Question 1

The following jobs are ranked from most desirable to least desirable from a survey of college seniors: personal fitness trainer,financial analyst,insurance agent,and sales clerk.Which of the four jobs will pay the least?

Accepted Answer

A) personal fitness trainer because of compensating differentials in wages 
B) sales clerk because it requires the least education 
C) insurance agent because the supply of them is very high 
D) Any of the above explanations could be correct.

Question 2

Economists have proposed which of the following hypotheses to explain the rising wage gap between skilled and unskilled workers? (i)	increases in the role of unions in setting skilled wage scales
(ii)	increasing international trade
(iii)	technological change

Accepted Answer

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

Question 3

Scenario 19-5
Billy works for the local piano moving company part-time after school. Billy has worked for the company for two years but still hasn't received a wage increase, even though newer employees have received raises. Billy has threatened his employer with a lawsuit if he doesn't get a raise in the next few weeks. Billy believes he is a victim of labor-market discrimination.
-Refer to Scenario 19-5.Why might an economist be skeptical of Billy's discrimination complaint?

Accepted Answer

A) Through antitrust laws, discriminating firms can be penalized with large fees. 
B) In a competitive market, employers pay employees based on their value to the firm. 
C) Discrimination leads to profit maximization. 
D) Only cost minimizers practice discrimination.

Question 4

The most popular movie stars have high incomes for a number of reasons.One such reason is

Accepted Answer

A) an ability for almost everyone to enjoy movies at a relatively low cost. 
B) the above-average intellect of the average movie star. 
C) a compensating differential. 
D) a lack of technological advances in the movie industry.

Question 5

The Asian Development Bank has been investing in education and training programs in the developing economies of Asia over the last five years.As a result of this investment,economists who adhere to the human capital view of education would predict

Accepted Answer

A) rising wages as labor productivity is enhanced. 
B) falling wages as the labor market is saturated with too many educated workers. 
C) the marginal productivity of capital would not be affected. 
D) the marginal productivity of labor would not be affected.

Question 6

Which of the following are examples of changing employment trends? (i)	Technological advances have replaced a great many routine jobs in the U.S.such as bank tellers and telephone operators.
(ii)	The number of people wanting to work in the personal services sector in the U.S.is increasing.
(iii)	Employment in the U.S.agricultural sector has declined by about 30 percentage points in the last century.
(iv)	Employment in the U.S.manufacturing sector has declined,while employment in manufacturing has increased worldwide.

Accepted Answer

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

Question 7

Jill is the best eye surgeon in town,and she earns $350,000 a year.Susan is an average eye surgeon in town,and she earns $100,000 a year.Jill's skills as a surgeon

Accepted Answer

A) are valued more by the market relative to Susan's and that explains why her income is higher than Susan's. 
B) are valued less by the market relative to Susan's and that explains why her income is higher than Susan's. 
C) are valued less by the market relative to Susan's and that explains why her income is lower than Susan's. 
D) are more expensive because she receives a compensating differential.

Question 8

The National Collegiate Athletic Association (NCAA)has long argued that nationally-prominent college athletes are compensated with an investment in human capital that far exceeds the monetary reward of playing professional sports.Examine this argument in light of your knowledge of human capital theory and the economic theory of labor markets.

Accepted Answer

The answer of The National Collegiate Athletic Association (NCAA)has long...

Question 9

For a "superstar" to emerge,it must be the case that

Accepted Answer

A) it is possible to supply the good or service that the superstar produces at low cost to every customer. 
B) some customers are willing and able to pay large sums of money to enjoy the good or service provided by the superstar. 
C) the superstar has a natural monopoly on his or her good or service. 
D) the superstar is willing to settle for a level of pay that is less than the value of his marginal product.

Question 10

Which of the following factors affects the marginal productivity of a worker?

Accepted Answer

A) discrimination based on age, race, or gender 
B) human capital 
C) compensating wage differentials 
D) All of the above are correct.

Question 11

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

Accepted Answer

A) a compensating differential. 
B) an inefficiency wage. 
C) the equilibrium difference. 
D) a union wage.

Question 12

A recent law school graduate is considering two offers to practice law,one in California and one in Alabama.The California bar exam is very difficult to pass,in part because California has a large number of unaccredited law schools.Assuming all other things equal,the attorney would expect

Accepted Answer

A) to be unable to predict the wage difference between Alabama and California. 
B) to make a higher wage in California. 
C) to make a higher wage in Alabama. 
D) wages in California and Alabama to be identical.

Question 13

Which of the following statements is not correct?

Accepted Answer

A) Both the human capital theory and the signaling theory of education could explain why college graduates earn more than high school graduates. 
B) The signaling theory of education suggests that the ability to complete a college degree is correlated with the ability to perform well in the labor market. 
C) If the human capital theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages. 
D) If the signaling theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages.

Question 14

Which of the following statements correctly identifies the shift in employment in the manufacturing sector in the United States?

Accepted Answer

A) In the 1940s, about 10 percent of American workers were employed in the manufacturing sector. 
B) Today, about 30 percent of American workers are employed in the manufacturing sector. 
C) The decline in jobs in the manufacturing sector mirrors a previous decline in employment in the U.S.agricultural sector. 
D) Both a and b are correct.

Question 15

A 1990 study of the market for collectable baseball cards suggested

Accepted Answer

A) there was no evidence of price discrimination on the basis of player position (hitter versus pitcher). 
B) markets in which the product price is low are not typically characterized by consumer-driven race discrimination. 
C) cards for white players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable black players. 
D) cards for black players (both hitters and pitchers) were 10 to 13 percent higher than those for comparable white players.

Question 16

A signaling theory of education suggests that educational attainment

Accepted Answer

A) is a signal of high marginal productivity. 
B) is correlated with natural ability. 
C) increases the productivity of low-ability workers. 
D) Both a and b are correct.

Question 17

The "beauty premium" can be explained by the fact that

Accepted Answer

A) marginal productivity in all occupations has a physical dimension. 
B) in some occupations, physical attractiveness of workers may enhance the value of their marginal product. 
C) beauty acts as an implicit signal of innate intelligence. 
D) beautiful people are likely to reflect "good breeding."

Question 18

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.

Question 19

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.

Question 20

The signaling theory of education maintains that workers who complete specific levels of education signal their high productivity to potential to employers.

Accepted Answer

A) True 
 B)False

Exam 19: Earnings and Discrimination