Question 1

Scenario 19-5
Billy works for the local piano moving company part-time after school. Billy has worked for the company for two years but still hasn't received a wage increase, even though newer employees have received raises. Billy has threatened his employer with a lawsuit if he doesn't get a raise in the next few weeks. Billy believes he is a victim of labor-market discrimination.
-Refer to Scenario 19-5.Why might an economist be skeptical of Billy's discrimination complaint?

Accepted Answer

A)   Through antitrust laws, discriminating firms can be penalized with large fees.
B)   In a competitive market, employers pay employees based on their value to the firm.
C)   Discrimination leads to profit maximization.
D)   Only cost minimizers practice discrimination.E) All of the above
F) A) and D)

Question 2

If an employer's behavior is supportive of the theory of efficiency wages,the employer would

Accepted Answer

A)   raise wages in an effort to increase worker effort.
B)   raise wages in an effort to increase worker turnover.
C)   decrease wages in an effort to increase worker effort.
D)   decrease wages in an effort to increase worker turnover.E) C) and D)
F) A) and C)

Question 3

Studies of discrimination in baseball suggest that black players

Accepted Answer

A)   suffered from discriminatory wage differentials several decades ago and those wage differentials persist today.
B)   suffered from discriminatory wage differentials several decades ago but those wage differentials have been eliminated.
C)   did not suffer from discriminatory wage differentials several decades ago but in recent years wage differentials have become evident.
D)   did not suffer from discriminatory wage differentials in the past and they do not suffer from wage differentials today.E) B) and C)
F) A) and B)

Question 4

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

Question 5

A union's major source of power is its

Accepted Answer

A)   high-profile leadership.
B)   ability to increase productivity.
C)   ability to threaten a strike.
D)   ability to deny employers the opportunity to bargain over wages.E) A) and B)
F) C) and D)

Question 6

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

Question 7

Hapland and Genoshia have just started to trade with each other.Hapland exports goods produced with skilled labor and imports goods made with unskilled labor from Genoshia.Over time,we would expect that the wages of skilled labor in Hapland will

Accepted Answer

A)   rise, and the wages of unskilled labor in Hapland will fall.
B)   fall, and the wages of unskilled labor in Hapland will rise.
C)   rise, and the wages of unskilled labor in Hapland will rise.
D)   fall, and the wages of unskilled labor in Hapland will fall.E) B) and D)
F) All of the above

Question 8

In recent years,the amount of international trade in which the United States engages has

Accepted Answer

A)   increased, altering the demand for skilled and unskilled labor.
B)   decreased a little, altering the demand for skilled and unskilled labor.
C)   decreased substantially, altering the demand for skilled and unskilled labor.
D)   remained fairly constant; thus, the demand for skilled and unskilled labor is unchanged.E) C) and D)
F) B) and C)

Question 9

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

Question 10

A compensation scheme that pays salespeople a percentage of the sales they make is attempting to reward

Accepted Answer

A)   work effort.
B)   loyalty to the firm.
C)   years of schooling.
D)   years of experience.E) B) and C)
F) A) and D)

Question 11

Scenario 19-1
Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp.
-Refer to Scenario 19-1.Ferris is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Ferris concludes that

Accepted Answer

A)   wages are unlikely to be affected by job requirements.
B)   since the lifeguard job would expose him to a threat of skin cancer, the wage will be low.
C)   if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise.
D)   if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise.E) C) and D)
F) A) and D)

Question 12

Which of the following is an economic explanation for the "beauty premium"?

Accepted Answer

A)   Employers pay very attractive women less than average-looking women because they believe them to be less intelligent.
B)   Employers pay above-average-looking men more than above-average-looking women.
C)   Employers pay above-average-looking women more than average-looking women because customers prefer to deal with better-looking women.
D)   Employers pay above-average-looking men more because they signal to the market that they are willing to spend more money on personal grooming, a sign of wealth and stability.E) None of the above
F) All of the above

Question 13

Profit-maximizing,competitive firms will not discriminate in the hiring of workers unless consumers exercise a preference for discrimination in product markets or governments mandate discrimination.

Accepted Answer

A) True 
 B)False

Question 14

If firms are competitive,then labor-market discrimination

Accepted Answer

A)   cannot exist in either the short run or the long run.
B)   will be more of a problem than if the market were monopolistic or imperfectly competitive.
C)   likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies.
D)   likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.E) B) and C)
F) All of the above

Question 15

Bill and Ted went to trade school at the same time.Each graduated with an associate's degree.They have received similar performance evaluations.Bill's employer is not a good business manager,and the bookkeeper embezzled money from the company.Because of the loss of funds,the employees did not receive raises last year.Ted's employer is a savvy business manager.If Ted has higher earnings than Bill,the difference is most likely a function of

Accepted Answer

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

Question 16

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Accepted Answer

A)   Good looks are an innate ability for some jobs, which results in higher productivity and higher wages.
B)   Good looks may be an indirect measure of other types of ability such as attention to detail.
C)   If better-looking people earn more than average-looking people, employers may be discriminating based on personal appearance.
D)   All of the above could explain the beauty premium.E) A) and B)
F) C) and D)

Question 17

Superstars earn high incomes due to their ability to satisfy the demands of millions of people at once.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following statements is not correct?

Accepted Answer

A)   Both the human capital theory and the signaling theory of education could explain why college graduates earn more than high school graduates.
B)   The signaling theory of education suggests that the ability to complete a college degree is correlated with the ability to perform well in the labor market.
C)   If the human capital theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages.
D)   If the signaling theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages.E) B) and C)
F) C) and D)

Question 19

According to proponents of the signaling theory of education,an increase in the education levels of all workers would

Accepted Answer

A)   increase workers' productivity and increase their wages.
B)   increase workers' productivity but leave their wages unaffected.
C)   leave workers' productivity unaffected but increase their wages.
D)   leave workers' productivity and wages unaffected.E) A) and B)
F) A) and C)

Question 20

Which of the following is not an example of efficiency wages?

Accepted Answer

A)   More productive workers are paid more to reflect their higher output.
B)   Higher wages induce higher output from workers.
C)   Better quality applicants apply for jobs that pay above-equilibrium wages.
D)   Workers are less likely to leave jobs that pay above-equilibrium wages.E) All of the above
F) A) and B)

Exam 19: Earnings and Discrimination.

Profit-maximizing,competitive firms will not discriminate in the hiring of workers unless consumers exercise a preference for discrimination in product markets or governments mandate discrimination.

Correct Answer
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Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Correct Answer
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Correct Answer
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Superstars earn high incomes due to their ability to satisfy the demands of millions of people at once.

Correct Answer
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A union's major source of power is its

Correct Answer
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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

Hapland and Genoshia have just started to trade with each other.Hapland exports goods produced with skilled labor and imports goods made with unskilled labor from Genoshia.Over time,we would expect that the wages of skilled labor in Hapland will

Correct Answer
verified

In recent years,the amount of international trade in which the United States engages has

Correct Answer
verified

The term "compensating differential" refers to

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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If firms are competitive,then labor-market discrimination

Correct Answer
verified

If an employer's behavior is supportive of the theory of efficiency wages,the employer would

Correct Answer
verified

A compensation scheme that pays salespeople a percentage of the sales they make is attempting to reward

Correct Answer
verified

Studies of discrimination in baseball suggest that black players

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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 Answer
verified

According to proponents of the signaling theory of education,an increase in the education levels of all workers would

Correct Answer
verified

Which of the following is an economic explanation for the "beauty premium"?

Correct Answer
verified

Which of the following is not an example of efficiency wages?

Correct Answer
verified

Exam 19: Earnings and Discrimination.

Profit-maximizing,competitive firms will not discriminate in the hiring of workers unless consumers exercise a preference for discrimination in product markets or governments mandate discrimination.

Correct AnswerverifiedShow Answer

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Superstars earn high incomes due to their ability to satisfy the demands of millions of people at once.

Correct AnswerverifiedShow Answer

A union's major source of power is its

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

Hapland and Genoshia have just started to trade with each other.Hapland exports goods produced with skilled labor and imports goods made with unskilled labor from Genoshia.Over time,we would expect that the wages of skilled labor in Hapland will

Correct AnswerverifiedShow Answer

In recent years,the amount of international trade in which the United States engages has

Correct AnswerverifiedShow Answer

The term "compensating differential" refers to

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

If firms are competitive,then labor-market discrimination

Correct AnswerverifiedShow Answer

If an employer's behavior is supportive of the theory of efficiency wages,the employer would

Correct AnswerverifiedShow Answer

A compensation scheme that pays salespeople a percentage of the sales they make is attempting to reward

Correct AnswerverifiedShow Answer

Studies of discrimination in baseball suggest that black players

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

According to proponents of the signaling theory of education,an increase in the education levels of all workers would

Correct AnswerverifiedShow Answer

Which of the following is an economic explanation for the "beauty premium"?

Correct AnswerverifiedShow Answer

Which of the following is not an example of efficiency wages?

Correct AnswerverifiedShow Answer

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