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Exam 19: Earnings and Discrimination

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Question 181

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Callie has just graduated from Hairs-R-Us Beauty School with a license to cut hair. She can earn $15 an hour styling hair at the local hair salon or $20 an hour styling hair at the local funeral home. The higher wage offered by the funeral home is an example of

A) a human capital differential.
B) a compensating differential.
C) signaling theory.
D) the superstar phenomenon.

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

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Question 182

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A natural correction to employer discrimination in market economies is the

A) threat of judicial review.
B) profit motive.
C) political process.
D) union movement.

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

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Question 183

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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

In 1913, the Ford Motor Company decided to pay its employees $5 a day. This wage was significantly higher than what any other organization offered. Henry Ford believed that this wage would make his employees happier, increase their productivity, and lower employee turnover. Economists would say that Mr. Ford offered his employees

Efficiency wages will raise the quantity of labor supplied to the market.

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

Economists generally agree that

People are willing to invest in human capital because

Figure 19-6 -Refer to Figure 19-6. Given demand, D1, and supply, S1, how much more do workers earn per hour if the supply curve shifts to S2?

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 $10. If a labor union subsequently establishes a union shop and negotiates an hourly wage of $12.50, then employment is

Many studies of wage discrimination have been conducted on professional sports teams. This industry is easier to study than others because the professional teams have many objective measures of

Jay was just drafted by a professional baseball team, and was offered a record-breaking contract because of his potential. This is an example of

The theory of education that states firms use educational attainment as a way of sorting between high-ability and low-ability workers is called

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

Which of the following is the most important contributor to human capital?

It is argued that competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the potency of that natural remedy?

Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?

Adam and Bob are identical twins who attended grammar school through high school together. Adam got a job after high school, and Bob got a job after graduating from college. Adam earns $36,000 a year, and Bob earns $69,000 a year. Select the best explanation for this wage difference.

Scenario 19-6 Suppose that in the competitive market for auto repair, firms prefer to hire men rather than women. Assume that the women applying for positions have the same skills, experience, and work ethic as the men. As a result of this discrimination, the demand for women is lower than it otherwise would be. -Refer to Scenario 19-6. What conclusion can you draw about women's wages compared to men's wages in this industry?

A compensating differential refers to a difference in wages that arises from nonmonetary characteristics.