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Exam 19: Earnings and Discrimination

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Question 81

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Suppose that an employer can hire workers with straight hair and workers with curly hair. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by hiring only workers with straight hair?

A) The employer will be just as efficient as a nondiscriminating employer.
B) The employer will face higher costs than firms that focus only on maximizing profits.
C) The employer will immediately go out of business because discrimination is illegal.
D) The employer will face union strikes.

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

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Question 82

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Labor unions will raise the quantity of labor demanded.

A) True
B) False

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Question 83

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The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests

Cheryl is a professor at a local university. She hired a student from the university to babysit for her children and paid the student a wage higher than the typical wage paid to babysitters in her area to ensure the babysitter's reliability and that attention is paid to her children. What is the name for this above-equilibrium wage?

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

A group of firms working together and acting as a supplier of a product is called a cartel. A group of employees working together and acting as a single supplier of labor is called a

According to the signaling view, education

Figure 19-7 ​ ​ -Refer to Figure 19-7. Given demand, D1, and supply, S2, how many fewer people are employed if a minimum wage of $8 per hour is imposed on this market as compared to allowing wages to adjust to balance labor demand and labor supply?

If the signaling theory of education is correct,

The statement that "the rich get richer, and the poor get poorer" is supported by evidence of an expanding wage gap between high-skill and low-skill workers.

Compensating differentials are differences in wages related to the characteristics of a job.

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. If consumers do not discriminate between bald barbers and barbers with hair, then

A computer is an example of human capital.

It is illegal in the United States for firms to pay different employees different wages for doing the same job.

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

Which theory states that education is correlated with natural ability?

When the supply of workers is plentiful, one would predict that market wages would be

Noah and Alyssa have 130 hours of college credit each from Impressive University. Each has 30 hours of economics. Noah has a bachelor's degree, whereas Alyssa is three credits short of required history 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 history class would not enhance Alyssa's job performance, if Noah earns a higher salary than Alyssa, the ABC Company may subscribe to the

Explain the role of job experience in explaining the differences between the average wages of men and women.

All differences in wages that are not accounted for by differences in human-capital investment are likely to be a result of discrimination.