Question 1

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

Accepted Answer

A)  age. 
B)  years of experience. 
C)  years of education. 
D)  All of the above are forms of discrimination. 
A)  age. 
B)  years of experience. 
C)  years of education. 
D)  All of the above are forms of discrimination.

Question 2

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 3

The example of segregated streetcars in the southern United States in the early twentieth century is one example of

Accepted Answer

A)  racial discrimination by firms, despite government efforts to halt it. 
B)  racial discrimination by firms with no government action either to halt it or to support it. 
C)  government-mandated racial discrimination. 
D)  a failure to find any discrimination where most would expect to find it. 
A)  racial discrimination by firms, despite government efforts to halt it. 
B)  racial discrimination by firms with no government action either to halt it or to support it. 
C)  government-mandated racial discrimination. 
D)  a failure to find any discrimination where most would expect to find it.

Question 4

Figure 19-1  
-Refer to Figure 19-1. If the minimum wage in this market is $8, then

Accepted Answer

A)  employment is 10 million 
B)  employment is 12 million 
C)  there is a surplus of 1 million workers 
D)  there is a surplus of 3 million workers 
A)  employment is 10 million 
B)  employment is 12 million 
C)  there is a surplus of 1 million workers 
D)  there is a surplus of 3 million workers

Question 5

Scenario 19-4
Assume that the labor market for barbers is competitive and that it is differentiated into two groups: barbers who are bald (or going bald) and those who have a full head of hair. Assume that the barbers in this market have identical hair-cutting ability, regardless of whether they are bald or not. Currently the equilibrium wage in the bald barber market is lower than that in the nonbald market. Further assume that the market for haircuts is competitive.
-Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then

Accepted Answer

A)  all barbershops now earn a normal economic profit. 
B)  competition will ensure the difference in wages will persist. 
C)  barbershops that hire barbers with hair will be more profitable than those that don't. 
D)  barbershops that hire bald barbers will be more profitable than those that don't. 
A)  all barbershops now earn a normal economic profit. 
B)  competition will ensure the difference in wages will persist. 
C)  barbershops that hire barbers with hair will be more profitable than those that don't. 
D)  barbershops that hire bald barbers will be more profitable than those that don't.

Question 6

Business owners who care only about making money are

Accepted Answer

A)  likely to discriminate against certain groups of workers. 
B)  likely to be replaced by discriminating businesses. 
C)  more concerned about racial discrimination than gender discrimination. 
D)  at an advantage when competing against those who practice discrimination. 
A)  likely to discriminate against certain groups of workers. 
B)  likely to be replaced by discriminating businesses. 
C)  more concerned about racial discrimination than gender discrimination. 
D)  at an advantage when competing against those who practice discrimination.

Question 7

Scenario 19-2
Travis, a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for workers to help a disaster relief agency distribute food aid in Africa. Recruiter B is looking for custodial help to clean motel rooms in a motel located near the entrance to a famous national park.
-Refer to Scenario 19-2. Travis is carefully considering the options that each recruiter presents. On the basis of knowledge obtained in his economics class, Travis concludes that

Accepted Answer

A)  if the motel job also requires an ability to do general plumbing repairs, the wage offer will be higher than otherwise. 
B)  if the food distribution job has a requirement for special training or certification, the wage offer will be lower than otherwise. 
C)  if the food distribution job exposes him to the Ebola virus, the wage will be lower. 
D)  if the motel job involves substantial amounts of driving for supplies, the wage offer will be lower than otherwise. 
A)  if the motel job also requires an ability to do general plumbing repairs, the wage offer will be higher than otherwise. 
B)  if the food distribution job has a requirement for special training or certification, the wage offer will be lower than otherwise. 
C)  if the food distribution job exposes him to the Ebola virus, the wage will be lower. 
D)  if the motel job involves substantial amounts of driving for supplies, the wage offer will be lower than otherwise.

Question 8

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 9

When employers pay an efficiency wage above the market equilibrium wage, this will likely result in

Accepted Answer

A)  a surplus of labor. 
B)  no unemployment. 
C)  an increase in the number of people employed. 
D)  an decrease in the quantity of labor supplied. 
A)  a surplus of labor. 
B)  no unemployment. 
C)  an increase in the number of people employed. 
D)  an decrease in the quantity of labor supplied.

Question 10

Explain the theory that education acts as a signaling device. How does this contrast with the theory of education as an investment in human capital?

Accepted Answer

The theory of signaling suggests that th

Question 11

Which of the following statements is not correct?

Accepted Answer

A)  Some firms pay wages that are above the equilibrium wage. 
B)  Workers sometimes form labor unions to push their wages up. 
C)  Wages never deviate from the balance of supply and demand in the market for labor. 
D)  The federal government mandates that employers pay their workers at least as much as the minimum wage. 
A)  Some firms pay wages that are above the equilibrium wage. 
B)  Workers sometimes form labor unions to push their wages up. 
C)  Wages never deviate from the balance of supply and demand in the market for labor. 
D)  The federal government mandates that employers pay their workers at least as much as the minimum wage.

Question 12

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 13

Economists are skeptical that discrimination is employer driven because

Accepted Answer

A)  discrimination cannot exist in markets. 
B)  employers are not really interested in maximizing profit. 
C)  employers typically base wages paid on the prevailing market wage. 
D)  holding productivity constant, a profit-maximizing employer will hire the cheapest labor available. 
A)  discrimination cannot exist in markets. 
B)  employers are not really interested in maximizing profit. 
C)  employers typically base wages paid on the prevailing market wage. 
D)  holding productivity constant, a profit-maximizing employer will hire the cheapest labor available.

Question 14

If firms are competitive, then labor-market discrimination

Accepted Answer

A)  cannot exist in either the short run or the long run. 
B)  will be more of a problem than if the market were monopolistic or imperfectly competitive. 
C)  likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies. 
D)  likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms. 
A)  cannot exist in either the short run or the long run. 
B)  will be more of a problem than if the market were monopolistic or imperfectly competitive. 
C)  likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies. 
D)  likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.

Question 15

Scenario 19-1
Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp.
-Refer to Scenario 19-1. Ferris is carefully considering the options that each recruiter presents. On the basis of knowledge obtained in his economics class, Ferris concludes that

Accepted Answer

A)  wages are unlikely to be affected by job requirements. 
B)  since the lifeguard job would expose him to a threat of skin cancer, the wage will be low. 
C)  if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise. 
D)  if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise. 
A)  wages are unlikely to be affected by job requirements. 
B)  since the lifeguard job would expose him to a threat of skin cancer, the wage will be low. 
C)  if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise. 
D)  if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise.

Question 16

John is an Asian 23-year-old male, and Ken is an Asian 43-year-old male. Both John and Ken are economics majors, and they graduated from the same college with the same GPA - John in 2006 and Ken in 1986. John and Ken are both financial advisers at the same brokerage firm. John earns $52,000 a year, and Ken earns $88,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)  John has more human capital than Ken. 
B)  John has less human capital than Ken. 
C)  John has been discriminated against because he is young. 
D)  Ken has been discriminated against because he is old. 
A)  John has more human capital than Ken. 
B)  John has less human capital than Ken. 
C)  John has been discriminated against because he is young. 
D)  Ken has been discriminated against because he is old.

Question 17

Given that the median male is better paid than the median female, which of the following is a valid explanation for wage differences?

Accepted Answer

A)  compensating differentials 
B)  differences in human capital 
C)  discrimination 
D)  All of the above can be a partial explanation. 
A)  compensating differentials 
B)  differences in human capital 
C)  discrimination 
D)  All of the above can be a partial explanation.

Question 18

Which of the following is not an explanation for why better educated workers earn more, on average, than less educated workers?

Accepted Answer

A)  The higher wages may be a compensating differential for the cost of acquiring the education. 
B)  Workers with a college degree signal their higher abilities to potential employers. 
C)  Skilled labor is increasingly becoming a substitute for unskilled labor, which raises the earnings of workers with more education. 
D)  Better educated workers are more productive, on average. 
A)  The higher wages may be a compensating differential for the cost of acquiring the education. 
B)  Workers with a college degree signal their higher abilities to potential employers. 
C)  Skilled labor is increasingly becoming a substitute for unskilled labor, which raises the earnings of workers with more education. 
D)  Better educated workers are more productive, on average.

Question 19

Labor-market discrimination based solely on age is illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 20

Economists have found evidence that differences in wages can be explained by

Accepted Answer

A)  experience 
B)  job characteristics 
C)  physical attractiveness 
D)  All of the above are correct. 
A)  experience 
B)  job characteristics 
C)  physical attractiveness 
D)  All of the above are correct.

Exam 19: Earnings and Discrimination

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

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

The example of segregated streetcars in the southern United States in the early twentieth century is one example of

Figure 19-1 -Refer to Figure 19-1. If the minimum wage in this market is $8, then

Business owners who care only about making money are

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

When employers pay an efficiency wage above the market equilibrium wage, this will likely result in

Explain the theory that education acts as a signaling device. How does this contrast with the theory of education as an investment in human capital?

Which of the following statements is not correct?

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

Economists are skeptical that discrimination is employer driven because

If firms are competitive, then labor-market discrimination

Given that the median male is better paid than the median female, which of the following is a valid explanation for wage differences?

Which of the following is not an explanation for why better educated workers earn more, on average, than less educated workers?

Labor-market discrimination based solely on age is illegal in the United States.

Economists have found evidence that differences in wages can be explained 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

Six Debates Over Macroeconomic Policy

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