Question 1

A compensating differential refers to differences in pay due to

Accepted Answer

A)  productivity levels of workers. 
B)  signaling differences of workers. 
C)  nonmonetary characteristics of jobs. 
D)  All of the above are correct. 
A)  productivity levels of workers. 
B)  signaling differences of workers. 
C)  nonmonetary characteristics of jobs. 
D)  All of the above are correct.

Question 2

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Accepted Answer

A)  Good looks are an innate ability for some jobs, which results in higher productivity and higher wages. 
B)  Good looks may be an indirect measure of other types of ability such as attention to detail. 
C)  If better-looking people earn more than average-looking people, employers may be discriminating based on personal appearance. 
D)  All of the above could explain the beauty premium. 
A)  Good looks are an innate ability for some jobs, which results in higher productivity and higher wages. 
B)  Good looks may be an indirect measure of other types of ability such as attention to detail. 
C)  If better-looking people earn more than average-looking people, employers may be discriminating based on personal appearance. 
D)  All of the above could explain the beauty premium.

Question 3

Economists who study labor markets have documented

Accepted Answer

A)  a general decline in the wages of college graduates over the last decade. 
B)  an increasing trend in U.S. labor markets for employers to pay all costs of education and training. 
C)  a decrease in the earnings gap between low-skill and high-skill workers over the past two decades. 
D)  an increase in the earnings gap between low-skill and high-skill workers over the past two decades. 
A)  a general decline in the wages of college graduates over the last decade. 
B)  an increasing trend in U.S. labor markets for employers to pay all costs of education and training. 
C)  a decrease in the earnings gap between low-skill and high-skill workers over the past two decades. 
D)  an increase in the earnings gap between low-skill and high-skill workers over the past two decades.

Question 4

Scenario 19-6
Suppose that in the competitive market for auto repair, firms prefer to hire men rather than women. Assume that the women applying for positions have the same skills, experience, and work ethic as the men. As a result of this discrimination, the demand for women is lower than it otherwise would be.
-Refer to Scenario 19-6. If the firms in this market are profit-maximizers and customers do not care if a woman or a man works on their car, what will likely happen?

Accepted Answer

Women will be hired

Question 5

Among female workers over age 25, about what percent has a college degree? What is this percentage for black female workers over age 25?

Accepted Answer

The answer of Among female workers over age 25, about...

Question 6

According to economic historians, streetcars in southern cities in the early 1900s were racially segregated because the owners of the firms believed that segregation raised the firms' profits.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not an example of capital used in production?

Accepted Answer

A)  a teacher's chalkboard 
B)  a manufacturer's factory 
C)  a landscaper's time 
D)  an accountant's education 
A)  a teacher's chalkboard 
B)  a manufacturer's factory 
C)  a landscaper's time 
D)  an accountant's education

Question 8

Which of the following statements is correct?

Accepted Answer

A)  Differences in human capital may explain differences in wages between blacks and whites. 
B)  Racial discrimination is the strongest explanation for differences in wages between blacks and whites. 
C)  Gender discrimination is the strongest explanation for differences in wages between blacks and whites. 
D)  None of the above statements is correct. 
A)  Differences in human capital may explain differences in wages between blacks and whites. 
B)  Racial discrimination is the strongest explanation for differences in wages between blacks and whites. 
C)  Gender discrimination is the strongest explanation for differences in wages between blacks and whites. 
D)  None of the above statements is correct.

Question 9

Nancy and Sheila are both loan officers who graduated from the same university with bachelors' degrees in economics, and achieved similar performance reviews. Nancy started working one year before Sheila. If Nancy earns a higher annual salary than Sheila because she has more experience, the employer is

Accepted Answer

A)  rewarding increases in human capital. 
B)  paying efficiency wages. 
C)  practicing discrimination. 
D)  paying a compensating differential. 
A)  rewarding increases in human capital. 
B)  paying efficiency wages. 
C)  practicing discrimination. 
D)  paying a compensating differential.

Question 10

Above-equilibrium wages caused by efficiency wages will most likely result in

Accepted Answer

A)  a shortage of labor. 
B)  increased unemployment. 
C)  compensating wage differentials. 
D)  an decrease in the quantity of labor supplied. 
A)  a shortage of labor. 
B)  increased unemployment. 
C)  compensating wage differentials. 
D)  an decrease in the quantity of labor supplied.

Question 11

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

Accepted Answer

A)  human capital 
B)  discrimination 
C)  unions 
D)  All of the above could explain wage differences among groups. 
A)  human capital 
B)  discrimination 
C)  unions 
D)  All of the above could explain wage differences among groups.

Question 12

According to the signaling theory of education, better-educated workers

Accepted Answer

A)  are likely to be high-ability workers. 
B)  improve their marginal productivity through education. 
C)  are in scarce supply in less developed countries. 
D)  can only find low-skilled jobs due to technology. 
A)  are likely to be high-ability workers. 
B)  improve their marginal productivity through education. 
C)  are in scarce supply in less developed countries. 
D)  can only find low-skilled jobs due to technology.

Question 13

The ownership of human capital

Accepted Answer

A)  is typically embodied in related physical capital. 
B)  may be subject to government restrictions on transferability. 
C)  is not easily transferable. 
D)  All of the above are correct. 
A)  is typically embodied in related physical capital. 
B)  may be subject to government restrictions on transferability. 
C)  is not easily transferable. 
D)  All of the above are correct.

Question 14

In the early twentieth century, streetcars in many southern cities were segregated by race. This racial segregation was the result of

Accepted Answer

A)  laws that required such segregation. 
B)  long-standing southern traditions about which the law was silent. 
C)  streetcar firms trying to maximize profits. 
D)  streetcar firms trying to minimize costs. 
A)  laws that required such segregation. 
B)  long-standing southern traditions about which the law was silent. 
C)  streetcar firms trying to maximize profits. 
D)  streetcar firms trying to minimize costs.

Question 15

Some economists argue that changes in U.S. trade flows have altered the gap between wages of skilled and unskilled workers. Explain.

Accepted Answer

The U.S. tends to import goods produced

Question 16

Differences in human capital are likely to

Accepted Answer

A)  be unrelated to wage rate differences across gender classifications, since both men and women are required to complete requirements for a high school diploma. 
B)  be most helpful in explaining age discrimination, but unhelpful in explaining race discrimination. 
C)  explain some of the differences in average wage rates across age classifications. 
D)  explain all of the differences in average wage rates across gender classifications. 
A)  be unrelated to wage rate differences across gender classifications, since both men and women are required to complete requirements for a high school diploma. 
B)  be most helpful in explaining age discrimination, but unhelpful in explaining race discrimination. 
C)  explain some of the differences in average wage rates across age classifications. 
D)  explain all of the differences in average wage rates across gender classifications.

Question 17

If men, on average, earn 20 percent more than women in a particular occupation,

Accepted Answer

A)  this is clear evidence of discrimination. 
B)  some of this differential could be due to differences in educational levels. 
C)  some of this differential could be due to differences in human capital. 
D)  Both b and c are correct. 
A)  this is clear evidence of discrimination. 
B)  some of this differential could be due to differences in educational levels. 
C)  some of this differential could be due to differences in human capital. 
D)  Both b and c are correct.

Question 18

According to the signaling theory of education,

Accepted Answer

A)  schooling sends signals to employers in much the same way that advertising sends signals to consumers. 
B)  a person becomes more productive by earning a college degree. 
C)  education is less important than natural ability. 
D)  All of the above are correct. 
A)  schooling sends signals to employers in much the same way that advertising sends signals to consumers. 
B)  a person becomes more productive by earning a college degree. 
C)  education is less important than natural ability. 
D)  All of the above are correct.

Question 19

Adam and Bob are identical twins who attended grammar school through high school together. Adam got a job after high school, and Bob got a job after graduating from college. Adam earns $36,000 a year, and Bob earns $69,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)  Adam has less human capital than Bob. 
B)  Bob has less human capital than Adam. 
C)  Adam has received a compensating differential 
D)  Adam is a member of a union. 
A)  Adam has less human capital than Bob. 
B)  Bob has less human capital than Adam. 
C)  Adam has received a compensating differential 
D)  Adam is a member of a union.

Question 20

Which of the following statements is correct?

Accepted Answer

A)  Compensating wage differentials reflect different skills of workers. 
B)  Discrimination by employers affects the marginal productivity of workers. 
C)  The signaling theory of education suggests that schooling does not affect worker productivity. 
D)  The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers. 
A)  Compensating wage differentials reflect different skills of workers. 
B)  Discrimination by employers affects the marginal productivity of workers. 
C)  The signaling theory of education suggests that schooling does not affect worker productivity. 
D)  The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers.

Exam 19: Earnings and Discrimination

A compensating differential refers to differences in pay due to

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Economists who study labor markets have documented

Among female workers over age 25, about what percent has a college degree? What is this percentage for black female workers over age 25?

According to economic historians, streetcars in southern cities in the early 1900s were racially segregated because the owners of the firms believed that segregation raised the firms' profits.

Which of the following is not an example of capital used in production?

Which of the following statements is correct?

Above-equilibrium wages caused by efficiency wages will most likely result in

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

According to the signaling theory of education, better-educated workers

The ownership of human capital

In the early twentieth century, streetcars in many southern cities were segregated by race. This racial segregation was the result of

Some economists argue that changes in U.S. trade flows have altered the gap between wages of skilled and unskilled workers. Explain.

Differences in human capital are likely to

If men, on average, earn 20 percent more than women in a particular occupation,

According to the signaling theory of education,

Adam and Bob are identical twins who attended grammar school through high school together. Adam got a job after high school, and Bob got a job after graduating from college. Adam earns $36,000 a year, and Bob earns $69,000 a year. Select the best explanation for this wage difference.

Which of the following statements is correct?

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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