Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

Accepted Answer

A)   12% more than women with a high school education.
B)   26% more than women with a high school education.
C)   42% more than women with a high school education.
D)   71% more than women with a high school education.E) B) and D)
F) A) and B)

Question 3

Which of the following is an example of a compensating differential?

Accepted Answer

A)   Two workers with different undergraduate majors earn different salaries.
B)   Two workers with different years of experience earn different salaries.
C)   Two workers whose jobs entail different working conditions earn different salaries.
D)   Two workers with different levels of personal attractiveness earn different salaries.E) C) and D)
F) A) and C)

Question 4

Cory has just graduated from veterinary school.He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher.The higher salary to work with larger animals is an example of

Accepted Answer

A)   a compensating differential.
B)   signaling theory.
C)   an efficiency wage.
D)   efficient union bargaining.E) All of the above
F) B) and C)

Question 5

Which of the following does not affect the wages a worker earns?

Accepted Answer

A)   natural ability
B)   effort
C)   chance
D)   All of the above affect the wages a worker earns.E) C) and D)
F) A) and B)

Question 6

Which of the following statements represents the idea behind signaling in education?

Accepted Answer

A)   Education can turn an unproductive person into a productive person.
B)   Education increases the marginal productivity of naturally productive workers.
C)   The more naturally productive people are more inclined to educate themselves.
D)   All of the above are correct.E) A) and C)
F) None of the above

Question 7

Christy and Claudia are aspiring models.Talent scouts consider them to be similarly beautiful.Both enter a talent show.Claudia contracts food poisoning the night before the competition and withdraws.Christy wins the competition and signs a multi-million dollar contract.The differences in their earnings likely reflect

Accepted Answer

A)   discrimination.
B)   differences in human capital.
C)   differences in signaling.
D)   chance.E) C) and D)
F) None of the above

Question 8

If employers are profit-maximizers,then

Accepted Answer

A)   competition will always eventually eliminate employment discrimination.
B)   employment discrimination may persist if consumers discriminate.
C)   employment discrimination will persist because it is always profitable.
D)   compensating differentials cannot exist.E) C) and D)
F) B) and C)

Question 9

Empirical work that does not account for differences in the productivity of workers

Accepted Answer

A)   is unlikely to find evidence of wage differentials.
B)   can provide strong evidence of labor market discrimination.
C)   is likely to misinterpret apparent evidence of labor market discrimination.
D)   is accepted as superior to empirical work that does correct for differences in productivity of workers.E) None of the above
F) A) and D)

Question 10

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Accepted Answer

A) True 
 B)False

Question 11

If firms are competitive,then labor-market discrimination

Accepted Answer

A)   cannot exist in either the short run or the long run.
B)   will be more of a problem than if the market were monopolistic or imperfectly competitive.
C)   likely will not be a long-run problem unless customers exhibit discriminatory preferences or government maintains discriminatory policies.
D)   likely will be more of a problem in the long run than in the short run due to the zero-profit condition that characterizes long-run equilibrium for competitive firms.E) None of the above
F) A) and B)

Question 12

The fact that movie star Julia Roberts's salary is much higher than the salary earned by the world's best plumber can best be explained by the

Accepted Answer

A)   failure of the market to reward talent fairly.
B)   fact that wage rates cannot reflect the influence of education properly.
C)   willingness of some people to accept a lower wage rate in order to do what they like most to do.
D)   superstar phenomenon.E) All of the above
F) C) and D)

Question 13

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 point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then the employment level

Accepted Answer

A)   increases from 6,000 to 10,000.
B)   increases from 3,000 to 10,000.
C)   decreases from 10,000 to 3,000.
D)   decreases from 6,000 to 3,000.E) All of the above
F) None of the above

Question 14

Why do major-league baseball players get paid more than minor-league players?

Accepted Answer

A)   Major-league players are better athletes.
B)   The higher wage reflects a compensating differential.
C)   Playing in the major leagues in more pleasant then playing in the minor leagues.
D)   The higher wage is often due to educational discrepancies.E) A) and B)
F) A) and C)

Question 15

Figure 19-1 
-Refer to Figure 19-1.Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $10 as shown.Which of the following compensation schemes could the graph be illustrating?

Accepted Answer

A)   An efficiency wage.
B)   Discrimination.
C)   A compensating differential.
D)   The superstar phenomenon.E) C) and D)
F) B) and D)

Question 16

A difference in wages between a highly-educated worker and a less-educated worker

Accepted Answer

A)   may be due to a difference in the amounts of human capital between the workers..
B)   may be a signal that the market is indifferent to a worker's level of human capital.
C)   is considered unfair by economists.
D)   is considered unfair by everyone.E) C) and D)
F) B) and C)

Question 17

Major league baseball players get paid more than minor league baseball players because of

Accepted Answer

A)   compensating differentials.
B)   higher levels of educational attainment.
C)   greater abilities.
D)   All of the above are correct.E) B) and D)
F) C) and D)

Question 18

Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?

Accepted Answer

A)   There is a cost advantage for firms that do not discriminate.
B)   Workers who are victims of discrimination will eventually drop out of the labor market.
C)   Competing firms will hire fewer of the workers who are temporarily victimized by discrimination.
D)   Discrimination cannot exist in markets.E) None of the above
F) All of the above

Question 19

If there is systematic discrimination against a group of workers,then the wage paid to those workers likely will be

Accepted Answer

A)   lower due to a higher supply of workers in that group.
B)   lower due to a lower demand for workers in that group.
C)   higher due to a lower supply of workers in that group.
D)   higher due to a higher demand for workers in that group.E) None of the above
F) All of the above

Question 20

Nick and Daryn are both market analysts who started working for their current employer during the same year,graduated from the same university with bachelors' degrees in economics,and achieved similar performance reviews.Nick earned a master's degree last year.If Nick earns a higher annual salary than Daryn because he has more formal education,the employer is

Accepted Answer

A)   paying a compensating differential.
B)   paying efficiency wages.
C)   practicing discrimination.
D)   rewarding increases in human capital.E) B) and C)
F) A) and D)

Exam 19: Earnings and Discrimination

Correct Answer
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Correct Answer
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If there is systematic discrimination against a group of workers,then the wage paid to those workers likely will be

Correct Answer
verified

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

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 an example of a compensating differential?

Correct Answer
verified

If employers are profit-maximizers,then

Correct Answer
verified

Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?

Correct Answer
verified

Empirical work that does not account for differences in the productivity of workers

Correct Answer
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A difference in wages between a highly-educated worker and a less-educated worker

Correct Answer
verified

Major league baseball players get paid more than minor league baseball players because of

Correct Answer
verified

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Correct Answer
verified

Cory has just graduated from veterinary school.He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher.The higher salary to work with larger animals is an example of

Correct Answer
verified

Figure 19-1 -Refer to Figure 19-1.Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $10 as shown.Which of the following compensation schemes could the graph be illustrating?

Correct Answer
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Which of the following statements represents the idea behind signaling in education?

Correct Answer
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Why do major-league baseball players get paid more than minor-league players?

Correct Answer
verified

Which of the following does not affect the wages a worker earns?

Correct Answer
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If firms are competitive,then labor-market discrimination

Correct Answer
verified

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 point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then the employment level

Correct Answer
verified

The fact that movie star Julia Roberts's salary is much higher than the salary earned by the world's best plumber can best be explained by the

Correct Answer
verified

Exam 19: Earnings and Discrimination

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If there is systematic discrimination against a group of workers,then the wage paid to those workers likely will be

Correct AnswerverifiedShow Answer

Between 1980 and 2008,the wage gap between women with a high school education and women with a college education has increased.In particular,in 2008 women with a college degree earned about

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 an example of a compensating differential?

Correct AnswerverifiedShow Answer

If employers are profit-maximizers,then

Correct AnswerverifiedShow Answer

Why would a wage differential due to discrimination be unlikely to persist in a competitive labor market?

Correct AnswerverifiedShow Answer

Empirical work that does not account for differences in the productivity of workers

Correct AnswerverifiedShow Answer

A difference in wages between a highly-educated worker and a less-educated worker

Correct AnswerverifiedShow Answer

Major league baseball players get paid more than minor league baseball players because of

Correct AnswerverifiedShow Answer

It is increasingly clear that technological change is the only explanation for an expanding wage gap between high-skill and low-skill workers.

Correct AnswerverifiedShow Answer

Cory has just graduated from veterinary school.He can earn $40,000 working at a small animal clinic or $50,000 working with farm animals and horses where the risks of getting injured by an animal are higher.The higher salary to work with larger animals is an example of

Correct AnswerverifiedShow Answer

Figure 19-1 -Refer to Figure 19-1.Suppose the local labor market was in equilibrium to begin with but then the largest local employer decided to change its compensation scheme to $10 as shown.Which of the following compensation schemes could the graph be illustrating?

Correct AnswerverifiedShow Answer

Which of the following statements represents the idea behind signaling in education?

Correct AnswerverifiedShow Answer

Why do major-league baseball players get paid more than minor-league players?

Correct AnswerverifiedShow Answer

Which of the following does not affect the wages a worker earns?

Correct AnswerverifiedShow Answer

If firms are competitive,then labor-market discrimination

Correct AnswerverifiedShow Answer

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 point A.If a labor union subsequently establishes a union shop and negotiates an hourly wage of $20,then the employment level

Correct AnswerverifiedShow Answer

The fact that movie star Julia Roberts's salary is much higher than the salary earned by the world's best plumber can best be explained by the

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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Correct Answer
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