Question 1

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Accepted Answer

A)  the theory of compensating differentials 
B)  the efficient-market hypothesis 
C)  human-capital theory 
D)  signaling theory 
A)  the theory of compensating differentials 
B)  the efficient-market hypothesis 
C)  human-capital theory 
D)  signaling theory

Question 2

Other things the same, we'd expect that a job with less pleasant working conditions pays

Accepted Answer

A)  more; this is known as an efficiency wage. 
B)  more; this is known as a compensating differential. 
C)  less; this is known as an efficiency wage. 
D)  less; this is known as a compensating differential. 
A)  more; this is known as an efficiency wage. 
B)  more; this is known as a compensating differential. 
C)  less; this is known as an efficiency wage. 
D)  less; this is known as a compensating differential.

Question 3

Which of the following is not an example of a compensating differential?

Accepted Answer

A)  paying workers who do dull, boring work higher wages than workers who do fun, interesting work, all else equal 
B)  paying workers who work on the night shift higher wages than workers who work the day shift, all else equal 
C)  paying workers who do more dangerous work higher wages than workers who do less dangerous work, all else equal 
D)  paying workers with PhDs higher wages than workers with BAs, all else equal 
A)  paying workers who do dull, boring work higher wages than workers who do fun, interesting work, all else equal 
B)  paying workers who work on the night shift higher wages than workers who work the day shift, all else equal 
C)  paying workers who do more dangerous work higher wages than workers who do less dangerous work, all else equal 
D)  paying workers with PhDs higher wages than workers with BAs, all else equal

Question 4

In recent years, the amount of international trade in which the United States engages has

Accepted Answer

A)  increased, raising domestic demand for unskilled labor. 
B)  increased, reducing domestic demand for unskilled labor. 
C)  decreased, raising domestic demand for unskilled labor. 
D)  decreased, reducing domestic demand for unskilled labor. 
A)  increased, raising domestic demand for unskilled labor. 
B)  increased, reducing domestic demand for unskilled labor. 
C)  decreased, raising domestic demand for unskilled labor. 
D)  decreased, reducing domestic demand for unskilled labor.

Question 5

What is the term for offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics?

Accepted Answer

The answer of What is the term for offering different...

Question 6

Black men earn an average of 21% less than white men. A labor economist who wants to investigate whether the differences in earnings indicate labor-market discrimination against black men should consider whether black and white men have similar

Accepted Answer

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

Question 7

Experimental evidence indicates women choose less competitive environments than men.

Accepted Answer

A) True 
 B)False

Question 8

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 job in Africa has a lot of job satisfaction, the wage will be higher. 
B)  if the job in Africa has a lot of job satisfaction, the wage will be lower. 
C)  if the job cleaning motel rooms is miserable work, the wage will be lower. 
D)  if the job cleaning motel rooms is not miserable work, the wage will be higher. 
A)  if the job in Africa has a lot of job satisfaction, the wage will be higher. 
B)  if the job in Africa has a lot of job satisfaction, the wage will be lower. 
C)  if the job cleaning motel rooms is miserable work, the wage will be lower. 
D)  if the job cleaning motel rooms is not miserable work, the wage will be higher.

Question 9

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 $20. Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $30 per hour. After the workers become unionized, how many workers do manufacturing firms collectively hire?

Accepted Answer

A)  160 workers 
B)  200 workers 
C)  240 workers 
D)  There is not enough information to determine the number of workers. 
A)  160 workers 
B)  200 workers 
C)  240 workers 
D)  There is not enough information to determine the number of workers.

Question 10

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 his 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 his investment in the form of increased labor productivity. 
D)  receives reimbursement from the government for the cost of the education.

Question 11

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)  competitive pressure in the market for haircuts will eventually cause the equilibrium wage in both markets to be identical. 
B)  the equilibrium wage in the "bald" market will eventually fall. 
C)  the equilibrium wage in the "hairy" market will eventually rise. 
D)  wages in the market for barbers can never be in equilibrium. 
A)  competitive pressure in the market for haircuts will eventually cause the equilibrium wage in both markets to be identical. 
B)  the equilibrium wage in the "bald" market will eventually fall. 
C)  the equilibrium wage in the "hairy" market will eventually rise. 
D)  wages in the market for barbers can never be in equilibrium.

Question 12

Chris just completed his college degree from a prestigious university. He did not go to school to become more productive. Rather, he went to school and completed his degree to convey his innate productivity to employers. To which theory of education does he subscribe?

Accepted Answer

The answer of Chris just completed his college degree from...

Question 13

The statement that "night shift workers make a higher wage than day shift workers" is likely to reflect the fact that

Accepted Answer

A)  most people's preference is to work the day shift. 
B)  some people prefer to work a night shift for nonmonetary reasons. 
C)  night shift jobs are generally more technically difficult. 
D)  more women than men work the night shift. 
A)  most people's preference is to work the day shift. 
B)  some people prefer to work a night shift for nonmonetary reasons. 
C)  night shift jobs are generally more technically difficult. 
D)  more women than men work the night shift.

Question 14

A manager of a small firm who believes in the signaling theory of education would encourage her employees to obtain additional education to raise their on-the-job productivity.

Accepted Answer

A) True 
 B)False

Question 15

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.

Question 16

One reason why better-looking workers may have higher earnings is that physical attractiveness is correlated with intelligence.

Accepted Answer

A) True 
 B)False

Question 17

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 18

On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to

Accepted Answer

A)  the marginal product of labor. 
B)  the marginal product of capital. 
C)  diminishing marginal returns. 
D)  a compensating differential. 
A)  the marginal product of labor. 
B)  the marginal product of capital. 
C)  diminishing marginal returns. 
D)  a compensating differential.

Question 19

Which of the following is an example of customer discrimination?

Accepted Answer

A)  European soccer players earn more than U.S. soccer players since soccer is more popular in Europe. 
B)  Male basketball players in the NBA earn higher salaries than female basketball players in the WNBA since viewers prefer watching NBA games. 
C)  Golfers on the men's PGA tour earn more than golfers on the women's LPGA tour since people prefer watching the men play golf. 
D)  All of the above are examples of customer discrimination. 
A)  European soccer players earn more than U.S. soccer players since soccer is more popular in Europe. 
B)  Male basketball players in the NBA earn higher salaries than female basketball players in the WNBA since viewers prefer watching NBA games. 
C)  Golfers on the men's PGA tour earn more than golfers on the women's LPGA tour since people prefer watching the men play golf. 
D)  All of the above are examples of customer discrimination.

Question 20

Table 19-2   Source: US Census Bureau and Mankiw's calculations
-Refer to Table 19-2. What are two possible hypotheses to explain the changes in relative demand for high-skilled workers and low-skilled workers in recent years?

Accepted Answer

increased internatio

Exam 19: Earnings and Discrimination

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Other things the same, we'd expect that a job with less pleasant working conditions pays

Which of the following is not an example of a compensating differential?

In recent years, the amount of international trade in which the United States engages has

What is the term for offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal characteristics?

Black men earn an average of 21% less than white men. A labor economist who wants to investigate whether the differences in earnings indicate labor-market discrimination against black men should consider whether black and white men have similar

Experimental evidence indicates women choose less competitive environments than men.

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

Chris just completed his college degree from a prestigious university. He did not go to school to become more productive. Rather, he went to school and completed his degree to convey his innate productivity to employers. To which theory of education does he subscribe?

The statement that "night shift workers make a higher wage than day shift workers" is likely to reflect the fact that

A manager of a small firm who believes in the signaling theory of education would encourage her employees to obtain additional education to raise their on-the-job productivity.

One reason why better-looking workers may have higher earnings is that physical attractiveness is correlated with intelligence.

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.

On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to

Which of the following is an example of customer discrimination?

Table 19-2 Source: US Census Bureau and Mankiw's calculations -Refer to Table 19-2. What are two possible hypotheses to explain the changes in relative demand for high-skilled workers and low-skilled workers in recent years?

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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