Question 1

The theory of efficiency wages suggests that firms may pay above-equilibrium wages

Accepted Answer

A)   to reduce employee turnover.
B)   to prevent unions from recruiting members.
C)   to reduce the need for minimum wage laws.
D)   to increase the demand for better-skilled workers.E) All of the above
F) C) and D)

Question 2

Daryn and Nick work for two different companies, but each performs the same job working on a loading dock.
Daryn, however, earns a higher salary than his friend Nick The difference in salary could illustrate union wages if
Daryn's annual salary is covered by a collective bargaining agreement and Nick's is not.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is not correct?

Accepted Answer

A)   Competitive markets tend to limit the impact of discrimination on wages.
B)   Differences in earnings of whites and blacks or men and women provide clear evidence of discrimination.
C)   Some differences in earnings are attributable to discrimination based on race, sex, or other factors.
D)   Profit-maximizing behavior can reduce discriminatory wage differentials.E) B) and C)
F) A) and B)

Question 4

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

Question 5

People are willing to invest in human capital because

Accepted Answer

A)   the demand for skilled labor is higher than for unskilled labor.
B)   it increases the marginal product of their labor.
C)   firms are willing to pay more for more productive workers.
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 6

Which of the following explains why soccer players make millions of dollars in Europe but do not in the United States?

Accepted Answer

A)   discriminatory rules established by the government
B)   compensating wage differentials for living in Europe
C)   discriminatory preferences on the part of US sports fans for other sports
D)   efficiency wages paid to European players to enhance on-field performanceE) All of the above
F) A) and B)

Question 7

Expenditures on human capital

Accepted Answer

A)   reflect an expectation of some future return on the investment.
B)   are generally embodied in a specific individual.
C)   reflect an investment of resources today to raise productivity in the future.
D)   All of the above are correct.E) A) and C)
F) A) and B)

Question 8

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

Question 9

Figure 19-3
The manufacturing labor market. 
-Refer to Figure 19-3. Suppose the manufacturing labor market, which is non-unionized, is in equilibrium at a wage equal to $25. Suppose now that the AFL-CIO (a labor organization)  organizes the workers in the manufacturing market and negotiates a wage of $30 per hour. Because of the union,

Accepted Answer

A)   80 people who were once employed are now unemployed.
B)   40 people who were once employed are now unemployed.
C)   80 people who were once unemployed are now employed.
D)   40 people who were once unemployed are now employed.E) B) and C)
F) A) and C)

Question 10

How does the theory of efficiency wages explain above-equilibrium wages?

Accepted Answer

A)   Employers are forced by competition to pay higher wages in efficient markets.
B)   Employers give their workers a higher wage in the hope that it will lead to increased productivity.
C)   Workers get higher wages when they prove they are increasing their productivity.
D)   Workers demand higher wages to compensate for poor fringe benefits.E) A) and B)
F) A) and C)

Question 11

The accumulation of investments in people is called

Accepted Answer

The answer of The accumulation of investments in people is...

Question 12

When discrimination occurs as a result of employer prejudice, discriminating firms do not maximize profits.

Accepted Answer

A) True 
 B)False

Question 13

Explain why the following situation is likely to persist: soccer players in Europe are the highest paid athletes and in the US they are among the lowest paid athletes.

Accepted Answer

Consumers use personal preferences when ...

Question 14

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Accepted Answer

A)   "We encourage our employees to enroll in night classes to improve their on­the­job productivity."
B)   "We encourage our employees to participate in online seminars to learn new skills."
C)   "We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs."
D)   "When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow­through to finish what they start."E) A) and C)
F) A) and D)

Question 15

Why do college graduates earn more in wages than workers with only a high school diploma?

Accepted Answer

They have ...

Question 16

Jake and Zach are identical twins who attended grammar school through college together. Jake took a job as an engineer who does not have to travel out of the state. Zach took a job as an engineer who must travel out of state once a week. Jake earns $125,000 a year, and Zach earns $155,000 a year. Select the best explanation for this wage difference.

Accepted Answer

A)   Zach puts in less effort than Jake.
B)   Zach has less human capital than Jake.
C)   Zach receives a higher wage to compensate for the disagreeable nature of business travel.
D)   Jake's lower salary supports the signaling theory of education.E) All of the above
F) A) and B)

Question 17

Dr. Benson is regarded as, by far, the best dentist in his part of the country, yet his income is not significantly higher than the average income for a dentist in his area. In contrast, Bo Johnson, the best baseball player in that region, earns five times the average salary of all baseball players. The most likely explanation is that

Accepted Answer

A)   the widespread perception that Dr. Benson is a great dentist is, in fact, incorrect.
B)   the baseball players' union is more powerful than the professional association of dentists.
C)   Bo Johnson, unlike Dr. Benson, can provide his services to millions of people simultaneously.
D)   chance plays a role in determining people's incomes, resulting in earnings discrepancies that are hard to explain or justify.E) All of the above
F) A) and B)

Question 18

If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that

Accepted Answer

A)   the theory of efficiency wages holds true for that market.
B)   there is a powerful labor union representing workers in that market.
C)   workers are largely unskilled and/or inexperienced and minimum-wage laws are effectively holding wages up in that market.
D)   All of the above are correct.E) A) and B)
F) B) and D)

Question 19

Which of the following statements is not correct?

Accepted Answer

A)   If a firm discriminates by paying short workers less than tall workers, the firm may be able to compete in the market if the firm's customers also prefer taller workers to shorter workers.
B)   If the government passes regulations that prevent shorter workers from working in higher paying jobs, taller workers may continue to earn higher wages than shorter workers.
C)   Government regulation that prohibits discrimination is economically necessary because market forces support discrimination.
D)   Competitive markets will eliminate discrimination in wages over time unless customer preferences also reflect discrimination and/or government intervention promotes discrimination.E) A) and B)
F) B) and D)

Question 20

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

Accepted Answer

A)   both skilled and unskilled labor will rise proportionately.
B)   skilled labor will fall and the demand for unskilled labor will rise.
C)   skilled labor will rise and the demand for unskilled labor will fall.
D)   both skilled and unskilled labor will be unaffected, assuming no barriers to free trade.E) All of the above
F) B) and C)

Exam 19: Earnings and Discrimination

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
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How does the theory of efficiency wages explain above-equilibrium wages?

Correct Answer
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Correct Answer
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Which of the following statements is not correct?

Correct Answer
verified

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

Correct Answer
verified

Explain why the following situation is likely to persist: soccer players in Europe are the highest paid athletes and in the US they are among the lowest paid athletes.

Correct Answer
verified
Consumers use personal preferences when ...
View Answer

Expenditures on human capital

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

Correct Answer
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Why do college graduates earn more in wages than workers with only a high school diploma?

Correct Answer
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They have ...
View Answer

Correct Answer
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If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that

Correct Answer
verified

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Correct Answer
verified

The accumulation of investments in people is called

Correct Answer
verified

Which of the following explains why soccer players make millions of dollars in Europe but do not in the United States?

Correct Answer
verified

The theory of efficiency wages suggests that firms may pay above-equilibrium wages

Correct Answer
verified

People are willing to invest in human capital because

Correct Answer
verified

When discrimination occurs as a result of employer prejudice, discriminating firms do not maximize profits.

Correct Answer
verified

Which of the following statements is not correct?

Correct Answer
verified

Correct Answer
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Correct Answer
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Exam 19: Earnings and Discrimination

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

How does the theory of efficiency wages explain above-equilibrium wages?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

If unskilled labor is relatively plentiful and cheap in many foreign countries, then as the United States expands its trade with these foreign countries, the domestic demand for

Correct AnswerverifiedShow Answer

Explain why the following situation is likely to persist: soccer players in Europe are the highest paid athletes and in the US they are among the lowest paid athletes.

Correct AnswerverifiedConsumers use personal preferences when ...View AnswerShow Answer

Expenditures on human capital

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Why do college graduates earn more in wages than workers with only a high school diploma?

Correct AnswerverifiedThey have ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

If we were to observe above-equilibrium wages in a particular labor market, then a possible explanation might be that

Correct AnswerverifiedShow Answer

Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?

Correct AnswerverifiedShow Answer

The accumulation of investments in people is called

Correct AnswerverifiedShow Answer

Which of the following explains why soccer players make millions of dollars in Europe but do not in the United States?

Correct AnswerverifiedShow Answer

The theory of efficiency wages suggests that firms may pay above-equilibrium wages

Correct AnswerverifiedShow Answer

People are willing to invest in human capital because

Correct AnswerverifiedShow Answer

When discrimination occurs as a result of employer prejudice, discriminating firms do not maximize profits.

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Consumers use personal preferences when ...
View Answer

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They have ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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