Econ ch. 17

A compensating differential is:

a difference in wages that offsets differences in working conditions.

A compensating differential is mainly a cause of a difference in wages because:

of differences in working conditions.

A binding minimum wage is a(n) ______ for labor.

price floor

A union can raise wages by:

reducing the supply of labor

A firm will hire a worker as long as:

the marginal product of labor is greater than or equal to the wage earned by the worker.

t/f: An individual's labor supply curve might be backward bending

true

In general, wages are determined:

by the skills of the worker and the productivity of the entire economy.

An individual's labor supply curve:

can be either positively or negatively sloped, or perfectly inelastic.

An individual labor supply curve:

can be positively sloped, vertical, or negatively sloped at different ranges.

A union can lower wages by:

causing work stoppages, which slow down the entire economy.

A newly imposed binding minimum wage:

decreases employment

Good-looking people:

earn more than otherwise comparable less attractive people.

Customer-based discrimination is weakened by:

economic growth

t/f: If the marginal product of labor is $10 an hour, the firm should hire the worker so long as the wage (including fringe benefits) exceeds $10 an hour.

false

If the marginal product of labor is constant in labor, then a market labor demand curve is:

flat

A firm is willing to hire a worker when the marginal product of labor is:

greater than the wage

A firm will hire workers as long as the marginal product of labor is:

greater than the wage

A firm will hire a worker whenever that worker's marginal product of labor is:

greater than the worker's wage.

In a market economy discrimination by employers will NOT:

increases the firm's profits

Discrimination by employees:

is a situation in which one group of workers doesn't want to work with another group of workers.

Discrimination by customers:

means that some customers might not want to do business with firms that hire certain workers

A market labor supply curve:

is always positively sloped

In the Wealth of Nations, Adam Smith wrote: Pecuniary wages and profit, indeed, are everywhere in Europe extremely different according to the different employments of labour and stock. But this difference arises partly from certain circumstances in the employments themselves, which, either really, or at least in the imaginations of men, make up for a small pecuniary gain in some, and counterbalance a great one in others; and partly from the policy of Europe, which nowhere leaves things at perfect liberty. (Book 1, Chapter 10) Which idea was Smith describing?

labor market issues

Evidence suggests that résumés with names closely associated with African Americans received:

less than average number of interview requests.

An individual's labor supply curve:

may be backward bending if the wage is high enough.

In a world of perfect information:

statistical discrimination would not exist.

Discrimination by employers:

tends to break down quickly because employers are always looking to hire the most productive workers at the lowest wages in order to maximize profits.

A firm will continue to hire workers as long as:

the marginal product of labor is greater than the wage.

Firms will hire additional workers as long as:

the marginal revenue of that worker is greater than the worker's wage.

A single person's supply curve for labor slopes down when:

the person starts taking part of their income as leisure.

College graduates are paid more, on average, partly because the act of finishing college signals that they are more likely to be a good employee.

true

Discrimination is:

using information about group averages to make conclusions about individuals.