Question 1

Evidence suggests that business owners are generally

Accepted Answer

A)   interested in profits only when discrimination is illegal.
B)   more interested in discrimination than in making a profit.
C)   unable to determine the link between discrimination and profitability.
D)   more interested in making a profit than in discriminating against a particular group.E) All of the above
F) A) and D)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A prestigious private high school requires each of its teachers to have a Ph.D.in the subject they teach.This requirement is likely to

Accepted Answer

A)   increase the supply of teachers to this school.
B)   increase wages for teachers at the private school relative to those at public schools.
C)   decrease the marginal product of teachers at the private school.
D)   All of the above are correct.E) B) and C)
F) A) and D)

Question 4

Which of the following statements correctly identifies the shift in employment in the manufacturing sector in the United States?

Accepted Answer

A)   In the 1940s,about 10 percent of American workers were employed in the manufacturing sector.
B)   Today,about 30 percent of American workers are employed in the manufacturing sector.
C)   The decline in jobs in the manufacturing sector mirrors a previous decline in employment in the U.S.agricultural sector.
D)   Both a and b are correct.E) All of the above
F) None of the above

Question 5

Jill is the best eye surgeon in town,and she earns $350,000 a year.Susan is an average eye surgeon in town,and she earns $100,000 a year.Jill's skills as a surgeon

Accepted Answer

A)   are valued more by the market relative to Susan's and that explains why her income is higher than Susan's.
B)   are valued less by the market relative to Susan's and that explains why her income is higher than Susan's.
C)   are valued less by the market relative to Susan's and that explains why her income is lower than Susan's.
D)   are more expensive because she receives a compensating differential.E) B) and D)
F) All of the above

Question 6

Which of the following factors affects the marginal productivity of a worker?

Accepted Answer

A)   Human capital.
B)   The worker's disposable income.
C)   Compensating wage differentials.
D)   Discrimination based on age,race,or gender.E) B) and D)
F) A) and C)

Question 7

Suppose that Philip is the best contractor in town,and he makes $400,000 a year.Suppose that Julia Roberts is the best and highest paid actress in Hollywood,and she makes $13 million per movie.Both are the best in their respective fields of work.One reason for the significant difference in incomes has to do with the nature of the service each offers.Philip's contracting services

Accepted Answer

A)   can be provided to an unlimited number of customers in a year,but Julia's work is sold to only a few individuals in a year.
B)   can only be provided to a limited number of customers in a year,but Julia's work is sold to millions of individuals in a year - i.e. ,to anyone who has the willingness and ability to pay for admission to her movies.
C)   can be provided to a unlimited number of customers in a year,and Julia's work is sold to millions of individuals in a year - i.e. ,to anyone who has the willingness and ability to pay for admission to her movies.
D)   can only be provided to a limited number of customers in a year,and Julia's work is sold to only a few individuals in a year.E) A) and B)
F) B) and C)

Question 8

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

Accepted Answer

A)   the theory of efficiency wages
B)   the marginal-productivity theory
C)   human-capital theory
D)   signaling theoryE) B) and D)
F) None of the above

Question 9

First grade teachers who work in Lynn,Massachusetts (a large,low income city north of Boston) public schools earn more than first grade teachers who work in private schools in more affluent communities north of Boston.Lynn teachers belong to a teachers' union.Which statement best explains the scenario described above?

Accepted Answer

A)   Lynn school teachers receive a compensating differential because they work in a more difficult environment,and they receive higher than market equilibrium wages because they are members of a teachers' union.
B)   Lynn school teachers receive a compensating differential because they work in a more difficult environment,but they do not receive higher than market equilibrium wages because they are members of a teachers' union.
C)   Lynn school teachers do not receive a compensating differential because they work in a more difficult environment,but they do receive higher than market equilibrium wages because they are members of a teachers' union.
D)   Lynn school teachers do not receive a compensating differential because they work in a more difficult environment,and they do not receive higher than market equilibrium wages because they are members of a teachers' union.E) C) and D)
F) A) and B)

Question 10

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Accepted Answer

A)   architects' services are not as highly valued by society as are the services of athletes and actors.
B)   only physically attractive people can become superstars,and it would be a coincidence if a highly talented architect were also physically attractive.
C)   government regulations place restrictions on the incomes of architects,but there are no such restrictions on the incomes of athletes or actors.
D)   it is impossible,currently,for an architect to supply his or her services at low cost to every customer.E) A) and D)
F) All of the above

Question 11

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better-educated workers who have higher marginal productivities.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

Accepted Answer

A)   Workers in the market are unskilled and not represented by a union,and their wage exceeds the equilibrium wage.
B)   Workers in the market are highly skilled and not represented by a union,and their wage exceeds the minimum wage.
C)   Workers in the market are highly skilled and represented by a union,and their wage exceeds the equilibrium wage.
D)   Employers in the market are known for reducing the workers' wage whenever they get an opportunity to do so.E) A) and B)
F) None of the above

Question 13

Which of the following would be considered an investment in human capital?

Accepted Answer

A)   education
B)   a teacher's blackboard
C)   the purchase of a new computer to enhance labor productivity
D)   All of the above are correct.E) B) and C)
F) A) and C)

Question 14

Public school teachers are known to have low wages.This is probably because

Accepted Answer

A)   public school teacher jobs are easy.
B)   public school teachers are required to be college graduates.
C)   public school teachers need very little money to live.
D)   many people perceive the job of public school teacher to have a high element of personal satisfaction.E) B) and D)
F) B) and C)

Question 15

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

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Scenario 19-3
In the small town of Hamilton,Montana,there is a local hardware store called Eddy's Hardware.There are only two types of workers who apply for jobs at Eddy's Hardware: cowboys and farm boys.Local politicians have received numerous complaints that Eddy's Hardware is practicing wage discrimination against cowboys.Eddy's Hardware denies the complaint and says the store is only trying to maximize profit.
-Refer to Scenario 19-3.Which of the following statements would weaken the discrimination complaint against Eddy's Hardware?

Accepted Answer

A)   Cowboys are more productive than farm boys.
B)   Cowboys work longer hours than farm boys and their effort is greater.
C)   Cowboys are generally less educated than farm boys in the field of hardware.
D)   All of the above would weaken the discrimination complaint.E) B) and C)
F) A) and D)

Question 18

In the early 20th century,streetcars in many southern cities required that white passengers sit in the front of car,while black passengers sat in the back.The firms that ran the streetcars were

Accepted Answer

A)   in favor of the segregation laws because they lowered costs and increased profits.
B)   against the segregation laws because they increased costs and lowered profits.
C)   lobbied local governments to enact such laws because their customers were willing to pay more for service in order to maintain the segregation.
D)   concerned about the effects of smoking.Since blacks smoked more than whites,they were supportive of the segregation laws.E) A) and B)
F) B) and D)

Question 19

Two economists created fake resumes with either common African-American names such as Lakisha and Jamal or common white names such as Emily and Greg.After sending them to potential employers with "Help Wanted" ads in Boston and Chicago newspapers,they found that

Accepted Answer

A)   black employees earned 50 percent less than white employees in Chicago but that blacks and whites had similar wages in Boston.
B)   black employees earned 50 percent less than white employees in Boston but that blacks and whites had similar wages in Chicago.
C)   job applicants with white names received 50 percent more phone calls from interested employers.
D)   job applicants with white names received 7 percent more phone calls from interested employers.E) A) and D)
F) B) and C)

Question 20

Which of the following comparisons best illustrates a compensating differential?

Accepted Answer

A)   John's wage is higher than Jane's because the value of John's marginal product is higher than Jane's.
B)   Beth's wage is higher than Bill's because Beth is very personable,and Bill is very gruff.
C)   Karl's wage is higher than Kay's because Karl's job may cause long-term health problems,and Kay's job will not impair her health.
D)   All of the above are good illustrations of compensating differentials.E) All of the above
F) None of the above

Exam 19: Earnings and Discrimination

Correct Answer
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Which of the following comparisons best illustrates a compensating differential?

Correct Answer
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Jill is the best eye surgeon in town,and she earns $350,000 a year.Susan is an average eye surgeon in town,and she earns $100,000 a year.Jill's skills as a surgeon

Correct Answer
verified

Public school teachers are known to have low wages.This is probably because

Correct Answer
verified

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

Correct Answer
verified

Two economists created fake resumes with either common African-American names such as Lakisha and Jamal or common white names such as Emily and Greg.After sending them to potential employers with "Help Wanted" ads in Boston and Chicago newspapers,they found that

Correct Answer
verified

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

Correct Answer
verified

Which of the following statements correctly identifies the shift in employment in the manufacturing sector in the United States?

Correct Answer
verified

Evidence suggests that business owners are generally

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
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In the early 20th century,streetcars in many southern cities required that white passengers sit in the front of car,while black passengers sat in the back.The firms that ran the streetcars were

Correct Answer
verified

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

Correct Answer
verified

Which of the following factors affects the marginal productivity of a worker?

Correct Answer
verified

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better-educated workers who have higher marginal productivities.

Correct Answer
verified

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Correct Answer
verified

Correct Answer
verified

A prestigious private high school requires each of its teachers to have a Ph.D.in the subject they teach.This requirement is likely to

Correct Answer
verified

Which of the following would be considered an investment in human capital?

Correct Answer
verified

Exam 19: Earnings and Discrimination

Correct AnswerverifiedShow Answer

Which of the following comparisons best illustrates a compensating differential?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Jill is the best eye surgeon in town,and she earns $350,000 a year.Susan is an average eye surgeon in town,and she earns $100,000 a year.Jill's skills as a surgeon

Correct AnswerverifiedShow Answer

Public school teachers are known to have low wages.This is probably because

Correct AnswerverifiedShow Answer

Which theory explains the fact that some firms may choose to pay their employees more then they would earn as determined by equilibrium in the labor market?

Correct AnswerverifiedShow Answer

Two economists created fake resumes with either common African-American names such as Lakisha and Jamal or common white names such as Emily and Greg.After sending them to potential employers with "Help Wanted" ads in Boston and Chicago newspapers,they found that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements correctly identifies the shift in employment in the manufacturing sector in the United States?

Correct AnswerverifiedShow Answer

Evidence suggests that business owners are generally

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the early 20th century,streetcars in many southern cities required that white passengers sit in the front of car,while black passengers sat in the back.The firms that ran the streetcars were

Correct AnswerverifiedShow Answer

Which of the following sets of circumstances is likely to provide the best evidence in support of the theory of efficiency wages?

Correct AnswerverifiedShow Answer

Which of the following factors affects the marginal productivity of a worker?

Correct AnswerverifiedShow Answer

Higher levels of human capital are correlated with higher earnings because firms are willing to pay more for better-educated workers who have higher marginal productivities.

Correct AnswerverifiedShow Answer

The primary economic explanation as to why a world-renowned architect cannot attain the "superstar" status that an athlete or actor can attain is that

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A prestigious private high school requires each of its teachers to have a Ph.D.in the subject they teach.This requirement is likely to

Correct AnswerverifiedShow Answer

Which of the following would be considered an investment in human capital?

Correct AnswerverifiedShow Answer

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