Question 1

Which of the following can be used to help explain wage differences among different groups of workers?

Accepted Answer

A)  human capital and compensating differentials 
B)  human capital but not compensating differentials 
C)  compensating differentials but not human capital 
D)  neither human capital nor compensating differentials 
A)  human capital and compensating differentials 
B)  human capital but not compensating differentials 
C)  compensating differentials but not human capital 
D)  neither human capital nor compensating differentials

Question 2

Which of the following is an example of a compensating differential?

Accepted Answer

A)  paying workers with more years of experience higher wages than workers with fewer years of experience, all else equal 
B)  paying workers who work on the day shift lower wages than workers who work the night shift, all else equal 
C)  paying accountants who have passed the Certified Public Accountant exam higher wages than accountants who have not passed it, all else equal 
D)  All of the above are examples of compensating differentials. 
A)  paying workers with more years of experience higher wages than workers with fewer years of experience, all else equal 
B)  paying workers who work on the day shift lower wages than workers who work the night shift, all else equal 
C)  paying accountants who have passed the Certified Public Accountant exam higher wages than accountants who have not passed it, all else equal 
D)  All of the above are examples of compensating differentials.

Question 3

Park rangers at Yellowstone National Park are known to have low wages. This is probably because

Accepted Answer

A)  park rangers are required to be college graduates. 
B)  park rangers don't need much money to live. 
C)  park ranger jobs are perceived to be dangerous. 
D)  park ranger jobs are perceived to be "fun." 
A)  park rangers are required to be college graduates. 
B)  park rangers don't need much money to live. 
C)  park ranger jobs are perceived to be dangerous. 
D)  park ranger jobs are perceived to be "fun."

Question 4

Empirical evidence suggests that ability, effort, and chance are not likely to be significant contributors to wage differences.

Accepted Answer

A) True 
 B)False

Question 5

When employers sort employment applications into high-ability and low-ability people based on whether or not the applicant has a college degree (irrespective of major), they are providing evidence in support of the

Accepted Answer

A)  human-capital theory of education. 
B)  signaling theory of education. 
C)  principle that education reduces marginal productivity. 
D)  principle that most business owners are more interested in discriminating against a particular group than in maximizing profits. 
A)  human-capital theory of education. 
B)  signaling theory of education. 
C)  principle that education reduces marginal productivity. 
D)  principle that most business owners are more interested in discriminating against a particular group than in maximizing profits.

Question 6

Effective minimum-wage laws will most likely

Accepted Answer

A)  increase demand for labor. 
B)  create a surplus of labor. 
C)  increase incomes for all unskilled workers. 
D)  decrease incomes for all unskilled workers. 
A)  increase demand for labor. 
B)  create a surplus of labor. 
C)  increase incomes for all unskilled workers. 
D)  decrease incomes for all unskilled workers.

Question 7

"The customer is always right" explains

Accepted Answer

A)  the higher wages paid to members of a union. 
B)  compensating differentials. 
C)  persistent wage discrimination based on consumer preferences. 
D)  All of the above are correct. 
A)  the higher wages paid to members of a union. 
B)  compensating differentials. 
C)  persistent wage discrimination based on consumer preferences. 
D)  All of the above are correct.

Question 8

The "superstar" phenomenon can apply to which of these jobs?

Accepted Answer

A)  high-school teacher 
B)  author 
C)  heart surgeon 
D)  carpenter 
A)  high-school teacher 
B)  author 
C)  heart surgeon 
D)  carpenter

Question 9

Which of the following is an example of customer discrimination?

Accepted Answer

A)  A foreign government prevents women from legally working as teachers. 
B)  White theater goers prefer to watch movies with white stars rather than black stars. 
C)  Customers prefer more experienced lawyers over less experienced ones. 
D)  All of the above are correct. 
A)  A foreign government prevents women from legally working as teachers. 
B)  White theater goers prefer to watch movies with white stars rather than black stars. 
C)  Customers prefer more experienced lawyers over less experienced ones. 
D)  All of the above are correct.

Question 10

According to the superstar phenomenon, the most talented person in which of the following occupations is most likely to earn extremely high wages?

Accepted Answer

A)  an electrician 
B)  a hair stylist 
C)  a journalist 
D)  an engineer 
A)  an electrician 
B)  a hair stylist 
C)  a journalist 
D)  an engineer

Question 11

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

Accepted Answer

A)  Chris is a consultant who is paid more than other workers with similar skills because he is required to travel 80% of the time. 
B)  Abby is a teacher who is paid less than other workers with similar skills because she does not have to work during the summer months. 
C)  Ben is a businessman who is paid more than other workers with similar skills because he graduated from a prestigious university with honors. 
D)  Daphne is a skyscraper window-washer who is paid more than other workers with similar skills because of the risk she faces in her daily job. 
A)  Chris is a consultant who is paid more than other workers with similar skills because he is required to travel 80% of the time. 
B)  Abby is a teacher who is paid less than other workers with similar skills because she does not have to work during the summer months. 
C)  Ben is a businessman who is paid more than other workers with similar skills because he graduated from a prestigious university with honors. 
D)  Daphne is a skyscraper window-washer who is paid more than other workers with similar skills because of the risk she faces in her daily job.

Question 12

In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes

Accepted Answer

A)  compensating differentials. 
B)  the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C)  the decreasing importance of labor unions. 
D)  the increasing importance of international trade. 
A)  compensating differentials. 
B)  the increased recognition that a larger stock of human capital usually leads to higher earnings. 
C)  the decreasing importance of labor unions. 
D)  the increasing importance of international trade.

Question 13

Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.

Accepted Answer

A)  Dan is being discriminated against. 
B)  Harry might be discriminated against if he has more experience as a plumber. 
C)  Harry might be discriminated against if he has less training as a plumber. 
D)  Harry might be discriminated against if he works the day shift and Dan works the night shift. 
A)  Dan is being discriminated against. 
B)  Harry might be discriminated against if he has more experience as a plumber. 
C)  Harry might be discriminated against if he has less training as a plumber. 
D)  Harry might be discriminated against if he works the day shift and Dan works the night shift.

Question 14

Which of the following is true of minimum-wage laws?

Accepted Answer

A)  They affect skilled workers' wages. 
B)  They create above-equilibrium wages for some unskilled workers. 
C)  They create a shortage of unskilled labor. 
D)  They negatively affect the employment of skilled workers. 
A)  They affect skilled workers' wages. 
B)  They create above-equilibrium wages for some unskilled workers. 
C)  They create a shortage of unskilled labor. 
D)  They negatively affect the employment of skilled workers.

Question 15

Which of the following is an example of discrimination in the labor market?

Accepted Answer

A)  Women earn less than men because women are more likely to be employed in occupations that pay less, such as elementary school teachers rather than electrical engineers. 
B)  Women earn less than men because women have, on average, fewer years of experience in the labor force because women, on average, periodically leave the labor force to raise children. 
C)  A pharmaceutical sales company pays women less than men because the company's customers, physicians and pharmacists, say that they prefer to deal with men rather than women. 
D)  All of the above are examples of discrimination. 
A)  Women earn less than men because women are more likely to be employed in occupations that pay less, such as elementary school teachers rather than electrical engineers. 
B)  Women earn less than men because women have, on average, fewer years of experience in the labor force because women, on average, periodically leave the labor force to raise children. 
C)  A pharmaceutical sales company pays women less than men because the company's customers, physicians and pharmacists, say that they prefer to deal with men rather than women. 
D)  All of the above are examples of discrimination.

Question 16

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. Competition in the market for haircuts is consistent with which of the following statements?

Accepted Answer

A)  Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers. 
B)  All firms that hire only bald barbers will go out of business. 
C)  Firms hiring bald barbers will enter the market, increasing the demand for bald barbers. 
D)  Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers. 
A)  Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers. 
B)  All firms that hire only bald barbers will go out of business. 
C)  Firms hiring bald barbers will enter the market, increasing the demand for bald barbers. 
D)  Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers.

Question 17

The most important type of human capital is

Accepted Answer

The answer of The most important type of human capital...

Question 18

A cutting-edge biotech firm is hiring recent college graduates. To attract the very best applicants and to increase worker effort the firm is paying a wage 20% higher than the market wage for entry level employees in this industry. What is the term for the wage paid in this example?

Accepted Answer

The answer of A cutting-edge biotech firm is hiring recent...

Question 19

Differences in human capital among workers can often be attributed to social or political processes rather than economic processes.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that an employer can hire workers with brown hair and workers with blonde hair. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by hiring only workers with brown hair?

Accepted Answer

A)  The employer will be just as efficient as a nondiscriminating employer. 
B)  The employer will face higher costs than firms that focus only on maximizing profits. 
C)  The employer will immediately go out of business because discrimination is illegal. 
D)  The employer will face union strikes. 
A)  The employer will be just as efficient as a nondiscriminating employer. 
B)  The employer will face higher costs than firms that focus only on maximizing profits. 
C)  The employer will immediately go out of business because discrimination is illegal. 
D)  The employer will face union strikes.

Exam 19: Earnings and Discrimination

Which of the following can be used to help explain wage differences among different groups of workers?

Which of the following is an example of a compensating differential?

Park rangers at Yellowstone National Park are known to have low wages. This is probably because

Empirical evidence suggests that ability, effort, and chance are not likely to be significant contributors to wage differences.

When employers sort employment applications into high-ability and low-ability people based on whether or not the applicant has a college degree (irrespective of major), they are providing evidence in support of the

Effective minimum-wage laws will most likely

"The customer is always right" explains

The "superstar" phenomenon can apply to which of these jobs?

Which of the following is an example of customer discrimination?

According to the superstar phenomenon, the most talented person in which of the following occupations is most likely to earn extremely high wages?

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

In order to explain the changing gap in earnings between skilled and unskilled workers in recent years, economists have proposed two hypotheses. One hypothesis emphasizes

Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.

Which of the following is true of minimum-wage laws?

Which of the following is an example of discrimination in the labor market?

The most important type of human capital is

A cutting-edge biotech firm is hiring recent college graduates. To attract the very best applicants and to increase worker effort the firm is paying a wage 20% higher than the market wage for entry level employees in this industry. What is the term for the wage paid in this example?

Differences in human capital among workers can often be attributed to social or political processes rather than economic processes.

Suppose that an employer can hire workers with brown hair and workers with blonde hair. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by hiring only workers with brown hair?

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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