Question 1

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 2

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

Question 3

John is an Asian 23-year-old male, and Ken is an Asian 43-year-old male. Both John and Ken are economics majors, and they graduated from the same college with the same GPA - John in 2006 and Ken in 1986. John and Ken are both financial advisers at the same brokerage firm. John earns $52,000 a year, and Ken earns $88,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)   John has more human capital than Ken.
B)   John has less human capital than Ken.
C)   John has been discriminated against because he is young.
D)   Ken has been discriminated against because he is old.E) All of the above
F) B) and C)

Question 4

Which of the following examples best describes the signaling theory of education?

Accepted Answer

A)   The hiring manager offers a job to a recent college graduate because she is more beautiful than the rest of the applicants.
B)   The hiring manager offers a job to a recent college graduate because she is expected to be more productive than other applicants due to her educational attainment.
C)   The hiring manager offers a job to a recent college graduate because the hiring manager has a bias toward people with college degrees.
D)   The hiring manager offers a job to a recent college graduate because education is correlated with natural ability.E) B) and D)
F) All of the above

Question 5

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Accepted Answer

A)   race.
B)   level of education.
C)   attitudes toward risk.
D)   All of the above are forms of discrimination.E) None of the above
F) A) and B)

Question 6

Streetcar owners in the early 20th century were against segregation for profit maximizing reasons.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

Politicians often point to wage differentials as evidence of labor-market discrimination against ethnic minorities and women; however, economists argue against this approach because people differ in the amount of human capital they have and the kinds of work they are willing and able to do.

Accepted Answer

A) True 
 B)False

Question 9

Jake and Harry each have 130 hours of college credit from Impressive University. Each has 30 hours of economics. Jake has a bachelor's degree, while Harry is 3 credits short of required physical education classes and therefore does not have a degree. Each of them has one year of experience as a market analyst for ABC Company. Assuming that the physical education class would not enhance Harry's job performance, if Jake earns a higher salary than Harry, the ABC Company may subscribe to the

Accepted Answer

A)   human capital theory.
B)   discrimination theory.
C)   compensating differential theory.
D)   signaling theory.E) A) and B)
F) A) and C)

Question 10

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) A) and D)

Question 11

Which of the following is the most likely outcome of raising the minimum wage?

Accepted Answer

A)   an increase in both the quantity of labor supplied by workers and the quantity of labor demanded by firms
B)   an increase in the quantity of labor supplied by workers and a decrease in the quantity of labor demanded by firms
C)   a decrease in the quantity of labor supplied by workers and an increase in the quantity of labor demanded by firms
D)   a decrease in both the quantity of labor supplied by workers and the quantity of labor demanded by firmsE) All of the above
F) A) and B)

Question 12

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

Accepted Answer

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

Question 13

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Accepted Answer

A) True 
 B)False

Question 14

Figure 19-5 
-Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded 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) B) and D)
F) A) and C)

Question 15

For a "superstar" to emerge, it must be the case that

Accepted Answer

A)   it is possible to supply the good or service that the superstar produces at low cost to every customer.
B)   some customers are willing and able to pay large sums of money to enjoy the good or service provided by the superstar.
C)   the superstar has a natural monopoly on his or her good or service.
D)   the superstar can become sufficiently popular to earn income from advertisements.E) B) and C)
F) A) and D)

Question 16

Which of the following is not a consequence of above-equilibrium wages in a labor market?

Accepted Answer

A)   a surplus of labor
B)   unemployment
C)   more unionized jobs
D)   All of the above are consequences of above-equilibrium wages.E) B) and C)
F) C) and D)

Question 17

The competition experiment conducted by economists Muriel Niederle and Lise Vesterlund was consistent with the results of Terry Odean which were that

Accepted Answer

A)   men were better at math than women.
B)   men chose competition more because they were better at sports than women.
C)   men trade stocks excessively while women adopt a buy-and-hold strategy.
D)   streetcar companies were not in favor of segregation because it hurt their profits.E) C) and D)
F) None of the above

Question 18

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

Question 19

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) A) and D)
F) A) and C)

Question 20

Empirical evidence suggests that ability, effort, and chance are not likely to be significant contributors to wage differences.

Accepted Answer

A) True 
 B)False

Exam 19: Earnings and Discrimination

The competition experiment conducted by economists Muriel Niederle and Lise Vesterlund was consistent with the results of Terry Odean which were that

Correct Answer
verified

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

Correct Answer
verified

Empirical evidence suggests that ability, effort, and chance are not likely to be significant contributors to wage differences.

Correct Answer
verified

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Correct Answer
verified

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

Correct Answer
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Correct Answer
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The theory of efficiency wages asserts that

Correct Answer
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Correct Answer
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Politicians often point to wage differentials as evidence of labor-market discrimination against ethnic minorities and women; however, economists argue against this approach because people differ in the amount of human capital they have and the kinds of work they are willing and able to do.

Correct Answer
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Correct Answer
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Which of the following is the most likely outcome of raising the minimum wage?

Correct Answer
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Which of the following statements is correct?

Correct Answer
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The superstar phenomenon applies to

Correct Answer
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Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded of labor if a minimum wage of $8 per hour is imposed on this market?

Correct Answer
verified

Which of the following is not a consequence of above-equilibrium wages in a labor market?

Correct Answer
verified

For a "superstar" to emerge, it must be the case that

Correct Answer
verified

Which of the following examples best describes the signaling theory of education?

Correct Answer
verified

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

Correct Answer
verified

Streetcar owners in the early 20th century were against segregation for profit maximizing reasons.

Correct Answer
verified

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Correct Answer
verified

Exam 19: Earnings and Discrimination

The competition experiment conducted by economists Muriel Niederle and Lise Vesterlund was consistent with the results of Terry Odean which were that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Empirical evidence suggests that ability, effort, and chance are not likely to be significant contributors to wage differences.

Correct AnswerverifiedShow Answer

The fact that doctors are paid more than economics professors is an example of a compensating differential.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The theory of efficiency wages asserts that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Politicians often point to wage differentials as evidence of labor-market discrimination against ethnic minorities and women; however, economists argue against this approach because people differ in the amount of human capital they have and the kinds of work they are willing and able to do.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the most likely outcome of raising the minimum wage?

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The superstar phenomenon applies to

Correct AnswerverifiedShow Answer

Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what is the quantity demanded of labor if a minimum wage of $8 per hour is imposed on this market?

Correct AnswerverifiedShow Answer

Which of the following is not a consequence of above-equilibrium wages in a labor market?

Correct AnswerverifiedShow Answer

For a "superstar" to emerge, it must be the case that

Correct AnswerverifiedShow Answer

Which of the following examples best describes the signaling theory of education?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Streetcar owners in the early 20th century were against segregation for profit maximizing reasons.

Correct AnswerverifiedShow Answer

Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by

Correct AnswerverifiedShow Answer

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