Module 5 ECON 202

Which factor(s) partially explain(s) wage differentials? 1. difference in talent 2. different amount of human capital 3. compensating differentials

1 , 2, and 3

An example of statistical discrimination

a company, considering two equally qualified job candidates, chooses one based on ethnic stereotype

An example of causation

a frim producing CFLs installs new machinery the per-day production of CFLs increases

Implicit bias

attitudes or stereotypes that affect our understanding, actions and decisions in an unconscious manner

A firm's demand curve for labor will shift because of a

change in the demand for a firm's product

A difference in wages required to offset the desirable or undesirable aspects of a job is a(n)

compensating differential

Rosalie and Henry work at a nursery where they grow sunflowers. Rosalie works all day in the hot sun, planting and harvesting sunflowers, where she earns $34 per hour. Henry, on the other hand, works inside the air conditioned warehouse, drying and roasting sunflower seeds and earns $22 per hour. Which source of wage differences is exemplified by the example?

compensating differentials

Wage differences that reflect the fact that some jobs are less pleasant than others are called

compensating differentials

Jenna is a concert pianist. A grand piano is a _____ to her labor in the production of her concerts.

complement

A decrease in the demand for pastry chefs may follow an increase in

concerns about healthy living

A decrease in the productivity of labor will, all else equal, lead to a(n) ___ in the equilibrium quantity of labor and ____ in the equilibrium price of labor

decrease decrease

Damon's wage falls. Via the substitution effect, he would ___ his work hours; via the income effect, he would ____ his work hours

decrease increase

Alex and Marilyn started Ono Yo, an organic and fresh fruit frozen yogurt truck. As the demand for organic and healthier desserts rose, demand for Ono Yo's products grew. Because of the growth in demand for Ono Yo's product, Alex's and Marilyn's

demand for workers increase

Prejudice

discrimination that exists as a result of an individual having a dislike towards members of a particular group

Taste-based discrimination

discrimination that occurs because the discriminator dislikes another person's gender, race, or some other personal characteristic

The labor demand curve has a ____ slope because of ____

downward diminishing marginal product

An example of a shift with both the labor supply curve and the labor demand curve

employers covering more of the cost of health insurance for all employees

Statistical discrimination

employers using a characteristic of a group to make inferences about an individual's skills

Companies that engage in workplace discrimination are likely to

have lower profits when they compete against other firms that do not discriminate

Compensating differentials lead to

higher salaries for more unpleasant jobs.

The cost of working one more hour is the

hour of leisure that is given up

In labor market, the quantity is the

hours of work bought or sold

The substitution effect of a higher wage measures

how people respond to a change in relative prices.

The income effect measures

how people's choices change when they have more income.

When economists use the term "correlation", they are referring to

how two variables move together in a predictable way

An increase in population that increases the size of the labor force will, all else equal, lead to a(n) ___ in the equilibrium quantity of labor and a(n) ____ in the equilibrium price of labor

increase decrease

Sources of discrimination do not include

job applicants

Derived demand means

labor demand is derived from demand for the product it produces

Undesirable job features lead to a ________ labor ________.

lower supply

Labor demand is based on ____ and labor supply is based on _____

marginal revenue product opportunity cost

The labor supply curve for social workers will shift to the right when

non-wage benefits for social workers increase

Suppose a study finds that hot cocoa sales in a region tend to increase the same time that the number of car crashes increase in the same region. The study's authors conclude that hot cocoa sales cause car crashes. The author are most likely exhibiting

omitted variable bias

The marginal product of labor is how much an additional unit of labor affects

output

A shift in the demand for labor will not occur if the

price of labor falls

Jordan's Photography Studio pays its workers $60 per day and sells poster-size prints for $10 each. If the market wage rises to $70, then the

quantity of labor demanded decreases, but the labor demand curve does not shift

Your landscaping company labor and shovels. The price of shovels falls, and this _____ your demand for labor because labor and shovels are ____

raises complements

When earnings reflect compensating differentials, workers with _____ human capital earn _____ salaries because _____.

similar different their jobs differ in things like risk or enjoyment

Human capital is

the accumulated knowledge and skills that make a worker more productive

What happens in the labor market for custodians in Indonesia when the population of Indonesia grows?

the custodian labor supply curve shifts rightward

An example of derived demand

the demand for kitchen renovation affects the demand for carpenters

When would you see the greatest gain if a compensating differential is built into your salary?

the differential is for a large positive job aspect that you care about more than most people do

The Rational Rule for Employers says to hire more workers if

the marginal revenue product is greater than (or equal to) the wage

Higher wages for data analysts would not cause

the market supply curve for data analysts to shift

Counterfactual

the outcome that would have happened in some other scenario

The value of the marginal product of labor is the marginal product of labor multiplied by

the price of the item the firm produces

The U.S. Bureau of the Census reported that, on average, white men earn $50,945, whereas white women earn $31,008. Economic discrimination explains at least some of this wage gap, but economists think that there are other factors that also contribute to wage gaps? Not an explanation offered by economists these types of wage gaps?

there are innate differences between men and women that make men more productive than women because men are more productive, they can earn more on average

In a perfectly competitive market, employers will not pay less than the market wage because, at a wage below the equilibrium wage

they would not be able to hire anyone

Suppose the labor market for electricians is in equilibrium. Which event might decrease the wage of electricians?

unemployed manufacturing workers attend technical school to learn the electricians trade

When an employer makes decisions based on statistical discrimination

using observations about the average characteristics of a group to make inferences about an individual

A profit-maximizing firm, operating in a perfectly competitive market, will add new units of labor until the

value of the marginal product equals the wage

Because of extreme national pride, the government of Samara passes a law requiring all workers to have the ability to speak French, the national language

wage differential continues to exist

Due to their dislike for short servers, all the residents of the city of Da San willingly pay more to eat out elsewhere rather than eating at a restaurant with short servers

wage differential continues to exist

A competitive market is guided by the economic self-interest of employers seeking the lowest labor costs and consumers seeking the least expensive products and services

wage differential is eliminated

Jason owns a deli and wants to maximize his profits. Therefore, he is willing to hire anyone at the minimum wage

wage differential is eliminated