Question 1

Economists are skeptical that discrimination is employer driven because (i) 	employers are not really interested in maximizing profit.
(ii) 	holding productivity constant,a profit-maximizing employer will hire the cheapest labor available.
(iii) 	discrimination cannot exist in markets.

Accepted Answer

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

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Compensating wage differentials reflect different skills of workers.
B)  Discrimination by employers affects the marginal productivity of workers.
C)  The signaling theory of education suggests that schooling does not affect worker productivity.
D)  The superstar phenomenon explains why more talented entertainers earn more than less talented entertainers.E) B) and C)
F) B) and D)

Question 3

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

Accepted Answer

A)  signaling theory
B)  human-capital theory
C)  physical-capital theory
D)  the efficient-market hypothesisE) B) and D)
F) B) and C)

Question 4

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Accepted Answer

A)  architects' services are not as highly valued by society as are the services of athletes and actors.
B)  only physically attractive people can become superstars, and it would be a coincidence if a highly talented architect were also physically attractive.
C)  government regulations place restrictions on the incomes of architects, but there are no such restrictions on the incomes of athletes or actors.
D)  it is impossible for an architect to supply his or her services at low cost to every customer.E) B) and C)
F) All of the above

Question 5

Scenario 19-4
Assume that the labor market for barbers is competitive and that it is differentiated into two groups: barbers who are bald (or going bald)  and those who have a full head of hair. Assume that the barbers in this market have identical hair-cutting ability, regardless of whether they are bald or not. Currently the equilibrium wage in the bald barber market is lower than that in the nonbald market. Further assume that the market for haircuts is competitive.
-Refer to Scenario 19-4.Competition in the market for haircuts is consistent with which of the following statements?

Accepted Answer

A)  Firms hiring nonbald barbers will have a cost advantage, leading to an increase in the demand for nonbald barbers.
B)  All firms that hire only bald barbers will go out of business.
C)  Firms hiring bald barbers will enter the market, increasing the demand for bald barbers.
D)  Firms hiring nonbald barbers will enter the market, increasing the demand for nonbald barbers.E) A) and B)
F) A) and C)

Question 6

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Accepted Answer

A)  will survive if they increase production and garner a larger market share.
B)  will eventually earn zero economic profits.
C)  will survive as long as they are willing to have a smaller market share.
D)  are likely to eventually go out of business.E) B) and D)
F) B) and C)

Question 7

The theory of efficiency wages asserts that

Accepted Answer

A)  unions are often successful in forcing employers to pay higher wages.
B)  employers strive to hold wages below equilibrium levels.
C)  employers may find it profitable to pay above-equilibrium wages.
D)  efficient workers actually earn lower wages than those earned by inefficient workers.E) C) and D)
F) None of the above

Question 8

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Accepted Answer

A) True 
 B)False

Question 9

Some economists suggest that international trade has led to an expanding wage gap between high-skill and low-skill workers in the United States.

Accepted Answer

A) True 
 B)False

Question 10

According to the signaling theory of education,better-educated workers (i) 	signal their higher marginal productivities.
(ii) 	are likely to be high-ability workers.
(iii) 	are in scarce supply in less developed countries.

Accepted Answer

A)  (i)  and (ii)  only
B)  (i)  and (iii)  only
C)  (ii)  only
D)  (i) , (ii) , and (iii) E) All of the above
F) A) and B)

Question 11

Expenditures on human capital

Accepted Answer

A)  reflect an expectation of some future return on the investment.
B)  are generally embodied in a specific individual.
C)  reflect an investment of resources today to raise productivity in the future.
D)  All of the above are correct.E) None of the above
F) C) and D) D

Question 12

When comparing average wages for black and white workers in the United States,wages paid to black workers have been about 20 percent less than those paid to white workers.

Accepted Answer

A) True 
 B)False

Question 13

The term "compensating differential" refers to

Accepted Answer

A)  the fact that workers who do similar work should be paid the same wage.
B)  the fact that some workers live further from their jobs than do other workers.
C)  a wage difference that is distinguishable on the basis of monetary characteristics.
D)  a wage difference that arises from nonmonetary characteristics of different jobs.E) All of the above
F) A) and B)

Question 14

According to evidence provided by the U.S.government,the median black

Accepted Answer

A)  woman is paid roughly the same as the median white woman.
B)  woman is paid roughly the same as the median black man.
C)  man is paid 22 percent less than the median white man.
D)  All of the above are correct.E) All of the above
F) A) and C)

Question 15

The fact that some schools direct females away from science and math courses is evidence of

Accepted Answer

A)  labor-market discrimination.
B)  discrimination that occurs prior to people entering the labor market.
C)  discrimination by customers.
D)  discrimination by employers.E) B) and D)
F) A) and D) B

Question 16

If unskilled labor is relatively plentiful and cheap in many foreign countries,then as the United States expands its trade with these foreign countries,the domestic demand for

Accepted Answer

A)  unskilled labor will rise and skilled labor will fall.
B)  skilled labor will rise and unskilled labor will fall.
C)  both skilled and unskilled labor will rise proportionately.
D)  both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.E) B) and C)
F) None of the above

Question 17

Public school teachers are known to have low wages.This is probably because

Accepted Answer

A)  public school teacher jobs are easy.
B)  public school teachers are required to be college graduates.
C)  public school teachers need very little money to live.
D)  many people perceive the job of public school teacher to have a high element of personal satisfaction.E) C) and D)
F) B) and D)

Question 18

The wage difference between jobs that require education and those that don't

Accepted Answer

A)  is not likely to be related to productivity differences.
B)  is a barrier to obtaining an education.
C)  does not affect the supply of workers in the different labor markets.
D)  encourages workers to bear the cost of acquiring education.E) A) and B)
F) A) and C)

Question 19

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Accepted Answer

A)  the theory of compensating differentials
B)  the efficient-market hypothesis
C)  human-capital theory
D)  signaling theoryE) C) and D)
F) A) and D)

Question 20

Other things equal,when the supply of workers is scarce,one would predict that market wages would be

Accepted Answer

A)  relatively high.
B)  relatively low.
C)  determined solely by factors that affect demand.
D)  determined outside the domain of economic theory.E) C) and D)
F) B) and C)

Exam 19: Earnings and Discrimination

Economists are skeptical that discrimination is employer driven because (i) employers are not really interested in maximizing profit. (ii) holding productivity constant,a profit-maximizing employer will hire the cheapest labor available. (iii) discrimination cannot exist in markets.

Correct Answer
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B

Which of the following statements is correct?

Correct Answer
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Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

Correct Answer
verified

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Correct Answer
verified

Correct Answer
verified

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Correct Answer
verified

The theory of efficiency wages asserts that

Correct Answer
verified

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Correct Answer
verified

Some economists suggest that international trade has led to an expanding wage gap between high-skill and low-skill workers in the United States.

Correct Answer
verified

According to the signaling theory of education,better-educated workers (i) signal their higher marginal productivities. (ii) are likely to be high-ability workers. (iii) are in scarce supply in less developed countries.

Correct Answer
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Expenditures on human capital

Correct Answer
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D

When comparing average wages for black and white workers in the United States,wages paid to black workers have been about 20 percent less than those paid to white workers.

Correct Answer
verified

The term "compensating differential" refers to

Correct Answer
verified

According to evidence provided by the U.S.government,the median black

Correct Answer
verified

The fact that some schools direct females away from science and math courses is evidence of

Correct Answer
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B

If unskilled labor is relatively plentiful and cheap in many foreign countries,then as the United States expands its trade with these foreign countries,the domestic demand for

Correct Answer
verified

Public school teachers are known to have low wages.This is probably because

Correct Answer
verified

The wage difference between jobs that require education and those that don't

Correct Answer
verified

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Correct Answer
verified

Other things equal,when the supply of workers is scarce,one would predict that market wages would be

Correct Answer
verified

Exam 19: Earnings and Discrimination

Economists are skeptical that discrimination is employer driven because (i) employers are not really interested in maximizing profit. (ii) holding productivity constant,a profit-maximizing employer will hire the cheapest labor available. (iii) discrimination cannot exist in markets.

Correct AnswerverifiedB

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

Correct AnswerverifiedShow Answer

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Correct AnswerverifiedShow Answer

The theory of efficiency wages asserts that

Correct AnswerverifiedShow Answer

Economists would argue that the gender wage gap is narrowing because of efficiency wages.

Correct AnswerverifiedShow Answer

Some economists suggest that international trade has led to an expanding wage gap between high-skill and low-skill workers in the United States.

Correct AnswerverifiedShow Answer

According to the signaling theory of education,better-educated workers (i) signal their higher marginal productivities. (ii) are likely to be high-ability workers. (iii) are in scarce supply in less developed countries.

Correct AnswerverifiedShow Answer

Expenditures on human capital

Correct AnswerverifiedD

When comparing average wages for black and white workers in the United States,wages paid to black workers have been about 20 percent less than those paid to white workers.

Correct AnswerverifiedShow Answer

The term "compensating differential" refers to

Correct AnswerverifiedShow Answer

According to evidence provided by the U.S.government,the median black

Correct AnswerverifiedShow Answer

The fact that some schools direct females away from science and math courses is evidence of

Correct AnswerverifiedB

If unskilled labor is relatively plentiful and cheap in many foreign countries,then as the United States expands its trade with these foreign countries,the domestic demand for

Correct AnswerverifiedShow Answer

Public school teachers are known to have low wages.This is probably because

Correct AnswerverifiedShow Answer

The wage difference between jobs that require education and those that don't

Correct AnswerverifiedShow Answer

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

Correct AnswerverifiedShow Answer

Other things equal,when the supply of workers is scarce,one would predict that market wages would be

Correct AnswerverifiedShow Answer

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B

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D

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B

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