Question 1

When employers sort employment applications into high-ability and low-ability people based on the attainment of 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.

Question 2

According to proponents of the signaling theory of education,

Accepted Answer

A)  schooling has no real productivity benefit. 
B)  no one person finds it easier to earn a college degree than does any other person. 
C)  the human-capital view of education is entirely correct. 
D)  employers send signals to young people to persuade them to expend whatever effort is necessary to earn college degrees.

Question 3

A signaling theory of education suggests that

Accepted Answer

A)  people who attend college are more likely to capture a "beauty premium." 
B)  education is a signal of social status. 
C)  education does not necessarily increase productivity. 
D)  education will sever the link between innate ability and compensation.

Question 4

As a result of an increase in the earnings gap between skilled and unskilled jobs,the incentive to get a college education has been declining.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an explanation for why better educated workers earn more,on average,than less educated workers in the United States?

Accepted Answer

A)  Better educated workers have higher marginal productivities,on average. 
B)  Compensating differentials lower the wages of skilled workers relative to unskilled workers. 
C)  The United States tends to import goods produced with unskilled labor,which reduces the U.S.demand for unskilled labor. 
D)  The demand for skilled labor has risen over time relative to the demand for unskilled labor.

Question 6

Workers with more human capital on average earn substantially higher pay than workers with less human capital in

Accepted Answer

A)  most countries but not in the United States. 
B)  the United States but not in most other countries. 
C)  the United States and in most other countries. 
D)  None of the above is correct;the evidence fails to indicate that human capital is a significant factor in determining earnings anywhere in the world.

Question 7

Discrimination by a manager in the hiring process

Accepted Answer

A)  decreases the firm's costs. 
B)  increases the firm's costs. 
C)  is evident if a white manager refuses to hire a Hispanic worker. 
D)  is evident if a 30-year-old manager refuses to hire a 50-year-old worker.

Question 8

How does the theory of efficiency wages explain above-equilibrium wages?

Accepted Answer

A)  Employers are forced to pay higher wages in efficient markets. 
B)  Employers give their workers a higher wage in the hope that it will lead to increased productivity. 
C)  Workers get higher wages when they prove they are increasing their productivity. 
D)  Workers demand higher wages to compensate for poor fringe benefits.

Question 9

A "technology" hypothesis has been advanced as an explanation for the widening earnings gap between skilled and unskilled workers in the United States.This hypothesis emphasizes the likelihood that technological advances have

Accepted Answer

A)  increased the supply of both skilled and unskilled workers. 
B)  increased the supply of skilled workers and decreased the supply of unskilled workers. 
C)  increased the demand for skilled workers and decreased the demand for unskilled workers. 
D)  decreased the demand for both skilled and unskilled workers.

Question 10

When computers are used to replace workers on a factory production line,the wage gap between skilled and unskilled workers

Accepted Answer

A)  will increase only if the company can increase the price of its product. 
B)  is likely to increase. 
C)  is likely to decrease. 
D)  will not change.

Question 11

Experimental evidence indicates women choose less competitive environments than men.

Accepted Answer

A) True 
 B)False

Question 12

If firms are competitive,then labor-market discrimination

Accepted Answer

A)  cannot exist in either the short run or the long run. 
B)  will be more of a problem than if the market were monopolistic or imperfectly competitive. 
C)  likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies. 
D)  likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.

Question 13

The idea of paying workers an efficiency wage is that

Accepted Answer

A)  doing so is more efficient than paying them the market wage. 
B)  paying workers less gives them the incentive to work harder. 
C)  workers and management gain at the expense of the stockholders of the company. 
D)  workers have the incentive to work harder,thus increasing their marginal productivity.

Question 14

In the country of Freedonia,men and women have the same level of education and choose different forms of work in the same proportions.The only real difference is that men typically stay home to raise young children,returning to the work force after their children enter elementary school.If no discrimination exists,then we would expect that,on average,

Accepted Answer

A)  women would earn less than men. 
B)  women would earn more than men. 
C)  men and women would earn the same wage. 
D)  wage differences between men and women would be due to differences in beauty.

Question 15

Explain the role of job experience in explaining the differences between the average wages of men and women.

Accepted Answer

The answer of Explain the role of job experience in...

Question 16

The market wage could be higher than the equilibrium wage if a worker

Accepted Answer

A)  is a superstar. 
B)  belongs to a labor union. 
C)  has more human capital. 
D)  All of the above are correct.

Question 17

Which of the following statements is not correct?

Accepted Answer

A)  It is possible that additional education will increase a worker's wage without increasing the worker's productivity. 
B)  If discriminating wage differentials persist in competitive markets,it is primarily because either consumers are willing to pay to maintain the discrimination or because government mandates it. 
C)  An efficiency wage corresponds to a lower wage that a nondiscriminating employer pays to a worker because a discriminating employer won't hire her. 
D)  In competitive markets,workers are paid a wage equal to the value of their marginal product.

Question 18

Economists found evidence of discrimination in each of the following markets except

Accepted Answer

A)  1960s baseball games. 
B)  baseball cards. 
C)  live basketball games in the 1980s. 
D)  current era baseball games.

Question 19

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

Question 20

According to proponents of the signaling theory of education,an increase in the education levels of all workers would

Accepted Answer

A)  increase workers' productivity and increase their wages. 
B)  increase workers' productivity but leave their wages unaffected. 
C)  leave workers' productivity unaffected but increase their wages. 
D)  leave workers' productivity and wages unaffected.

Exam 19: Earnings and Discrimination

When employers sort employment applications into high-ability and low-ability people based on the attainment of a college degree (irrespective of major) ,they are providing evidence in support of the