Question 1

Suppose that an employer hires workers with blue eyes and workers with brown eyes. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by offering blue-eyed workers lower wages than brown-eyed workers?

Accepted Answer

A)  The employer will be just as cost efficient as a nondiscriminating employer. 
B)  The employer will face higher costs than a nondiscriminating employer. 
C)  The employer will have lower costs. 
D)  The employer will have higher profits. 
E)  Both a and c are correct.

Question 2

Which of the following is most likely to increase the money wages that will be required to attract a given number of workers into a job category?

Accepted Answer

A)  the job is widely viewed as prestigious. 
B)  the employer provides child care on the premises. 
C)  the employer does not discriminate. 
D)  the work is widely viewed as being stressful and dangerous.

Question 3

Which of the following could be an institutional barrier to employment?

Accepted Answer

A)  licensing requirements 
B)  labor unions 
C)  minimum wages 
D)  all of the above

Question 4

An individual who possesses a specialized skill that is difficult to execute will

Accepted Answer

A)  necessarily receive wages considerably higher than those who lack this skill. 
B)  receive a wage determined by the number of other persons possessing this skill. 
C)  receive a high wage only when this skill is in great demand relative to its supply. 
D)  receive a wage rate that is lower than similarly productive individuals who lack this skill.

Question 5

If customers are racist but employers are not, then employment discrimination will be

Accepted Answer

A)  less profitable than nondiscrimination. 
B)  more profitable than nondiscrimination. 
C)  equally profitable as nondiscrimination. 
D)  easier to eliminate than if employers were racist but customers were not.

Question 6

Evidence suggests that education raises the earnings of the workforce mainly by

Accepted Answer

A)  increasing the marginal productivity of labor. 
B)  keeping young people out of the labor force, thereby reducing the supply of labor. 
C)  teaching workers how to demand more pay. 
D)  teaching people to read and write, although education beyond this point does not seem to increase worker productivity.

Question 7

Economic theory suggests that the standard of living of American workers would rise if

Accepted Answer

A)  the minimum wage were doubled. 
B)  the knowledge and skills of workers improved. 
C)  older workers were forced to retire earlier, opening up jobs for younger workers. 
D)  technological setbacks lowered output per worker hour, increasing the number of jobs.

Question 8

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

Accepted Answer

A)  worker preferences are an important source of earning differentials. 
B)  economics ranks one set of worker preferences as more desirable than another. 
C)  some people can be paid less for doing hard work while others have to be paid a premium for doing a similar task. 
D)  skill levels of laborers are a minor consideration in wage rate determination.

Question 9

Wages in the United States are higher than those in Mexico primarily because

Accepted Answer

A)  output per worker is higher in Mexico than in the United States. 
B)  output per worker is higher in the United States. 
C)  the human and physical capital of American workers is lower than that of their Mexican counterparts. 
D)  all of the above are correct.

Question 10

Economic studies have generally found that professional sports players have salaries that

Accepted Answer

A)  greatly exceed their marginal contribution to a team's revenue stream. 
B)  are approximately equal to their marginal revenue products. 
C)  are about one-half of what they contribute to a team's profitability. 
D)  are less than one-tenth of their marginal revenue products.

Question 11

In the late 1800s, Bernard made buggy whips. Their quality was such that people came from hundreds of miles to buy the whips. As mechanized transportation developed, horse-drawn buggies largely disappeared and so did the demand for Bernard's whips. Would Bernard have been better off if these new modes of transportation had never been invented?

Accepted Answer

The answer of In the late 1800s, Bernard made buggy...

Question 12

The major determinant of an individual's income is

Accepted Answer

A)  whether or not her family is wealthy. 
B)  how well she gets along with her co-workers and boss. 
C)  how productive she is combined with demand for what she produces. 
D)  how much she enjoys the work.

Question 13

Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D., why are college professors paid less than other occupations that require similar or lesser amounts of human capital?

Accepted Answer

The answer of Given the amount of time and other...

Question 14

Economic theory suggests that the standard of living of American workers would rise if

Accepted Answer

A)  the minimum wage were doubled. 
B)  automation were outlawed. 
C)  workers were forced to retire earlier. 
D)  technological improvements increased output per worker-hour.

Question 15

Which of the following would cause the demand for plumbers to decrease?

Accepted Answer

A)  an increase in the productivity of plumbers 
B)  a decline in the construction of housing 
C)  a law that mandated higher wages for plumbers 
D)  an increase in the number of plumbers who belong to a union

Question 16

Economic theory suggests that the standard of living of American workers would rise if

Accepted Answer

A)  technological change increased output per worker. 
B)  the minimum wage were doubled. 
C)  automation were outlawed. 
D)  a larger proportion of the labor force was unionized.

Question 17

An example of a non-pecuniary job characteristic is

Accepted Answer

A)  over-time pay. 
B)  salary. 
C)  an end-of-the-year bonus. 
D)  a comfortable work environment.

Question 18

Compared to the general population, millionaires are more likely to be

Accepted Answer

A)  well-educated. 
B)  relatively old. 
C)  self-employed. 
D)  all of the above. 
E)  only b and c above.

Question 19

Compensation where the top performer receives much higher rewards than other competitors, even if the others perform at only slightly lower levels, is called

Accepted Answer

A)  a compensating differential. 
B)  round-robin pay. 
C)  tournament pay. 
D)  base pay.

Question 20

As far as contributions to a professional sports team's bottom line are concerned, players generally receive

Accepted Answer

A)  about what they are worth. 
B)  about half of what they are worth. 
C)  about twice what they are worth. 
D)  about ten times more than what they are worth.

Exam 13: Earnings, Productivity, and the Job Market

Suppose that an employer hires workers with blue eyes and workers with brown eyes. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by offering blue-eyed workers lower wages than brown-eyed workers?

Which of the following is most likely to increase the money wages that will be required to attract a given number of workers into a job category?

Which of the following could be an institutional barrier to employment?

An individual who possesses a specialized skill that is difficult to execute will

If customers are racist but employers are not, then employment discrimination will be

Evidence suggests that education raises the earnings of the workforce mainly by

Economic theory suggests that the standard of living of American workers would rise if

The fact that some people will work hard to earn a lot of money while others will be content with much less income indicates that

Wages in the United States are higher than those in Mexico primarily because

Economic studies have generally found that professional sports players have salaries that

The major determinant of an individual's income is

Given the amount of time and other costs of investing in human capital that it takes to earn a Ph.D., why are college professors paid less than other occupations that require similar or lesser amounts of human capital?

Economic theory suggests that the standard of living of American workers would rise if

Which of the following would cause the demand for plumbers to decrease?

Economic theory suggests that the standard of living of American workers would rise if

An example of a non-pecuniary job characteristic is

Compared to the general population, millionaires are more likely to be

Compensation where the top performer receives much higher rewards than other competitors, even if the others perform at only slightly lower levels, is called

As far as contributions to a professional sports team's bottom line are concerned, players generally receive