Question 1

Labor unions will raise the quantity of labor demanded.

Accepted Answer

A) True 
 B)False

Question 2

Workers whose skills become obsolete as a result of technological change are often paid a lower wage as a result of

Accepted Answer

A)  natural ability. 
B)  geographic location of employment. 
C)  chance. 
D)  work effort.

Question 3

Which of the following is not an example of a compensating differential? Job A pays more than Job B because Job A requires

Accepted Answer

A)  more international travel to dangerous locations. 
B)  two night shifts per month. 
C)  careful handling of toxic chemicals. 
D)  an advanced degree.

Question 4

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 5

People are willing to invest in human capital because

Accepted Answer

A)  the demand for skilled labor is higher than for unskilled labor. 
B)  it increases the marginal product of their labor. 
C)  firms are willing to pay more for more productive workers. 
D)  All of the above are correct.

Question 6

As a summer job, some teenagers choose to detassle corn, a job requiring long hours walking corn fields in the summer heat. Other teens take jobs working as lifeguards. Given that detassling corn is a more difficult job than working as a lifeguard, we would expect a difference in wages between the two jobs. This difference is known as

Accepted Answer

A)  an efficiency wage. 
B)  a compensating differential. 
C)  a wage adjustment. 
D)  a minimum wage.

Question 7

Minimum wage laws

Accepted Answer

A)  creates a surplus of labor in markets where the equilibrium wage is above the minimum wage. 
B)  cannot be valid unless labor unions are sufficiently powerful to force enactment of those laws in the first place. 
C)  are likely to have a greater effect on unskilled-labor markets than on skilled-labor markets. 
D)  All of the above are correct.

Question 8

John has financial assets totaling $1.5 million, and he plans to use these assets to start his own business. Since John owns these funds and will not need to borrow to start his business, these assets are considered human capital.

Accepted Answer

A) True 
 B)False

Question 9

Tom and Eric went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Eric's employer is not a good business manager, and the sales manager lost a major deal. Because of the decrease in profits, the employees did not receive raises last year. Tom's employer is a savvy business manager and the sales manager is experienced and works hard. If Tom has higher earnings than Eric, the difference is most likely a function of

Accepted Answer

A)  chance. 
B)  differences in human capital. 
C)  differences in signaling. 
D)  discrimination.

Question 10

If a worker is indifferent between a job with a wage of $10 per hour and a job with a wage of $12 per hour, then the

Accepted Answer

A)  higher-paying job has a compensating wage differential of $2 per hour. 
B)  higher-paying job has a compensating wage differential of $12 per hour. 
C)  higher-paying job is intrinsically more attractive than the lower-paying joc. 
D)  wage in the higher-paying job must eventually fall due to competition.

Question 11

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.

Question 12

Figure 19-1 
-Refer to Figure 19-1. Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $8 as shown. Which of the following compensation schemes could the graph be illustrating?

Accepted Answer

A)  An efficiency wage. 
B)  Discrimination. 
C)  A compensating differential. 
D)  The superstar phenomenon.

Question 13

If an older worker earns less than a younger worker for the same job, we have proof of age discrimination.

Accepted Answer

A) True 
 B)False

Question 14

It is likely that, if we could measure the quality as well as the quantity of education,

Accepted Answer

A)  the human-capital argument would become less compelling as a means of explaining wage differentials between white workers and black workers. 
B)  the human-capital argument would become less compelling as a means of explaining wage differentials between male workers and female workers. 
C)  wage differentials between white workers and black workers would be more puzzling than they are now. 
D)  wage differentials between white workers and black workers would be more fully explained.

Question 15

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

Accepted Answer

A)  the inability to calculate wage differentials. 
B)  the inability to see changes in the wage differentials over a period of time. 
C)  the difficulty in measuring productivity differences between workers. 
D)  the difficulty in measuring female labor-force participation.

Question 16

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A)  race, ethnic group, sex, age, or other personal characteristics. 
B)  qualifications, experience, or job preferences. 
C)  levels of human capital. 
D)  All of the above are correct.

Question 17

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 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

Which of the following statements is not correct?

Accepted Answer

A)  If the signaling theory of education is correct, additional schooling does not affect worker productivity but rather signals a correlation between natural ability and education. 
B)  The theory of efficiency wages suggests that firms pay higher wages to workers in order to induce workers to be more productive. 
C)  Discrimination against workers of a certain race or ethnicity is often in conflict with a firm's desire to maximize profits. 
D)  The theory of compensating wage differentials reflects the different skills, abilities, and productivity of workers.

Question 20

Explain why the following situation is likely to persist: soccer players in Europe are the highest paid athletes and in the US they are among the lowest paid athletes.

Accepted Answer

The answer of Explain why the following situation is likely...

Exam 19: Earnings and Discrimination

Labor unions will raise the quantity of labor demanded.

Workers whose skills become obsolete as a result of technological change are often paid a lower wage as a result of

Which of the following is not an example of a compensating differential? Job A pays more than Job B because Job A requires

If firms are competitive, then labor-market discrimination

People are willing to invest in human capital because

Minimum wage laws

John has financial assets totaling $1.5 million, and he plans to use these assets to start his own business. Since John owns these funds and will not need to borrow to start his business, these assets are considered human capital.

If a worker is indifferent between a job with a wage of $10 per hour and a job with a wage of $12 per hour, then the

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

Figure 19-1 -Refer to Figure 19-1. Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $8 as shown. Which of the following compensation schemes could the graph be illustrating?

If an older worker earns less than a younger worker for the same job, we have proof of age discrimination.

It is likely that, if we could measure the quality as well as the quantity of education,

One of the problems with calculating the true amount of discrimination that takes place in the market for labor is

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

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

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

Which of the following statements is not correct?

Explain why the following situation is likely to persist: soccer players in Europe are the highest paid athletes and in the US they are among the lowest paid athletes.