Question 1

Compensating differentials are differences in wages related to the characteristics of a job.

Accepted Answer

A) True 
 B)False

Question 2

Table 19-2
  Source: US Census Bureau and Mankiw's calculations
-Refer to Table 19-2. What conclusion can you draw about the changes in the gaps in earnings between skilled and unskilled workers between 1975 and 2011?

Accepted Answer

The answer of Table 19-2
  Source: US Census Bureau...

Question 3

In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has

Accepted Answer

A)  risen as the demand for skilled labor has increased relative to the demand for unskilled labor. 
B)  risen as the demand for skilled labor has decreased relative to the demand for unskilled labor. 
C)  fallen as the demand for skilled labor has increased relative to the demand for unskilled labor. 
D)  fallen as the demand for skilled labor has decreased relative to the demand for unskilled labor.

Question 4

According to the superstar phenomenon, the most talented person in the following occupations is likely to earn extremely high wages except

Accepted Answer

A)  an author. 
B)  an auto mechanic. 
C)  a singer. 
D)  an advice columnist.

Question 5

When robots 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 6

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. What conclusion can you draw about women's wages compared to men's wages in this industry?

Accepted Answer

The answer of Scenario 19-6
Suppose that in the competitive market...

Question 7

Once during a U.S. presidential campaign, a lobbyist for a prominent national women's organization made the claim that women in the United States earn $0.60 for every $1.00 earned by a man. A reporter, who was prepared for this statement, asked the lobbyist why wages paid to the organization's secretarial staff (all of whom were women) were significantly below the national average if they were truly interested in raising the rates of compensation for women. If you were the lobbyist, how would you have answered this question? Do you think your answer is convincing? Explain.

Accepted Answer

The answer of Once during a U.S. presidential campaign, a...

Question 8

Studies of wages by labor economists indicate that measurable variables such as age, job characteristics, years of education, and years of experience account for

Accepted Answer

A)  virtually none of the variation in wages in our economy. 
B)  some, but less than 50 percent of the variation in wages in our economy. 
C)  about 75 percent of the variation in wages in our economy. 
D)  almost all of the variation in wages in our economy.

Question 9

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.

Question 10

Which of the following statements represents the idea behind signaling in education?

Accepted Answer

A)  Education can turn an unproductive person into a productive person. 
B)  Education increases the marginal productivity of naturally productive workers. 
C)  More productive people are more inclined to educate themselves. 
D)  All of the above are correct.

Question 11

Evidence of discrimination in labor markets

Accepted Answer

A)  applies only to race and gender. 
B)  is conclusively identified by large differences in average wages rates between men and women. 
C)  is difficult to verify by reference to differences in average wage rates. 
D)  is more easily identified on the basis of race than gender.

Question 12

All differences in wages that are not accounted for by differences in human-capital investment are likely to be a result of discrimination.

Accepted Answer

A) True 
 B)False

Question 13

On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to

Accepted Answer

A)  the marginal product of labor. 
B)  the marginal product of capital. 
C)  diminishing marginal returns. 
D)  a compensating differential.

Question 14

Figure 19-6 
-Refer to Figure 19-6. Given demand, D1, and supply, S2, how many fewer people are employed if a minimum wage of $8 per hour is imposed on this market as compared to allowing wages to adjust to balance labor demand and labor supply?

Accepted Answer

The answer of Figure 19-6 
-Refer to Figure 19-6. Given...

Question 15

Which of the following helps to explain the differences in earnings in the United States?

Accepted Answer

A)  ability, effort, and chance 
B)  compensating differentials 
C)  physical attractiveness 
D)  All of the above are correct.

Question 16

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

Accepted Answer

A)  belongs to a labor union. 
B)  is covered by a minimum-wage law. 
C)  is paid an efficiency wage. 
D)  All of the above are correct.

Question 17

In discussing discrimination and the wage differences that exist between men and women and between blacks and whites, it has been said that "the disease is political even if the symptom is economic." What does this mean?

Accepted Answer

A)  Wage differences persist because the political system has failed to enact laws to equalize wages among all groups. 
B)  Wage differences exist because of past discrimination on the part of political bodies such as city councils and school boards. 
C)  Wage differences exist because of the differences in the political views of the different groups. 
D)  Wage differences exist because the political system is biased against paying compensating differentials.

Question 18

A group of firms working together and acting as a supplier of a product is called a cartel. A group of employees working together and acting as a single supplier of labor is called a

Accepted Answer

The answer of A group of firms working together and...

Question 19

Jobs that involve pleasant work, as opposed to jobs that involve unpleasant work, usually pay

Accepted Answer

A)  higher wages, because jobs that involve pleasant work typically require more education than do jobs that involve unpleasant work. 
B)  higher wages, because jobs that involve pleasant work typically require more well-developed personality skills than do jobs that involve unpleasant work. 
C)  lower wages, because workers typically are not attracted to jobs that involve unpleasant work unless there is a monetary inducement. 
D)  lower wages, because workers who take jobs that involve unpleasant work typically stay in those jobs for relatively long periods of time and accumulate significant experience.

Question 20

Some economists hypothesize that international trade has altered the relative demand for skilled and unskilled labor, changing the gap in earnings between these two groups. Which of the following statements best describes this hypothesis?

Accepted Answer

A)  Unskilled labor is plentiful and cheap in the US, so the US tends to export goods produced with unskilled labor and import goods produced with skilled labor. 
B)  Unskilled labor is plentiful and cheap in many foreign countries, so the US tends to import goods produced with unskilled labor and export goods produced with skilled labor. 
C)  Computers raise the demand for skilled workers and reduce the demand for the unskilled workers whose jobs are replaced by the computers. 
D)  Greater demand for skilled labor has led to higher wages for those workers and greater demand for imported products.

Exam 19: Earnings and Discrimination