage our employees to participate in online seminars to learn new skills." 
C)  "We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs." 
D)  "When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow­through to finish what they start."

Question 18

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Accepted Answer

A)  The manager discriminates against women. 
B)  Allen works the undesirable early morning shift. 
C)  Allen has more experience and so more human capital. 
D)  All of the above could be correct. 
A)  The manager discriminates against women. 
B)  Allen works the undesirable early morning shift. 
C)  Allen has more experience and so more human capital. 
D)  All of the above could be correct.

Question 19

Some discriminatory hiring practices can be expected, even if markets are competitive, as a result of

Accepted Answer

A)  unrestricted entry and exit in markets. 
B)  lower costs of hiring. 
C)  a perfectly elastic market demand. 
D)  customer preferences. 
A)  unrestricted entry and exit in markets. 
B)  lower costs of hiring. 
C)  a perfectly elastic market demand. 
D)  customer preferences.

Question 20

Workers who work the night shift at factories are paid more than similar workers who work the day shift due to a

Accepted Answer

compensati

A competitive market may be consistent with a discriminatory wage differential if

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better- educated workers who have higher marginal productivities.

Unions are often able to sustain wages above the equilibrium wage because they can threaten to

Human capital refers to the physical tools and equipment that workers use on their jobs to enhance their productivity.

Who among the following individuals most likely experiences the largest nonmonetary reward as a supplier of labor? Assume all of the four individuals have the same level of education and work the same number of hours per week.

When comparing average wages for black and white men in the United States, wages paid to black men have been about 20 percent less than those paid to white men.

Efficiency wages will raise the quantity of labor supplied to the market.

Most economists believe that the higher average salaries earned by men in comparison to women arise from

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

According to evidence provided by the U.S. government, the median black

Table 19-1 Source: US Census Bureau and Mankiw's calculations -Refer to Table 19-1. From 1975 to 2011, the salary gap among women who graduate from college compared to those who complete only high school

The theory of efficiency wages suggests that

Which of the following is an example of human capital?

Labor-market discrimination is evident when

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Some discriminatory hiring practices can be expected, even if markets are competitive, as a result of

Workers who work the night shift at factories are paid more than similar workers who work the day shift due to a

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

A competitive market may be consistent with a discriminatory wage differential if

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better- educated workers who have higher marginal productivities.

Unions are often able to sustain wages above the equilibrium wage because they can threaten to

Human capital refers to the physical tools and equipment that workers use on their jobs to enhance their productivity.

Who among the following individuals most likely experiences the largest nonmonetary reward as a supplier of labor? Assume all of the four individuals have the same level of education and work the same number of hours per week.

When comparing average wages for black and white men in the United States, wages paid to black men have been about 20 percent less than those paid to white men.

Efficiency wages will raise the quantity of labor supplied to the market.

Most economists believe that the higher average salaries earned by men in comparison to women arise from

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

According to evidence provided by the U.S. government, the median black

Table 19-1 Source: US Census Bureau and Mankiw's calculations -Refer to Table 19-1. From 1975 to 2011, the salary gap among women who graduate from college compared to those who complete only high school

The theory of efficiency wages suggests that

Which of the following is an example of human capital?

Labor-market discrimination is evident when

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why Allen is paid more?

Some discriminatory hiring practices can be expected, even if markets are competitive, as a result of

Workers who work the night shift at factories are paid more than similar workers who work the day shift due to a

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