Question 1

Which of the following is an example of a compensating differential?

Accepted Answer

A)   Two workers with different levels of on-the-job training earn different salaries.
B)   Two workers whose jobs entail different working conditions earn different salaries.
C)   Two workers whose jobs require different levels of technical expertise earn different salaries.
D)   Two workers with different levels of natural ability earn different salaries.E) C) and D)
F) None of the above

Question 2

Studies show that white women earn approximately 25% less than white men. From this data alone, one should not conclude that white women are victims of discrimination. Name two other factors that could explain the difference in wages.

Accepted Answer

Differences in human...

Question 3

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.E) All of the above
F) C) and D)

Question 4

Public school teachers are known to have low wages. Which of the following would push the teachers' wages lower?

Accepted Answer

A)   Public school teacher jobs are difficult.
B)   Public school teachers are required to be college graduates.
C)   Public school teachers belong to a union.
D)   Teaching in a public school has a high element of personal satisfaction.E) A) and D)
F) A) and C)

Question 5

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.E) B) and C)
F) B) and D)

Question 6

Jill is the best eye surgeon in town, and she earns $350,000 a year. Susan is an average eye surgeon in town, and she earns $100,000 a year. Jill's skills as a surgeon

Accepted Answer

A)   are valued more by the market relative to Susan's and that explains why her income is higher than Susan's.
B)   are valued less by the market relative to Susan's and that explains why her income is higher than Susan's.
C)   are valued less by the market relative to Susan's and that explains why her income is lower than Susan's.
D)   are more expensive because she receives a compensating differential.E) None of the above
F) A) and D)

Question 7

A recent law school graduate is considering two offers to practice law, one in New York and one in Illinois. The New York bar exam is very difficult to pass compared with Illinois's exam. Assuming all other things equal, the attorney would expect

Accepted Answer

A)   to be unable to predict the wage difference between Illinois and New York.
B)   to make a lower wage in New York.
C)   to make a lower wage in Illinois.
D)   wages in Illinois and New York to be identical.E) All of the above
F) B) and D)

Question 8

A recent study of the determinants of wages for clerical staff at a state university found that years of schooling, years of experience, age and job characteristics only explained about one-half of the difference in wages. Describe other factors that may be important in explaining wages differences for clerical staff.

Accepted Answer

Other factors may include job ...

Question 9

The changing gap in wages between unskilled and skilled workers is most likely related to a larger increase in demand for unskilled occupations relative to skilled occupations.

Accepted Answer

A) True 
 B)False

Question 10

Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because

Accepted Answer

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

Question 11

The theory of efficiency wages asserts that

Accepted Answer

A)   employers set wages based on each employee's productivity.
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) B) and C)
F) A) and D)

Question 12

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, we would expect Tom not to offer which of the following company benefits?

Accepted Answer

A)   employer-matching 401k retirement plan contributions
B)   tuition reimbursement for workers who take college classes
C)   on-site day care
D)   health insuranceE) B) and D)
F) B) and C)

Question 13

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.E) None of the above
F) B) and C)

Question 14

If the signaling theory of education is correct,

Accepted Answer

A)   workers with more years of formal schooling will earn less than workers with fewer years of formal schooling.
B)   additional years of formal schooling do not increase a worker's productivity.
C)   workers with more years of formal schooling are less likely to be affected by ability, effort, and chance.
D)   men are more likely to earn more than women because men are more likely to have graduated from college.E) None of the above
F) A) and B)

Question 15

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

Accepted Answer

customer d...

Question 16

About what proportion of the variation of wages across workers is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?

Accepted Answer

About half. The othe...

Question 17

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

Accepted Answer

A)   a compensating differential.
B)   an inefficiency wage.
C)   the equilibrium difference.
D)   a union wage.E) A) and C)
F) A) and B)

Question 18

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Accepted Answer

A)   Every customer in the market wants to enjoy the good supplied by the best producer.
B)   Technology makes it possible for the best producer to supply every customer at low cost.
C)   Customers are willing to pay more for entertainment than other services.
D)   Both a and b are correct.E) A) and D)
F) A) and C)

Question 19

Maria has just graduated from Princeton University and has applied for a job at a major bank. The bank decides to offer Maria a job because they perceive her degree from Princeton to be an indication of her high-ability. To which of the following views of education does the bank subscribe?

Accepted Answer

A)   signaling
B)   human-capital view
C)   superstar phenomenon
D)   benefits of beautyE) All of the above
F) C) and D)

Question 20

The superstar phenomenon applies to

Accepted Answer

A)   all famous people equally.
B)   any type of worker who has high productivity.
C)   markets where technology allows the best producer to supply every customer at a low cost.
D)   markets where a small group of workers produce a much higher quality product than the average worker.E) C) and D)
F) A) and D)

Exam 19: Earnings and Discrimination

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

Correct Answer
verified

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

Correct Answer
verified
customer d...
View Answer

The theory of efficiency wages asserts that

Correct Answer
verified

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, we would expect Tom not to offer which of the following company benefits?

Correct Answer
verified

Maria has just graduated from Princeton University and has applied for a job at a major bank. The bank decides to offer Maria a job because they perceive her degree from Princeton to be an indication of her high-ability. To which of the following views of education does the bank subscribe?

Correct Answer
verified

About what proportion of the variation of wages across workers is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?

Correct Answer
verified
About half. The othe...
View Answer

The changing gap in wages between unskilled and skilled workers is most likely related to a larger increase in demand for unskilled occupations relative to skilled occupations.

Correct Answer
verified

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

Correct Answer
verified

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

Correct Answer
verified

Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because

Correct Answer
verified

Studies show that white women earn approximately 25% less than white men. From this data alone, one should not conclude that white women are victims of discrimination. Name two other factors that could explain the difference in wages.

Correct Answer
verified
Differences in human...
View Answer

If the signaling theory of education is correct,

Correct Answer
verified

Which of the following is an example of a compensating differential?

Correct Answer
verified

Jill is the best eye surgeon in town, and she earns $350,000 a year. Susan is an average eye surgeon in town, and she earns $100,000 a year. Jill's skills as a surgeon

Correct Answer
verified

A recent law school graduate is considering two offers to practice law, one in New York and one in Illinois. The New York bar exam is very difficult to pass compared with Illinois's exam. Assuming all other things equal, the attorney would expect

Correct Answer
verified

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Correct Answer
verified

Correct Answer
verified
Other factors may include job ...
View Answer

The superstar phenomenon applies to

Correct Answer
verified

Public school teachers are known to have low wages. Which of the following would push the teachers' wages lower?

Correct Answer
verified

Correct Answer
verified

Exam 19: Earnings and Discrimination

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

Correct AnswerverifiedShow Answer

Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

Correct Answerverifiedcustomer d...View AnswerShow Answer

The theory of efficiency wages asserts that

Correct AnswerverifiedShow Answer

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, we would expect Tom not to offer which of the following company benefits?

Correct AnswerverifiedShow Answer

Maria has just graduated from Princeton University and has applied for a job at a major bank. The bank decides to offer Maria a job because they perceive her degree from Princeton to be an indication of her high-ability. To which of the following views of education does the bank subscribe?

Correct AnswerverifiedShow Answer

About what proportion of the variation of wages across workers is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?

Correct AnswerverifiedAbout half. The othe...View AnswerShow Answer

The changing gap in wages between unskilled and skilled workers is most likely related to a larger increase in demand for unskilled occupations relative to skilled occupations.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A difference in wages that arises to offset the nonmonetary characteristics of different jobs is known as

Correct AnswerverifiedShow Answer

Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because

Correct AnswerverifiedShow Answer

Studies show that white women earn approximately 25% less than white men. From this data alone, one should not conclude that white women are victims of discrimination. Name two other factors that could explain the difference in wages.

Correct AnswerverifiedDifferences in human...View AnswerShow Answer

If the signaling theory of education is correct,

Correct AnswerverifiedShow Answer

Which of the following is an example of a compensating differential?

Correct AnswerverifiedShow Answer

Jill is the best eye surgeon in town, and she earns $350,000 a year. Susan is an average eye surgeon in town, and she earns $100,000 a year. Jill's skills as a surgeon

Correct AnswerverifiedShow Answer

A recent law school graduate is considering two offers to practice law, one in New York and one in Illinois. The New York bar exam is very difficult to pass compared with Illinois's exam. Assuming all other things equal, the attorney would expect

Correct AnswerverifiedShow Answer

Why can superstar athletes and movie stars earn multimillion dollar salaries but superstar electricians and professors cannot?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedOther factors may include job ...View AnswerShow Answer

The superstar phenomenon applies to

Correct AnswerverifiedShow Answer

Public school teachers are known to have low wages. Which of the following would push the teachers' wages lower?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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customer d...
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About half. The othe...
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Differences in human...
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Other factors may include job ...
View Answer

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