Question 1

Compared to present-oriented people,individuals who are more future-oriented tend to have _______ discount rates and consequently tend to obtain _______ education and earnings:

Accepted Answer

A) lower; more 
B) lower; less 
C) higher; more 
D) higher; less

Question 2

Suppose all workers are identical but working for Ajax is more pleasant than working for Acme.In all other nonwage respects the two firms offer the same job characteristics.In equilibrium:

Accepted Answer

A) the wage at Ajax will be higher than at Acme 
B) the wage at Ajax will be lower than at Acme 
C) workers will have lower net utility at Acme 
D) employment will be higher at Ajax if demand is the same in both markets

Question 3

Consider a worker who faces a tradeoff between wages on the vertical axis and job safety on the horizontal axis.The less averse a worker is to risk of injury on the job,the:

Accepted Answer

A) lower is the wage earned by the worker 
B) steeper is this worker's indifference curves 
C) flatter is this worker's indifference curves 
D) lower are the profits of this worker's employer

Question 4

Average hourly pay for production workers in the U.S.in 2010 was:

Accepted Answer

A) higher than in most other industrialized countries in Europe and Asia 
B) lower than in most other industrialized countries in Europe and Asia 
C) about the same as in most other industrialized countries in Europe and Asia 
D) lower than in many other industrialized countries in Europe but greater than in newly industrialized countries such as Singapore,Taiwan,and Korea

Question 5

The hedonic method of valuing a human life:

Accepted Answer

A) is based on the "price" of accepting risk as revealed in compensating wage differentials 
B) estimates the present value of the amount of wage and fringe benefits that would have been made had the worker not been killed 
C) typically results in a value of between $500,000 and $700,000 per life lost 
D) typically yields lower estimates than does the human capital approach

Question 6

Which of the following research findings would support an efficiency wage explanation of pay differentials?

Accepted Answer

A) Firms with higher turnover costs pay lower than average wages 
B) Firms with higher costs of detecting shirking pay higher than average wages 
C) Pay is positively correlated with human capital investments in a given industry 
D) Differences in observable worker characteristics explain most of the variance in pay across industries

Question 7

refer to the following diagrams.
-From the indifference curves,we can infer that worker A:

Accepted Answer

A) has a stronger taste for job safety relative to income than worker B 
B) has the same taste for job safety relative to income than worker B 
C) has a stronger taste for income relative to job safety than worker B 
D) has a lower skill level than worker B

Question 8

"The high psychic costs of leaving friends and family deter migration in response to wage differentials." This statement reflects the existence of:

Accepted Answer

A) geographic immobilities 
B) sociological immobilities 
C) institutional immobilities 
D) wage immobilities

Question 9

All else equal,large firms tend to pay higher wages.This may be explained by all of the following,except:

Accepted Answer

A) large firms may be more bureaucratic and a less pleasant place to work 
B) large firms are more likely to be unionized 
C) workers at large firms are more highly specialized,requiring more on-the-job training 
D) large firms are more likely to discriminate against women and minorities

Question 10

refer to the following diagram

-The shape of the worker's indifference curves-I1,I2,and I3-indicates that:

Accepted Answer

A) the worker faces a constant trade-off between job safety and wages 
B) for each successive reduction in job safety,greater increases in wages are required to maintain the same utility 
C) for each successive reduction in job safety,smaller increases in wages are required to maintain the same level of utility 
D) for each successive reduction in job safety,smaller reductions in wages are required to maintain the same utility

Question 11

People who receive relatively high pay also tend to work in a relatively desirable work environment.This is probably because:

Accepted Answer

A) employers have imperfect information 
B) highly paid and poorly paid workers are in noncompeting groups 
C) firms with desirable working conditions are operating off their normal isoprofit curves 
D) the differential required to compensate for high skill more than offsets the differential required for poor working conditions

Question 12

Fringe benefit packages differ substantially from one firm to the next because:

Accepted Answer

A) labor market information is costless 
B) adjustment periods tend to be short 
C) worker mobility costs are low 
D) firms may structure their fringe benefit packages to attract specific types of workers

Question 13

refer to the following diagram

-The highest level of utility the worker can possibly achieve is:

Accepted Answer

A) I1,if P is a normal-profit isoprofit curve 
B) I2,if P is a normal-profit isoprofit curve 
C) I1,if P represents a positive economic profit 
D) I3,if P is a normal-profit isoprofit curve

Question 14

Heterogeneous jobs are those that:

Accepted Answer

A) pay identical wages 
B) have differing nonwage attributes 
C) have identical nonwage attributes 
D) require no special skill

Question 15

Research by Krueger and Allen suggests that a substantial proportion of the increase in the college wage premium in the 1980s and 1990s can be explained by:

Accepted Answer

A) increased college enrollment by men 
B) increased college enrollment by women 
C) increased immigration rates 
D) skill-biased technological change

Question 16

refer to the following 
-Suppose that all other nonwage aspects of the jobs in these two markets are identical.We would expect labor supply in B to increase if:

Accepted Answer

A) the probability of job loss rises in B 
B) earnings are more variable in A 
C) job safety improves in A 
D) there are better prospects for advancement in A

Question 17

Lower-paid workers often seem to have less desirable working conditions as well because:

Accepted Answer

A) lower-paid workers tend to have proportionately greater fringe benefits. 
B) employers discriminate against unskilled workers 
C) the compensating differential for skill often outweighs the compensating differential for poor working conditions 
D) the compensating differential for poor working conditions often outweighs the compensating differential for skill

Question 18

According to research by Kostiuk,"shift work":

Accepted Answer

A) is relatively rare because such workers do not earn a compensating wage differential 
B) is more common than generally understood because such workers do not earn a compensating wage differential 
C) provides a greater wage premium for highly educated workers than for less educated workers 
D) provides a greater wage premium for less educated workers than for highly educated workers

Question 19

refer to the following 
-Consider a worker who faces a trade-off between higher wages and a more relaxed work environment as shown in the diagram.A worker whose indifference curves are relatively steep:

Accepted Answer

A) places a relatively high value on additional informality on the job 
B) will tend to work at a firm with a relatively informal environment,like firm X 
C) will not willingly sacrifice informality for higher wages 
D) does not place a relatively high value on additional informality on the job

Question 20

An example of a sociological immobility is:

Accepted Answer

A) ties to family and friends prevent workers from moving to a region with relatively high wages 
B) craft unions limit the access of nonunion workers to apprenticeship positions 
C) state governments require workers in many jobs to obtain a license 
D) the so-called "glass ceiling" (a form of discrimination)prevents women from moving into certain high-paying managerial jobs

Exam 8: The Wage Structure

Compared to present-oriented people,individuals who are more future-oriented tend to have _ discount rates and consequently tend to obtain _ education and earnings: