Question 1

An example of human capital is the purchase of a computer to help accountants.

Accepted Answer

A) True 
 B)False

Question 2

The figure given below shows the income-leisure trade off of an individual. Figure 15.6   AB and AC: Income constraints of the individual
I1, I2, and I3 curves show the income leisure choices of the individual.
Which of the following factors is likely to be responsible for the inward rotation of the income constraint from AB to AC in Figure 15.6?

Accepted Answer

A) An increase in income 
B) An increase in demand for labor 
C) An increase in the income tax rate 
D) A decrease in the opportunity cost of labor 
E) A decrease in the supply of labor 
A) An increase in income 
B) An increase in demand for labor 
C) An increase in the income tax rate 
D) A decrease in the opportunity cost of labor 
E) A decrease in the supply of labor

Question 3

Why do skilled workers earn relatively higher wages than unskilled workers?

Accepted Answer

A) The marginal productivity of skilled workers is low. 
B) The marginal cost of hiring skilled workers is low. 
C) The supply of skilled workers is relatively less. 
D) There is an abundant supply of skilled workers. 
E) There is an abundant supply of unskilled workers. 
A) The marginal productivity of skilled workers is low. 
B) The marginal cost of hiring skilled workers is low. 
C) The supply of skilled workers is relatively less. 
D) There is an abundant supply of skilled workers. 
E) There is an abundant supply of unskilled workers.

Question 4

The ratio of the median income of college-to high school-educated workers is called the _____.

Accepted Answer

A) college income premium 
B) college income differential 
C) college income benefit 
D) college income compensation 
E) education income gap 
A) college income premium 
B) college income differential 
C) college income benefit 
D) college income compensation 
E) education income gap

Question 5

The idea of comparable worth implies that wages are to be determined by the job characteristics and not merely by the interaction of demand and supply.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is a reason that some economists do not agree with the concept of a labor-leisure tradeoff?

Accepted Answer

A) Wages are paid in dollars and leisure is measured in time, hence there is no way to compare the two. 
B) On a day-to-day basis, most jobs do not have the flexibility to allow people to weigh the benefits and costs to determine how much they should work that day. 
C) In the long-run, the supply of labor hours is perfectly inelastic. 
D) An increase in the wage rate always leads to an increase in the supply of labor hours. 
E) Some people do not work at all, so there is no labor-leisure tradeoff for those individuals. 
A) Wages are paid in dollars and leisure is measured in time, hence there is no way to compare the two. 
B) On a day-to-day basis, most jobs do not have the flexibility to allow people to weigh the benefits and costs to determine how much they should work that day. 
C) In the long-run, the supply of labor hours is perfectly inelastic. 
D) An increase in the wage rate always leads to an increase in the supply of labor hours. 
E) Some people do not work at all, so there is no labor-leisure tradeoff for those individuals.

Question 7

Statistical discrimination is legal under the disparate impact standard but illegal under the treatment standard.

Accepted Answer

A) True 
 B)False

Question 8

Illegal immigrants to the U.S.usually charge higher wages than their American counterparts.

Accepted Answer

A) True 
 B)False

Question 9

A firm employing secretaries and steelworkers should ideally pay equal wages to both the groups of workers irrespective of the type of job each group does.

Accepted Answer

A) True 
 B)False

Question 10

It has been proved empirically that marriage and children lowers a woman's ability to earn as much as a man.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a reason for the wage differential between females and males?

Accepted Answer

A) The choice of major in college by females tends to be different than the choice by males. 
B) The existence of employer prejudice. 
C) The number of males is usually greater than the number of females in the labor force. 
D) Females bear the primary responsibility of childbearing. 
E) Women accept lower wages for flexible and shorter working hours. 
A) The choice of major in college by females tends to be different than the choice by males. 
B) The existence of employer prejudice. 
C) The number of males is usually greater than the number of females in the labor force. 
D) Females bear the primary responsibility of childbearing. 
E) Women accept lower wages for flexible and shorter working hours.

Question 12

When people are separated into different jobs on the basis of sex, it is referred to as:

Accepted Answer

A) statistical discrimination. 
B) employer prejudice. 
C) worker prejudice. 
D) occupational segregation. 
E) occupational crowding. 
A) statistical discrimination. 
B) employer prejudice. 
C) worker prejudice. 
D) occupational segregation. 
E) occupational crowding.

Question 13

Proponents of comparable worth justifies it on the ground that:

Accepted Answer

A) interfering with the functioning of the labor market will lead to shortages of labor. 
B) interfering with the functioning of the labor market will lead to excess supplies of labor. 
C) as a result of personal prejudices the market is unable to assess marginal products. 
D) market correctly processes the innumerable information which are available. 
E) interaction of demand and supply correctly determines the wage rate. 
A) interfering with the functioning of the labor market will lead to shortages of labor. 
B) interfering with the functioning of the labor market will lead to excess supplies of labor. 
C) as a result of personal prejudices the market is unable to assess marginal products. 
D) market correctly processes the innumerable information which are available. 
E) interaction of demand and supply correctly determines the wage rate.

Question 14

One of the major impacts of restricting immigration is that the:

Accepted Answer

A) prices of the products produced by unskilled laborers will decline. 
B) prices of the products produced by unskilled labor will increase. 
C) supply of labor in agriculture will increase. 
D) supply of labor in the industrial sector will rise. 
E) government's expenditure on education and health will rise. 
A) prices of the products produced by unskilled laborers will decline. 
B) prices of the products produced by unskilled labor will increase. 
C) supply of labor in agriculture will increase. 
D) supply of labor in the industrial sector will rise. 
E) government's expenditure on education and health will rise.

Question 15

Supporters of comparable worth claim that market correctly allocates the workers in their best paid works.

Accepted Answer

A) True 
 B)False

Question 16

The Civil Rights Act of 1964 in the United States led to _____.

Accepted Answer

A) the introduction of the concept of discrimination. 
B) complete elimination discrimination from the labor force. 
C) creation of equal opportunities for men and women. 
D) creation of equal opportunities for the members of different races. 
E) establishment of a much clearer definition of discrimination. 
A) the introduction of the concept of discrimination. 
B) complete elimination discrimination from the labor force. 
C) creation of equal opportunities for men and women. 
D) creation of equal opportunities for the members of different races. 
E) establishment of a much clearer definition of discrimination.

Question 17

Why are a large number of IT jobs being outsourced to China and India?

Accepted Answer

A) India and China experience large balance of payment deficits. 
B) India and China are highly capital intensive economies. 
C) India and China have abundant supply of cheap skilled labor. 
D) India and China have abundant supply of unskilled labor. 
E) India and China are rich in natural resources. 
A) India and China experience large balance of payment deficits. 
B) India and China are highly capital intensive economies. 
C) India and China have abundant supply of cheap skilled labor. 
D) India and China have abundant supply of unskilled labor. 
E) India and China are rich in natural resources.

Question 18

Which of the following statements best defines the economics of the so-called superstar effect in the labor market?

Accepted Answer

A) This effect will result in cases in which individuals with large productivity differences receive vastly different compensation. 
B) This effect occurs in cases in which individuals with small productivity differences receive very small differences in compensation. 
C) This effect occurs when the firm hiring the superstar simply does not understand the term marginal-revenue product. 
D) This effect occurs in cases in which individuals with small productivity differences receive vastly different compensation. 
E) This effect usually occurs in industries in which a labor union has far-reaching powers. 
A) This effect will result in cases in which individuals with large productivity differences receive vastly different compensation. 
B) This effect occurs in cases in which individuals with small productivity differences receive very small differences in compensation. 
C) This effect occurs when the firm hiring the superstar simply does not understand the term marginal-revenue product. 
D) This effect occurs in cases in which individuals with small productivity differences receive vastly different compensation. 
E) This effect usually occurs in industries in which a labor union has far-reaching powers.

Question 19

People leave their home country and go to another country to live primarily because they seek a higher quality of life.

Accepted Answer

A) True 
 B)False

Question 20

The principal argument against comparable worth is that the demand and supply of labor in the labor market allocates workers to where they are needed the most.

Accepted Answer

A) True 
 B)False

Exam 26: The Labor Market

An example of human capital is the purchase of a computer to help accountants.

Why do skilled workers earn relatively higher wages than unskilled workers?

The ratio of the median income of college-to high school-educated workers is called the _____.

The idea of comparable worth implies that wages are to be determined by the job characteristics and not merely by the interaction of demand and supply.

Which of the following is a reason that some economists do not agree with the concept of a labor-leisure tradeoff?

Statistical discrimination is legal under the disparate impact standard but illegal under the treatment standard.

Illegal immigrants to the U.S.usually charge higher wages than their American counterparts.

A firm employing secretaries and steelworkers should ideally pay equal wages to both the groups of workers irrespective of the type of job each group does.

It has been proved empirically that marriage and children lowers a woman's ability to earn as much as a man.

Which of the following is not a reason for the wage differential between females and males?

When people are separated into different jobs on the basis of sex, it is referred to as:

Proponents of comparable worth justifies it on the ground that:

One of the major impacts of restricting immigration is that the:

Supporters of comparable worth claim that market correctly allocates the workers in their best paid works.

The Civil Rights Act of 1964 in the United States led to _____.

Why are a large number of IT jobs being outsourced to China and India?

Which of the following statements best defines the economics of the so-called superstar effect in the labor market?

People leave their home country and go to another country to live primarily because they seek a higher quality of life.

The principal argument against comparable worth is that the demand and supply of labor in the labor market allocates workers to where they are needed the most.

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Elasticity: Demand and Supply

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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