Deck 12: Wages, Workers, and Management

Question 1

Human capital is:

A)capital equipment made by hand.
B)accumulated knowledge and skills that make a worker more productive.
C)capital equipment that must be operated by humans.
D)human labor used in place of machines.

Answer 1

B

Question 2

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

A)human capital.
B)labor enhancement.
C)labor factoring.
D)efficiency investment.

Answer 2

A

Question 3

To accumulate human capital, you can:

A)buy shares of human capital in a stock market.
B)buy capital equipment and hire workers to operate it.
C)obtain it through education, training, and experience.
D)save money by using your own labor to do things for yourself rather than purchasing services.

Answer 3

C

Question 4

Education level positively correlates with:

A)reliance on transfer payments.
B)custodial work.
C)job loss.
D)average annual income.

Question 5

Higher education tends to lead to higher salaries because education:

A)increases productivity.
B)enables graduates to repay loans.
C)confers on one a higher social status.
D)requires time to acquire.

Question 6

When education functions as a signal to an employer, it:

A)indicates a certain level of training.
B)conveys information about a job applicant's intelligence and tenacity.
C)matches job applicants to employer needs.
D)overstates ability.

Question 7

When education level is used to convey information to an employer, it serves as a:

A)gateway.
B)capital complement.
C)signal.
D)radio.

Question 8

_____ credibly conveys information that is hard for someone else to verify.

A)A proxy
B)A monitor
C)An opportunity cost
D)A signal

Question 9

A signal is:

A)an action taken to credibly convey information that is hard for someone else to verify.
B)advance notice of an action that will be taken in the future.
C)a price tag.
D)an indicator of the equilibrium wage and quantity in a market.

Question 10

When your education level is used to signal an employer, it conveys that you:

A)studied a field of knowledge.
B)can work hard and persistently to complete a large task.
C)value working at that company.
D)are in debt and need a job.

Question 11

Employers use educational background and degrees obtained to indicate an applicant's:

A)salary expectations and productivity.
B)amount of debt.
C)productivity and certain traits.
D)debt level and salary expectations.

Question 12

A higher wage paid to encourage greater worker productivity is:

A)an incentive wage.
B)a motivational factor system.
C)a factor incentive system.
D)an efficiency wage.

Question 13

An efficiency wage is a:

A)higher wage paid to encourage greater worker productivity.
B)higher wage paid to reward workers who show greater productivity.
C)system of tying wage rates to overall factory efficiency rather than personal productivity.
D)wage that rises when workers invest in their human capital.

Question 14

An efficiency wage is NOT _____ but rather _____.

A)a variable wage; a reward
B)a reward; an incentive
C)an incentive; a fixed wage
D)a fixed wage; a variable wage

Question 15

The logic of efficiency wages is that if an employer pays a high wage:

A)workers will invest in additional skill development.
B)the firm thereby shares profits with workers.
C)an employee will be motivated to work hard.
D)low-skilled workers will be unlikely to apply for work with that employer.

Question 16

Which of the following is NOT part of the rationale for efficiency wages?

A)An efficiency wage encourages workers to work harder to avoid risking losing their jobs.
B)An efficiency wage helps workers feel valued.
C)An efficiency wage raises the gain to workers for working more.
D)An efficiency wage rewards worker productivity with higher pay.

Question 17

An efficiency wage improves efficiency when:

A)the increase in worker effort and reduced turnover cover the cost of the higher wage.
B)it is structured so that only the most productive workers receive a higher wage.
C)capital costs are reduced enough to cover wage costs.
D)improved technology accompanies the worker training.

Question 18

When it is hard to monitor worker productivity, employers often pay:

A)a lower wage.
B)a higher wage.
C)a random wage.
D)a wage based on worker qualifications.

Question 19

Employers often pay a higher wage:

A)when it is easy to verify worker qualifications.
B)in a lower-skilled labor market.
C)when it is hard to monitor worker productivity.
D)in a labor market with excess workers.

Question 20

Forbes magazine (October 16, 2016) reports that Walmart pays its workers an efficiency wage. This means that Walmart:

A)rewards workers for being more productive than coworkers.
B)pays bonuses when overall productivity rises.
C)pays higher wages when workers generate new ideas that improve productivity.
D)pays above the going rate for workers in similar jobs at other companies.

Question 21

Which of the following principles does NOT support the notion of efficiency wages?

A)the diminishing marginal utility principle
B)the marginal principle
C)the opportunity cost principle
D)the cost-benefit principle

Question 22

What impact has technology had on the difference between the income of the best engineers and that of good engineers?

A)It has had little impact on the gap in income.
B)It has increased the gap in income significantly.
C)It has decreased some of the gap in income.
D)It has eliminated the large gap that once existed.

Question 23

When technology enables the best service provider in a field to supply a huge number of buyers instead of being limited to a small market, the larger market may become:

A)highly competitive.
B)characterized by losses on average.
C)dominated by one "superstar" provider.
D)an efficiency market.

Question 24

The average income of actresses may not be indicative of an aspiring actress's expected earnings because:

A)there is a very narrow range of incomes among actresses.
B)only a few actresses have much talent.
C)the few actresses who do not succeed skew the average income much lower than would be expected of most actresses.
D)a few superstars with extremely high earnings may skew the average income much higher than all but a few can hope to earn.

Question 25

Star actors in live theater typically do not earn as much as star actors in movies. A key reason for this is that:

A)technology allows many more people to view movies than plays.
B)plays do not require as much acting skill as movies.
C)there are more substitutes for movie actors than for theater actors.
D)government regulations set the pay scales in each of these industries.

Question 26

Which of the following is a valid explanation of why a star movie actor earns many times more than a star Broadway actor?

A)Government regulations specify how much each type of actor earns.
B)In one evening, many more people can view a movie than can see a Broadway play.
C)There is discrimination against Broadway actors but not against movie actors.
D)Broadway actors are far less skilled than movie actors.

Question 27

A major factor behind the exceptionally high salaries of superstars is:

A)a huge market supply, owing to the star status of such individuals.
B)limited demand, which results in a very high equilibrium price.
C)technological advance, which has expanded the market for superstar talent.
D)that stars receive large compensating differentials.

Question 28

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

A)a workplace offset.
B)a stress adjustment.
C)an offset adjustment.
D)a compensating differential.

Question 29

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

A)similar; different; their jobs differ in things like risk or enjoyment
B)different; the same; they show different work effort
C)similar; the same; adjustments are made to equalize the salaries
D)different; different; salaries are based on individual productivity

Question 30

Compensating differentials lead to:

A)equal salaries for equal levels of human capital.
B)higher salaries for more unpleasant jobs.
C)lower salaries for more unpleasant jobs.
D)incomes based solely on productivity.

Question 31

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)discrimination based on time preferences.
B)irrational decision making by an employer.
C)a compensating differential.
D)an efficiency wage.

Question 32

Which of the following is an example of a labor market characterized by compensating differentials?

A)A nursery school teacher earns less than a university professor.
B)Two real estate agents paid on commission earn different salaries due to different listings and sales volumes.
C)Adjustments are made to the salaries of teachers in different states to equalize the purchasing power of income.
D)Outside window washers of skyscrapers earn higher salaries than outside window washers of single family homes.

Question 33

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

A)The differential is for a negative risk that you care about more than most people do.
B)The differential is for a large negative risk that you don't care about as much as most people do.
C)The differential is for a positive job aspect that you don't care about as much as most people do.
D)The differential is for a slightly positive job aspect that you care about more than most people do.

Question 34

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

A)The differential is for a large negative risk that you care about more than most people do.
B)The differential is for a slightly negative risk that you don't care about as much as most people do.
C)The differential is for a large positive job aspect that you care about more than most people do.
D)The differential is for a slightly positive job aspect that you don't care about as much as most people do.

Question 35

Kaila wants her employer to pay her 20% more for making night deliveries in a high-crime neighborhood than the day delivery people receive. Most of the delivery people are willing to make night deliveries in the neighborhood for only a 10% differential. Kaila is seeking:

A)a compensating differential based on her individual concerns about the risks.
B)a compensating differential because others are undervaluing her concerns.
C)less than a compensating differential because she is asking for more than others are.
D)more than a compensating differential because she has greater concerns than most workers.

Question 36

When a compensating differential is paid, then:

A)all workers who do the same job for the employer receive the same differential.
B)jobs with negative attributes pay less.
C)jobs with positive attributes pay more.
D)each worker individually negotiates a differential based on personal preferences and dislikes.

Question 37

A compensating differential is an:

A)adjustment to wages that compensates for lost work due to the use of robotics.
B)adjustment to work hours that allows low-wage employees to earn more.
C)difference in wages that offsets the desirable or undesirable aspects of a job.
D)difference in wages that adjusts for differences in worker productivity.

Question 38

How is the labor market for estheticians affected if the government requires estheticians to have licenses to work in the field?

A)Market demand decreases, leading to a lower equilibrium wage and a lower quantity of labor.
B)Market demand increases, leading to a higher equilibrium wage and a higher quantity of labor.
C)Market supply increases, leading to a lower equilibrium wage and a higher quantity of labor.
D)Market supply decreases, leading to a higher equilibrium wage and a lower quantity of labor.

Question 39

When the government requires that a person have a license to work in a particular occupation, then in the labor market for that occupation:

A)supply decreases.
B)supply increases.
C)demand decreases.
D)demand increases.

Question 40

What happens in the labor market for public school teachers when a state government raises the minimum educational standards for certification as a public school teacher?

A)The demand for teachers decreases, resulting in a lower wage and lower quantity of labor.
B)The supply of teachers decreases, resulting in a higher wage and lower quantity of labor.
C)The demand for teachers increases, resulting in a higher wage and higher quantity of labor.
D)The supply of teachers increases, resulting in a lower wage and higher quantity of labor.

Question 41

The government increases the training requirements to obtain an electrician's license. What impact will this have in the labor market for electricians?

A)The demand for electricians will decrease, resulting in a lower wage and lower quantity of labor.
B)The demand for electricians will increase, resulting in a higher wage and higher quantity of labor.
C)The supply of electricians will decrease, resulting in a higher wage and lower quantity of labor.
D)The supply of electricians will increase, resulting in a lower wage and higher quantity of labor.

Question 42

What will happen in the labor market if the government requires that employers pay employees a higher wage for overtime hours than for regular work hours?

A)Labor demand will decrease because workers will cut back on work effort.
B)More workers will demand jobs, raising labor demand.
C)With extra pay, workers will not need extra hours.
D)Workers will be more willing to work additional hours.

Question 43

What will happen in the labor market for commercial truck drivers if the government raises the requirements needed to obtain a commercial driver's license?

A)The supply of truck drivers will decrease, resulting in a higher wage and lower quantity of labor.
B)The supply of truck drivers will increase, resulting in a lower wage and higher quantity of labor.
C)The demand for truck drivers will decrease, resulting in a lower wage and lower quantity of labor.
D)The demand for truck drivers will increase, resulting in a higher wage and higher quantity of labor.

Question 44

What will happen in the labor market for aestheticians if the government deregulates the industry and no longer requires individuals to obtain a license to work as aestheticians?

A)The supply of workers will decrease, resulting in a higher wage and lower quantity of labor.
B)The supply of workers will increase, resulting in a lower wage and higher quantity of labor.
C)The demand for workers will decrease, resulting in a lower wage and lower quantity of labor.
D)The demand for workers will increase, resulting in a higher wage and higher quantity of labor.

Question 45

Economic theory implies that when a minimum wage is set above the equilibrium wage, _____ will result.

A)lower wages
B)a shortage
C)unemployment
D)more jobs

Question 46

Economic theory implies that if a minimum wage is set above the equilibrium wage, there will _____ workers, and _____ will result.

A)not be enough; overemployment
B)be too many; underemployment
C)not be enough; unemployment
D)be too many; unemployment

Question 47

Studies of the minimum wage indicate that minimum wage laws _____ employment opportunities for low-skilled workers, but there is less agreement regarding _____.

A)reduce; the amount of the reduction
B)reduce; whether wages rise or fall
C)increase; the amount of the increase
D)increase; whether wages rise or fall

Question 48

Arguments in favor of minimum wage laws do NOT include that they:

A)reduce poverty.
B)increase unemployment.
C)compensate for a lack of bargaining power among low-skilled workers.
D)provide higher wages to those willing to work.

Question 49

The extent to which minimum wage laws cause unemployment depends on how far _____ equilibrium the wage is set and on _____.

A)above; whether the slope of the labor demand curve is positive
B)below; the degree of worker commitment
C)above; the elasticity of labor demand
D)below; the number of workers in the market

Question 50

The more _____ is the demand for low-skilled workers, the _____ is the impact of minimum wage laws on the number of jobs available for low-skilled workers.

A)elastic; more constant
B)inelastic; more variable
C)elastic; smaller
D)inelastic; smaller

Question 51

Unions are organizations that:

A)jointly represent a group of workers in negotiating with employers.
B)enable groups of workers to start their own companies.
C)represent employers in negotiating with employees.
D)local governments sponsor to set work safety standards for employers.

Question 52

Organizations that jointly represent a group of workers in negotiating with employers are called:

A)clubs.
B)unions.
C)cartels.
D)sponsors.

Question 53

Unions try to _____ union members by _____.

A)ensure more jobs for; reducing wages
B)ensure more jobs for; raising wages
C)raise wages of; shifting the labor supply curve to the left
D)raise wages of; shifting the labor supply curve to the right

Question 54

How does the pay of unionized workers compare with that of nonunionized workers in similar jobs, on average?

A)The average incomes are the same, but unionized workers' incomes vary far less.
B)Unionized workers earn the same.
C)Unionized workers earn less.
D)Unionized workers earn more.

Question 55

Unions both _____ and _____.

A)boost company productivity; increase the wages of union members
B)alter regulations; reduce the wages of union members
C)increase the wages of union members; reduce company costs
D)reduce company productivity; reduce company costs

Question 56

What changes in a labor market graph if the workers of a company form a union?

A)The labor market supply curve shifts to the right.
B)The labor market supply curve shifts to the left.
C)The labor market demand curve shifts to the right.
D)The labor market demand curve shifts to the left.

Question 57

If workers in a labor market form a union, wages should _____, and the quantity of labor employed should _____.

A)decrease; decrease
B)increase; increase
C)increase; decrease
D)increase; increase

Question 58

How might the formation of a union impact the productivity of a company?

A)Unions reduce productivity by raising costs.
B)Unions reduce productivity by raising worker confidence and morale.
C)Unions increase productivity by ensuring that there are more workers on the payroll.
D)Unions increase productivity by improving communication between workers and management.

Question 59

When an employer negotiates with an effective union, the wages of union members _____, and the number of jobs _____.

A)increase; decreases
B)increase; increases
C)decrease; decreases
D)decrease; increases

Question 60

Monopsony power exists in a labor market when there:

A)is a major seller of labor who can exert influence to sell at higher prices.
B)is a major buyer of labor who can exert influence to pay lower prices.
C)are many sellers of labor who each have little power but can still impact price.
D)are many buyers of labor who each have little power but can still impact price.

Question 61

A business using its bargaining power as a major buyer of labor to pay lower prices, including lower wages, is exerting _____ power.

A)compensating
B)union
C)monopsony
D)monopoly

Question 62

When an employer exerts monopsony power:

A)product prices will be higher.
B)product prices will be lower.
C)wages will be higher.
D)wages will be lower.

Question 63

The _____ wage resulting from an employer with monopsony power can be offset through _____.

A)low; minimum wage laws
B)low; discrimination
C)high; minimum wage laws
D)high; discrimination

Question 64

When a minimum wage is imposed in a monopsony labor market, the _____ may not reduce the _____.

A)minimum wage; number of employers
B)minimum wage; number of jobs
C)number of employers; minimum wage
D)number of employers; product price

Question 65

In a monopoly, there is one _____; in a monopsony, there is one _____.

A)unit of product; price
B)price; unit of product
C)seller; buyer
D)buyer; seller

Question 66

If one company provides 70% of the jobs in a town, the company could exert _____ power in its labor market.

A)differential
B)compensating
C)monopoly
D)monopsony

Question 67

Why can a company with monopsony power in its labor market succeed in paying low wages?

A)Workers don't have other employment options.
B)The employer doesn't have other options for employees.
C)There is a very limited supply of workers.
D)It must charge a low product price, so it cannot afford to pay a high wage.

Question 68

Monopsony power is held by a _____, and monopoly power is held by a _____.

A)seller; buyer
B)buyer; seller
C)producer; regulator
D)regulator; producer

Question 69

In a monopsony labor market:

A)employees bargain with market power through a union.
B)employees have an advantage, due to their human capital.
C)the employer pays a low wage.
D)the employer uses an attractive benefit package to attract good employees.

Question 70

Treating people differently based on characteristics such as gender, race, ethnicity, sexual orientation, religion, disability, social class, or other factors is:

A)union bias.
B)monopsony capital.
C)compensating differentials.
D)discrimination.

Question 71

Which of the following is NOT true regarding discrimination in labor markets?

A)Any differences in wages between members of different racial or age groups is due to discrimination.
B)Groups may differ in wages, due to differences in human capital or the types of jobs held.
C)Differences in effort or bargaining power across groups can lead to differences in wages across groups.
D)Discrimination may result in some workers being underpaid.

Question 72

Unobserved influences on wages do NOT include:

A)ability.
B)education level.
C)effort.
D)bargaining power.

Question 73

If there is discrimination against people of a particular race in labor markets, and workers of that race constitute the majority of workers in a particular occupation, all workers in that occupation may end up:

A)underworked.
B)overworked.
C)underpaid.
D)overpaid.

Question 74

Which of the following statements is true regarding discrimination in labor markets?

A)When discrimination occurs, all workers are treated equally.
B)If two workers in the same job have different salaries, one is a victim of discrimination.
C)If average income differs across groups of workers, there is discrimination.
D)Discrimination accounts for only part of the differences in wages across groups of workers.

Question 75

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

A)impacts wages
B)exists but has no impact
C)benefits groups that are discriminated against
D)accounts for all differences in wages across groups of workers

Question 76

Discrimination refers to:

A)the identification of differences among people that could affect their performance and preferences.
B)the identification of influences on people that lead them to adopt different attitudes and beliefs.
C)treating people differently based on such characteristics as gender, race, ethnicity, sexual orientation, religion, disability, social class, or other factors.
D)treating people differently based on their productivity.

Question 77

Which of the following factors would not lead to differences in average wages across racial groups?

A)the average human capital level among members of each racial group
B)types of jobs held by people in each racial group
C)the average family size in each racial group
D)the amount of bargaining power held by workers of each racial group

Question 78

The three sources of discrimination do NOT include:

A)statistical discrimination.
B)implicit bias.
C)prejudice.
D)malevolent bias.

Question 79

Prejudice is:

A)a preconceived bias, not based on reason or experience, against a group.
B)the use of observations about the average characteristics of a group to make inferences about an individual member of that group.
C)judgments shaped by the unconscious attribution of particular qualities to specific groups.
D)a feeling of inferiority, believing that everyone else is better and more skilled.

Question 80

A preconceived bias against a group that's not based on reason or experience is known as:

A)implicit bias.
B)prejudice.
C)statistical discrimination.
D)compensatory bias.