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Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about


A) 12% more than women with a high school education.
B) 26% more than women with a high school education.
C) 42% more than women with a high school education.
D) 71% more than women with a high school education.

E) None of the above
F) A) and C)

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Discrimination is usually not a profit-maximizing strategy.

A) True
B) False

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Figure 19-2 Figure 19-2 -Refer to Figure 19-2.This figure depicts labor demand and supply in a nonunionized labor market.The original equilibrium is at point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then there will be an excess A) supply of 3,000 workers. B) demand of 7,000 workers. C) supply of 4,000 workers. D) supply of 7,000 workers. -Refer to Figure 19-2.This figure depicts labor demand and supply in a nonunionized labor market.The original equilibrium is at point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then there will be an excess


A) supply of 3,000 workers.
B) demand of 7,000 workers.
C) supply of 4,000 workers.
D) supply of 7,000 workers.

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

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Christy and Claudia are aspiring models.Talent scouts consider them to be similarly beautiful.Both enter a talent show.Claudia contracts food poisoning the night before the competition and withdraws.Christy wins the competition and signs a multi-million dollar contract.The differences in their earnings likely reflect


A) discrimination.
B) differences in human capital.
C) differences in signaling.
D) chance.

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

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It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

A) True
B) False

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Given that the median male is better paid than the median female,which of the following is a valid explanation for wage differences?


A) compensating differentials
B) differences in human capital
C) discrimination
D) All of the above can be a partial explanation.

E) None of the above
F) C) and D)

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In the signaling theory of education,


A) schooling itself does not lead to more productive workers.
B) chance plays more of a role than in the human-capital theory.
C) schooling enhances worker productivity.
D) compensating differentials do not matter.

E) All of the above
F) A) and B)

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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.

A) True
B) False

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First grade teachers who work in Lynn,Massachusetts's (a large,low income city north of Boston) public schools earn more than first grade teachers who work in private schools in more affluent communities north of Boston.Lynn teachers belong to a teachers' union.Which statement best explains the scenario described above?


A) Lynn school teachers receive a compensating differential because they work in a more difficult environment, and they receive higher than market equilibrium wages because they are members of a teachers' union.
B) Lynn school teachers receive a compensating differential because they work in a more difficult environment, but they do not receive higher than market equilibrium wages because they are members of a teachers' union.
C) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, but they do receive higher than market equilibrium wages because they are members of a teachers' union.
D) Lynn school teachers do not receive a compensating differential because they work in a more difficult environment, and they do not receive higher than market equilibrium wages because they are members of a teachers' union.

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

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Why is a plumber never likely to be as rich as a movie star?


A) Compensating differentials create a higher wage in the movie business.
B) There haven't been any significant technological advances in the plumbing industry.
C) Productivity levels are low in the plumbing industry due to low worker morale.
D) A plumber can provide his services to only a limited number of customers.

E) None of the above
F) B) and D)

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Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?


A) the theory of efficiency wages
B) the marginal-productivity theory
C) human-capital theory
D) signaling theory

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

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A

In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?


A) Governments regulate to resolve problems of discrimination.
B) Profit-maximizing firms that do not discriminate tend to replace firms that discriminate.
C) Wages paid to groups that are victimized by discrimination are eventually bid up to above-equilibrium levels.
D) Discrimination is usually the outcome of rational decision-making processes, and competitive markets produce rational outcomes.

E) All of the above
F) B) and C)

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Which of the following statements is correct?


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

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Which of the following variables related to a worker's wage are the most difficult to measure?


A) ability, effort, and chance
B) job characteristics, gender, and race
C) gender, race, and geographic location
D) years of schooling, age, and years of experience

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

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If men,on average,earn 20 percent more than women in a particular occupation,


A) this is clear evidence of discrimination.
B) some of this differential could be due to differences in educational levels.
C) some of this differential could be due to differences in human capital.
D) Both b and c are correct.

E) None of the above
F) B) and D)

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Economists who study labor markets have discovered that


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) A) and B)
F) None of the above

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D

In the signaling theory of education,


A) discrimination does not affect wage differentials.
B) schooling makes workers more productive in the long-run.
C) schooling makes workers more productive in the short-run.
D) the worker signals to the employer that he is a valuable employee because he was willing to spend time to get an education.

E) B) and C)
F) A) and D)

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Education and on-the-job training are sources of human capital.

A) True
B) False

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The fact that wage differentials continue to exist across different groups of workers leads economists to believe that


A) discrimination by customers is the most common type of economic discrimination.
B) differences in human capital and job characteristics must be important in explaining the differences in wages.
C) firms apparently are not profit maximizers.
D) the market has failed to properly allocate wages to different workers.

E) B) and D)
F) A) and D)

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B

If an older worker earns less than a younger worker for the same job,we have proof of age discrimination.

A) True
B) False

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