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Studies of wages by labor economists indicate that measurable variables such as age,job characteristics,years of education,and years of experience account for


A) virtually none of the variation in wages in our economy.
B) some, but less than 50 percent of the variation in wages in our economy.
C) about 75 percent of the variation in wages in our economy.
D) almost all of the variation in wages in our economy.

E) A) and B)
F) A) and C)

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For a "superstar" to emerge,it must be the case that


A) it is possible to supply the good or service that the superstar produces at low cost to every customer.
B) some customers are willing and able to pay large sums of money to enjoy the good or service provided by the superstar.
C) the superstar has a natural monopoly on his or her good or service.
D) the superstar is willing to settle for a level of pay that is less than the value of his marginal product.

E) A) and C)
F) C) and D)

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Which of the following is not a consequence of above-equilibrium wages in a labor market?


A) a surplus of labor
B) unemployment
C) more unionized jobs
D) All of the above are consequences of above-equilibrium wages.

E) C) and D)
F) B) and D)

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


A) the higher the person's earnings.
B) the more physically attractive the person is likely to be.
C) the more socially outgoing the person is likely to be.
D) All of the above are correct.

E) B) and D)
F) None of the above

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"The customer is always right" explains


A) efficiency wages.
B) compensating differentials.
C) persistent wage discrimination based on consumer preferences.
D) the higher wages paid to members of a union.

E) All of the above
F) A) and B)

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


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 D)
F) B) and C)

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Which of the following is an example of customer discrimination?


A) A foreign government prevents women from legally working as teachers.
B) White NBA fans prefer to attend games where the teams have more white players in the starting lineups.
C) Nurses who work the night shift earn more than nurses who work the day shift.
D) All of the above could be correct.

E) C) and D)
F) B) and C)

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People are willing to invest in human capital because


A) the demand for skilled labor is higher than for unskilled labor.
B) it increases the marginal product of their labor.
C) firms are willing to pay more for more productive workers.
D) All of the above are correct.

E) A) and B)
F) B) and D)

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Discrimination by a manager in the hiring process may be consistent with the decision to maximize profits if


A) customers are willing to pay higher prices in order to maintain the discrimination.
B) the discrimination is based on race but not gender.
C) the discrimination is based on gender but not race.
D) Discrimination is never consistent with profit maximization.

E) B) and C)
F) None of the above

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Figure 19-3 The manufacturing labor market. Figure 19-3 The manufacturing labor market. -Refer to Figure 19-3.Suppose the manufacturing labor market,which is non-unionized,is in equilibrium at a wage equal to $30.Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $38 per hour.Because of the union, A) 10 people who were once employed are now unemployed. B) 20 people who were once employed are now unemployed. C) 40 people who were once employed are now unemployed. D) 20 people who were once unemployed are now employed. -Refer to Figure 19-3.Suppose the manufacturing labor market,which is non-unionized,is in equilibrium at a wage equal to $30.Suppose now that the AFL-CIO (a labor organization) organizes the workers in the manufacturing market and negotiates a wage of $38 per hour.Because of the union,


A) 10 people who were once employed are now unemployed.
B) 20 people who were once employed are now unemployed.
C) 40 people who were once employed are now unemployed.
D) 20 people who were once unemployed are now employed.

E) None of the above
F) All of the above

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


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) B) and D)
F) B) and C)

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According to evidence provided by the U.S.government,the median black


A) woman is paid roughly the same as the median white woman.
B) woman is paid roughly the same as the median black man.
C) man is paid 21 percent less than the median white man.
D) All of the above are correct.

E) None of the above
F) B) and C)

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Which of the following is an example of human capital?


A) Machines built by people.
B) Formal education acquired in schools.
C) On-the-job training.
D) Both b and c are correct.

E) B) and D)
F) A) and B)

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Suppose that a company hires recent college graduates for two types of jobs,sales people and credit analysts.The hours worked and skill levels are the same for both positions.The sales people must "cold call," which many people find to be unpleasant.When comparing the salaries of the two positions,it is likely that the company pays the


A) credit analysts more as a compensating differential.
B) sales people more as a compensating differential.
C) same salary for both positions because they require the same skill level.
D) same salary for both positions because it would be illegal to do otherwise.

E) All of the above
F) None of the above

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The signaling theory of education maintains that workers who complete specific levels of education signal their high productivity to potential to employers.

A) True
B) False

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Evidence from a 1988 study of the market for professional basketball players


A) found no evidence of consumer-driven wage discrimination.
B) found some evidence of consumer-driven wage discrimination.
C) found that measurement of marginal productivity was very difficult for basketball players.
D) indicated that sports with strong player associations are unlikely to experience wage discrimination.

E) None of the above
F) C) and D)

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Which of the following theories explains why increased education translates into higher wages?


A) human-capital theory
B) the theory of compensating differentials
C) the theory of supply and demand
D) comparative advantage

E) A) and D)
F) A) and C)

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The organized withdrawal of labor from a firm by a union is called


A) a strike.
B) a bargain.
C) a monopoly.
D) a tournament.

E) A) and D)
F) A) and C)

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Scenario 19-3 In the small town of Hamilton, Montana, there is a local hardware store called Eddy's Hardware. There are only two types of workers who apply for jobs at Eddy's Hardware: cowboys and farm boys. Local politicians have received numerous complaints that Eddy's Hardware is practicing wage discrimination against cowboys. Eddy's Hardware denies the complaint and says the store is only trying to maximize profit. -Refer to Scenario 19-3.Which of the following statements would strengthen the discrimination complaint against Eddy's Hardware?


A) Farm boys call in sick to work more often than cowboys.
B) Cowboys are less educated than farm boys, on average.
C) Farm boys' experience with hardware generally exceeds cowboys' experience with hardware.
D) Many cowboys take six months per year off from work to compete in a rodeo circuit and therefore have less on-the-job experience with a hardware store.

E) B) and C)
F) All of the above

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According to the signaling theory of education,better-educated workers


A) are likely to be high-ability workers.
B) improve their marginal productivity through education.
C) are in scarce supply in less developed countries.
D) can only find low-skilled jobs due to technology.

E) B) and D)
F) A) and B)

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