Module 6

Which of these instances would constitute labor-market discrimination? Courtney and Nicole are identical in all of their labor-market characteristics except that Courtney earns a higher salary than Nicole because

a. Courtney is 40 years old and Nicole is 60 years old.

When employers pay an efficiency wage above the market equilibrium wage, this will likely result in

a. a surplus of labor.

According to the superstar phenomenon, the most talented person in the following occupations is likely to earn extremely high wages except

a. an auto mechanic.

If a worker responds to an increase in the opportunity cost of leisure by taking more leisure, then her labor supply curve is

a. backward sloping.

If the demand curve for economics textbooks shifts to the left, then the value of the marginal product of labor for economics textbook authors will

a. fall.

Most of the total income earned in the U.S. economy is ultimately paid to

a. households in the form of wages and fringe benefits.

Consider the labor market for heath care workers. Because of the aging population in the United States, the output price for health care services has increased. Holding all else equal, the equilibrium wage of health care employees would

a. increase.

Consider the market for university economics professors. Suppose the opportunity cost of going to graduate school to get a Ph.D. in economics increases for many individuals. Suppose it generally takes about five years to get a Ph.D. in economics. Holding all else constant, in five years the equilibrium wage for university economics professors will

a. increase.

Difference in wages can be explained by differences in

a. job characteristics and worker characteristics.

A natural correction to employer discrimination in market economies is the

a. profit motive.

By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who differ only by

a. race, ethnic group, sex, age, or other personal characteristics.

When economists refer to a firm's capital, they are describing the

a. stock of equipment and buildings used in production.

Economists who attempt to explain the increasing earnings gap between skilled and unskilled workers in the United States offer two main hypotheses. Both hypotheses

a. suggest that, over time, the demand for skilled labor has risen relative to the demand for unskilled labor.

In general, the higher a person's education level,

a. the higher the person's earnings.

When labor supply increases,

a. wages decrease as long as labor demand is downward sloping.

As a result of their experiment economists Muriel Niederle and Lise Vesterlund found that

a. women choose competitive environments less than men.

Bob, the manager and owner of a small company, believes in the theory of efficiency wages. As such, Bob would be most likely to agree with which of the following quotes?

b. "Pay a man for the job you want him to do."

Which of the following is not correct?

b. A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor. b. A profit-maximizing firm hires workers so long as the wage rate exceeds the value of the marginal product of labor.

Which of the following statements is correct?

b. Both economic theory and evidence from the U.S. economy suggest that there is a close link between productivity and real wages.

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

b. chance.

Evidence of differences in the average wages of black workers compared to white workers

b. does not alone provide conclusive evidence of discrimination.

Tiffany has just graduated from Stanford University and has applied for a job as an engineer at a manufacturing plant. The manufacturer decides to offer Tiffany a job because it perceives she's gained valuable skills while at Stanford. To which of the following views of education does the manufacturer subscribe?

b. human-capital view

The "beauty premium" can be explained by the fact that

b. in some occupations, physical attractiveness of workers may enhance the value of their marginal product.

A plumber who specializes in cleaning plugged sewer lines is typically paid a higher wage than a plumber who works on installing water systems in new residential housing. Which of the following would push the wages of plumbers who work on sewer lines higher?

b. plumbers who work with sewer lines are likely to be perceived as having a "dirty" job.

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

b. schooling acts only as a signal of ability.

When the wages paid to government economists increase, the labor supply curve for academic economists

b. shifts to the left.

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

c. More productive people are more inclined to educate themselves.

Which of the following events can cause the labor-supply curve to shift?

c. an increase in the rate of immigration

Certain factors that are probably important in determining wages are nevertheless difficult to measure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include

c. effort and natural ability.

A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees but decided not to rehire when the most-recently-hired employee left the company, so the firm now has 14 employees. We can infer that

c. for the 15th employee, the wage exceeded the value of the marginal product of labor.

"The customer is always right" explains

c. persistent wage discrimination based on consumer preferences.

Workers with more human capital on average earn substantially higher pay than workers with less human capital in

c. the United States and in most other countries.

To say that a firm is competitive in the labor market is to say that the firm can choose

c. the number of workers it hires, but it cannot choose the wage it pays its workers.

In 2015, the total income of all U.S. residents was about

d. $16 trillion.

If men, on average, earn 20 percent more than women in a particular occupation,

d. Both b and c are correct.

Which of the following is not correct?

d. Economics has its own language and its own way of thinking, but few other fields of study do.

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

d. Employers give their workers a higher wage in the hope that it will lead to increased productivity.

Labor markets are different from most other markets because labor demand is

d. a derived demand.

Philip is an average contractor in town, and he earns $40,000 a year. Billy is the best contractor in town, and he earns $480,000 a year. Philip's contracting services

d. are valued less by the market relative to Billy's and that explains why his income is lower than Billy's.

If employers are profit-maximizers, then

d. employment discrimination may persist if consumers discriminate.

Assume the market for candles is competitive. A new invention leads to labor-augmenting technological progress in the production of candles. This development

d. increases the demand for workers who make candles and increases their equilibrium wage.

Because workers in the U.S. economy receive most of the total income earned, which of the following factors of production is considered to be the most important?

d. labor

When we focus on the firm as a supplier of a good or a service, we assume that the firm is a profit maximizer. When we focus on the firm as a demander of labor, we assume that the firm's objective is to

d. maximize profit.

Coal mining is a dangerous and dirty job. Suppose someone developed new machinery that made coal mining safer and cleaner; at the same time, suppose it made coal miners more productive. We would expect that the wages of coal miners would

d. rise, fall, or stay the same.

When a competitive firm maximizes profit, it will hire workers up to the point where the

d. value of the marginal product of labor is equal to the wage.

The labor supply curve shifts when

d. workers change the number of hours that they want to work at any given wage.

The labor supply curve reflects how

d. workers' decisions about the labor-leisure tradeoff respond to a change in the wage.

A competitive firm will hire workers up to the point at which the value of the marginal product of labor equals the

wage