Question 1

Effective minimum-wage laws will most likely

Accepted Answer

A)  increase demand for labor.
B)  create a surplus of labor.
C)  increase incomes for all unskilled workers.
D)  decrease incomes for all unskilled workers.E) B) and C)
F) C) and D)

Question 2

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Accepted Answer

A)  has more experience.
B)  is willing to travel two weeks out of each month, whereas worker B will not travel more than three nights a month.
C)  has a special certification that directly relates to her job, whereas worker B does not.
D)  is a young blonde woman, whereas worker B is an older, gray-haired man.E) A) and D)
F) None of the above

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs, especially for those workers who deal with the public.

Accepted Answer

A) True 
 B)False

Question 5

Some economists are skeptical of the argument that employers are responsible for discriminatory wage differences. They argue that market economies provide a natural remedy to employer discrimination, and that remedy is

Accepted Answer

A)  social responsibility.
B)  the profit motive.
C)  fear of reprisal from groups that suffer from those wage differences.
D)  fear of reprisal from government in the form of prosecution.E) A) and B)
F) B) and C)

Question 6

The economic theory of labor markets suggests that wages are determined by labor supply and labor demand.

Accepted Answer

A) True 
 B)False

Question 7

Customer discrimination is illegal in the United States.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an example of customer discrimination?

Accepted Answer

A)  A foreign government prevents women from legally working as teachers.
B)  White theater goers prefer to watch movies with white stars rather than black stars.
C)  Customers prefer more experienced lawyers over less experienced ones.
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 9

Wages of doctors tend to be higher than wages of bankers. Which of the following is a compensating differential explaining the difference in wages?

Accepted Answer

A)  Doctors have the stress of being responsible for other peoples' lives while bankers do not.
B)  Doctors are on call to work nights and weekends, while bankers work traditional business hours.
C)  Doctors must pay for malpractice insurance in case they are sued for a mistake on the job.
D)  All of the above are compensating differentials.E) None of the above
F) A) and B)

Question 10

Economists who study labor markets have discovered that

Accepted Answer

A)  only about 5 percent of wage differences are related to chance.
B)  ability is not difficult to measure but is largely insignificant in explaining wage differences.
C)  work effort is difficult to measure but is not likely to contribute much to an explanation of wage differences.
D)  ability, effort, and chance are likely to be significant contributors to wage differences.E) B) and C)
F) A) and D)

Question 11

Figure 19-5 
-Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, what is the surplus of labor if a minimum wage of $8 per hour is imposed on this market?

Accepted Answer

A)  100
B)  200
C)  300
D)  400E) A) and B)
F) B) and C)

Question 12

The difference in wages that results from nonmonetary characteristics of different jobs is called the

Accepted Answer

compensati...

Question 13

A difference in wages that reflects differences in the nonpay features of two jobs is called

Accepted Answer

A)  a compensating differential.
B)  a wage adjustment.
C)  an efficiency wage.
D)  a minimum wage.E) None of the above
F) A) and B)

Question 14

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 gamesE) A) and B)
F) A) and C)

Question 15

Which of the following statements is not correct?

Accepted Answer

A)  Some firms pay wages that are above the equilibrium wage.
B)  Workers sometimes form labor unions to push their wages up.
C)  Wages never deviate from the balance of supply and demand in the market for labor.
D)  The federal government mandates that employers pay their workers at least as much as the minimum wage.E) C) and D)
F) B) and C)

Question 16

Labor unions will raise the quantity of labor demanded.

Accepted Answer

A) True 
 B)False

Question 17

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)  both skilled and unskilled labor will rise proportionately.
B)  skilled labor will fall and the demand for unskilled labor will rise.
C)  skilled labor will rise and the demand for unskilled labor will fall.
D)  both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.E) B) and D)
F) C) and D)

Question 18

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the

Accepted Answer

A)  higher-paying job has a compensating wage differential of $3 per hour.
B)  higher-paying job has a compensating wage differential of $25 per hour.
C)  higher-paying job is intrinsically more attractive than the lower-paying job.
D)  factory is discriminating against Sally because she is a woman.E) A) and B)
F) None of the above

Question 19

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) A) and B)
F) A) and C)

Question 20

According to the human-capital view, education

Accepted Answer

A)  has no effect on lifetime earnings.
B)  alters work ethic.
C)  enhances productivity.
D)  is an indicator of natural ability.E) A) and C)
F) All of the above

Exam 19: Earnings and Discrimination

Some economists are skeptical of the argument that employers are responsible for discriminatory wage differences. They argue that market economies provide a natural remedy to employer discrimination, and that remedy is

Correct AnswerverifiedShow Answer

A difference in wages that reflects differences in the nonpay features of two jobs is called

Correct AnswerverifiedShow Answer

Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because worker A

Correct AnswerverifiedShow Answer

One reason why better-looking workers may have higher earnings is that physical attractiveness may enhance a worker's productivity for certain jobs, especially for those workers who deal with the public.

Correct AnswerverifiedShow Answer

Which of the following is an example of customer discrimination?

Correct AnswerverifiedShow Answer

The difference in wages that results from nonmonetary characteristics of different jobs is called the

Correct Answerverifiedcompensati...View AnswerShow Answer

Effective minimum-wage laws will most likely

Correct AnswerverifiedShow Answer

Economists who study labor markets have discovered that

Correct AnswerverifiedShow Answer

Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, what is the surplus of labor if a minimum wage of $8 per hour is imposed on this market?

Correct AnswerverifiedShow Answer

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

Wages of doctors tend to be higher than wages of bankers. Which of the following is a compensating differential explaining the difference in wages?

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

Sally and Harry both work at the local factory producing cars. Sally earns $22 per hour working the day shift, and Harry earns $25 per hour working the night shift. Sally and Harry do the same job, have the same experience, and have the same level of education. This means that the

Correct AnswerverifiedShow Answer

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

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Which of the following statements is not correct?

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According to the human-capital view, education

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The economic theory of labor markets suggests that wages are determined by labor supply and labor demand.

Correct AnswerverifiedShow Answer

Labor unions will raise the quantity of labor demanded.

Correct AnswerverifiedShow Answer

Customer discrimination is illegal in the United States.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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