Micro Ch11&12

Explain efficiency wage

A higher wage encourages greater work productivity

Which of the following is an example of statistical discrimination?

An employer relies on stereotypes in making hiring decisions.

The marginal revenue product of labor is equal to:

MPL × P.

Which of the following are true of statistical discrimination? There may be more than one correct answer. Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic. "Ban the box" laws not allowing employers to ask potential employees whether or not they have been in jail is increasing discrimination against Black men, particularly those without a college degree. Statistical discrimination occurs when firms base hiring decisions on which candidate will improve the firm's diversity statistics. Some employers run complex statistical analysis of candidates' resumes before deciding who to interview for a position.

Statistical discrimination occurs when employers discriminate against job candidates based on an irrelevant but observable characteristic which correlates to an unmeasurable but relevant characteristic. "Ban the box" laws not allowing employers to ask potential employees whether or not they have been in jail is increasing discrimination against Black men, particularly those without a college degree.

Alena manages a small theme park. She hires one more custodian at $450 per week, and her park is cleaner and more attractive. As a result of this improvement, ticket sales rise by 40 tickets per week. Tickets sell for $12. Use the Rational Rule for Employers to determine if hiring the extra custodian was a good move.

Yes, it was a good move because it added more to revenue than to cost.

Workers on the night shift at a factory earn more per hour than workers on the day shift, although their human capital and productivity are the same. This is an example of:

a compensating differential.

An efficiency wage is NOT _____ but rather _____.

a reward; an incentive

A signal is:

an action taken to credibly convey information that is hard for someone else to verify.

The labor demand is a/an _____________ demand

derived

A compensating differential is an:

difference in wages that offsets the desirable or undesirable aspects of a job.

Why does an employer's labor demand curve slope downward?

diminishing marginal product

The marginal product of labor is the

extra production that occurs from hiring an extra worker.

The accumulated knowledge and skills that make a worker more productive are known as:

human capital.

There is evidence that, despite antidiscrimination laws, discrimination _____ in labor markets.

impacts wages

Marginal revenue product is the

marginal revenue from hiring an additional worker.

The marginal revenue from hiring an additional worker is known as

marginal revenue product

An employer's labor demand curve is equal to the

marginal revenue product curve.

The _________________ measures how people respond to a change in relative prices when the wage rises.

substitution effect

In a labor market, workers _____ labor, and employers _____ labor.

supply; demand

An efficiency wage improves efficiency when:

the increase in worker effort and reduced turnover cover the cost of the higher wage.

An employer should hire one more worker if

the marginal benefit exceeds the marginal cost.

The Rational Rule for Employers implies that they keep hiring until

the wage equals the marginal revenue product of the last worker hired.

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

they would not be able to hire anyone

In a labor market graph, _____ is measured on the vertical axis, and _____ is measured on the horizontal axis.

wage; hours of labor

When making labor supply decisions, your options are

working or leisure