Question 1

Which of the following professionals is most likely to generate the income of a superstar?

Accepted Answer

A)  the best teacher 
B)  the best dentist 
C)  the best guitar player 
D)  the best airplane pilot 
A)  the best teacher 
B)  the best dentist 
C)  the best guitar player 
D)  the best airplane pilot

Question 2

Nurses who work in hospitals often are required to work on weekends, whereas nurses who work in doctors' offices generally only work Monday through Friday. Hospital nurses who must work on weekends are usually paid more than nurses working in doctors' offices for the same work even if they have the same skills and education. This difference in pay is attributed to

Accepted Answer

A)  an efficiency wage. 
B)  compensating differential. 
C)  differences in the marginal product of labor. 
D)  differences in human capital. 
A)  an efficiency wage. 
B)  compensating differential. 
C)  differences in the marginal product of labor. 
D)  differences in human capital.

Question 3

Store clerks are known to have low wages. This is likely to reflect the fact that

Accepted Answer

A)  store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. 
B)  store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers. 
C)  many people perceive the job of store clerk as having significant risk of death on the job. 
D)  store clerks are required to have a college degree. 
A)  store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers. 
B)  store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers. 
C)  many people perceive the job of store clerk as having significant risk of death on the job. 
D)  store clerks are required to have a college degree.

Question 4

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

Accepted Answer

A)  human-capital and price-fixing 
B)  human-capital and signaling 
C)  wage-differential and signaling 
D)  wage-differential and compensating-differentials 
A)  human-capital and price-fixing 
B)  human-capital and signaling 
C)  wage-differential and signaling 
D)  wage-differential and compensating-differentials

Question 5

Which of the following statements accurately explains the superstar phenomenon in wages?

Accepted Answer

A)  Better carpenters earn more than average carpenters because people are willing to pay higher prices for higher-quality work. 
B)  The more productive an author is, the more books she can write each year, so the more she earns. 
C)  Talented movie stars earn more than equally talented mechanics because technology allows the delivery of the services provided by the movie stars to all interested customers. 
D)  Athletes get paid for performing services that everyday people perform as hobbies. 
A)  Better carpenters earn more than average carpenters because people are willing to pay higher prices for higher-quality work. 
B)  The more productive an author is, the more books she can write each year, so the more she earns. 
C)  Talented movie stars earn more than equally talented mechanics because technology allows the delivery of the services provided by the movie stars to all interested customers. 
D)  Athletes get paid for performing services that everyday people perform as hobbies.

Question 6

Many economists believe that competitive, market economies provide a natural antidote to employer discrimination known as the

Accepted Answer

The answer of Many economists believe that competitive, market economies...

Question 7

Politicians often point to wage differentials as evidence of labor market discrimination against ethnic minorities and women. Economists, however, argue against this approach because

Accepted Answer

A)  they don't believe the wage differential really exists. 
B)  they can't agree on a definition of the term "discrimination." 
C)  they believe compensating differentials account for all wage differences. 
D)  different people may have different wages for reasons unrelated to discrimination. 
A)  they don't believe the wage differential really exists. 
B)  they can't agree on a definition of the term "discrimination." 
C)  they believe compensating differentials account for all wage differences. 
D)  different people may have different wages for reasons unrelated to discrimination.

Question 8

Evidence of discrimination in labor markets

Accepted Answer

A)  applies only to race and gender. 
B)  is conclusively identified by large differences in average wages rates between men and women. 
C)  is difficult to verify by reference to differences in average wage rates. 
D)  is more easily identified on the basis of race than gender. 
A)  applies only to race and gender. 
B)  is conclusively identified by large differences in average wages rates between men and women. 
C)  is difficult to verify by reference to differences in average wage rates. 
D)  is more easily identified on the basis of race than gender.

Question 9

If employers are profit-maximizers, then

Accepted Answer

A)  competition will always eventually eliminate employment discrimination. 
B)  employment discrimination may persist if consumers discriminate. 
C)  employment discrimination will persist because it is always profitable. 
D)  compensating differentials cannot exist. 
A)  competition will always eventually eliminate employment discrimination. 
B)  employment discrimination may persist if consumers discriminate. 
C)  employment discrimination will persist because it is always profitable. 
D)  compensating differentials cannot exist.

Question 10

Which of the following statements does not accurately describe the market for labor?

Accepted Answer

A)  The characteristics of workers, such as their education and experience, the characteristics of jobs, such as their pleasantness or unpleasantness, and the presence or absence of discrimination by employers all determine equilibrium wages. 
B)  Labor unions, minimum wage laws, and efficiency wages all may increase wages above their equilibrium level. 
C)  Firms are willing to pay more for better-educated workers as long as there is an excess supply of this type of worker. 
D)  Discrimination by employers against a group of workers may artificially lower wages for that group. 
A)  The characteristics of workers, such as their education and experience, the characteristics of jobs, such as their pleasantness or unpleasantness, and the presence or absence of discrimination by employers all determine equilibrium wages. 
B)  Labor unions, minimum wage laws, and efficiency wages all may increase wages above their equilibrium level. 
C)  Firms are willing to pay more for better-educated workers as long as there is an excess supply of this type of worker. 
D)  Discrimination by employers against a group of workers may artificially lower wages for that group.

Question 11

Discrimination may persist even in competitive markets when the source of the discrimination is

Accepted Answer

A)  employer prejudice. 
B)  customer prejudice. 
C)  wage prejudice. 
D)  employee prejudice. 
A)  employer prejudice. 
B)  customer prejudice. 
C)  wage prejudice. 
D)  employee prejudice.

Question 12

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 13

Which of the following theories explains why increased education translates into higher wages?

Accepted Answer

A)  human-capital theory 
B)  the theory of compensating differentials 
C)  the theory of supply and demand 
D)  comparative advantage 
A)  human-capital theory 
B)  the theory of compensating differentials 
C)  the theory of supply and demand 
D)  comparative advantage

Question 14

The term "compensating differential" refers to

Accepted Answer

A)  the fact that workers who do similar work should be paid the same wage. 
B)  the fact that some workers live further from their jobs than do other workers. 
C)  a wage difference that is due to unionization of some firms but not others. 
D)  a wage difference that arises from nonmonetary characteristics of different jobs. 
A)  the fact that workers who do similar work should be paid the same wage. 
B)  the fact that some workers live further from their jobs than do other workers. 
C)  a wage difference that is due to unionization of some firms but not others. 
D)  a wage difference that arises from nonmonetary characteristics of different jobs.

Question 15

Which of the following would tend to lessen the wage gap between a country's skilled and unskilled workers?

Accepted Answer

A)  technology increases the productivity of unskilled workers more than that of skilled workers 
B)  the country increases trade with countries that have a higher proportion of skilled workers 
C)  both A and B 
D)  neither A nor B 
A)  technology increases the productivity of unskilled workers more than that of skilled workers 
B)  the country increases trade with countries that have a higher proportion of skilled workers 
C)  both A and B 
D)  neither A nor B

Question 16

In the signaling theory of education,

Accepted Answer

A)  schooling itself does not lead to more productive workers. 
B)  chance plays more of a role than in the human-capital theory. 
C)  schooling enhances worker productivity. 
D)  compensating differentials do not matter. 
A)  schooling itself does not lead to more productive workers. 
B)  chance plays more of a role than in the human-capital theory. 
C)  schooling enhances worker productivity. 
D)  compensating differentials do not matter.

Question 17

Minimum wage laws

Accepted Answer

A)  creates a surplus of labor in markets where the equilibrium wage is above the minimum wage. 
B)  cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place. 
C)  are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets. 
D)  All of the above are correct. 
A)  creates a surplus of labor in markets where the equilibrium wage is above the minimum wage. 
B)  cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place. 
C)  are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets. 
D)  All of the above are correct.

Question 18

Which of the following is considered human capital?

Accepted Answer

A)  the ingredients a chef uses to prepare meals 
B)  the pots and pans and other tools a chef uses to prepare meals 
C)  the financial capital a chef uses to start his own restaurant 
D)  the skills a chef learns when attending a class about cake decorating 
A)  the ingredients a chef uses to prepare meals 
B)  the pots and pans and other tools a chef uses to prepare meals 
C)  the financial capital a chef uses to start his own restaurant 
D)  the skills a chef learns when attending a class about cake decorating

Question 19

Labor unions will raise the quantity of labor demanded.

Accepted Answer

A) True 
 B)False

Question 20

Technology is an important factor in explaining the high incomes of some athletes primarily because

Accepted Answer

A)  technology accounts for differences in incomes within all occupations. 
B)  technology makes it possible for very large numbers of people to watch athletes perform. 
C)  technology improves the performance of athletes. 
D)  technology requires human capital to use it efficiently. 
A)  technology accounts for differences in incomes within all occupations. 
B)  technology makes it possible for very large numbers of people to watch athletes perform. 
C)  technology improves the performance of athletes. 
D)  technology requires human capital to use it efficiently.

Exam 19: Earnings and Discrimination

Which of the following professionals is most likely to generate the income of a superstar?

Store clerks are known to have low wages. This is likely to reflect the fact that

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

Which of the following statements accurately explains the superstar phenomenon in wages?

Many economists believe that competitive, market economies provide a natural antidote to employer discrimination known as the

Politicians often point to wage differentials as evidence of labor market discrimination against ethnic minorities and women. Economists, however, argue against this approach because

Evidence of discrimination in labor markets

If employers are profit-maximizers, then

Which of the following statements does not accurately describe the market for labor?

Discrimination may persist even in competitive markets when the source of the discrimination is

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.

Which of the following theories explains why increased education translates into higher wages?

The term "compensating differential" refers to

Which of the following would tend to lessen the wage gap between a country's skilled and unskilled workers?

In the signaling theory of education,

Minimum wage laws

Which of the following is considered human capital?

Labor unions will raise the quantity of labor demanded.

Technology is an important factor in explaining the high incomes of some athletes primarily because

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

Filters