Question 1

Compensating differentials are associated most closely with which of the following?

Accepted Answer

Compensating differentials refer to the difference in wages paid for jobs that have varying levels of difficulty, risk, and inconvenience. Hazardous jobs are typically associated with higher compensating differentials because they pose a greater risk to workers' health and safety. Therefore, choice A is the best answer.

Question 2

A number of economists have estimated the impact of unionisation on workers' wages.Which of the following is one conclusion reached by these studies?

Accepted Answer

Studies show that being in a union increases a worker's wages by about 10 per cent, holding constant other factors that influence wages. This is known as the "union wage premium."

Question 3

Higher wages that compensate workers for unpleasant aspects of a job are called compensating differentials.

Accepted Answer

Compensating differentials refer to the additional pay offered to workers to compensate for the undesirable or risky aspects of a job, such as exposure to hazardous materials or working in extreme weather conditions.

Question 4

Wage differences among workers of different races and gender could be due to all of the following except

Accepted Answer

Labor unions can help to mitigate wage differences among workers of different races and genders by negotiating for equal pay and promoting diversity in the workplace. The other options (A, B, and C) are all factors that can contribute to wage differences.

Question 5

The most important factor contributing to wage differences in the labour market is differences in the level of education and training among workers.

Accepted Answer

Research shows that workers with higher levels of education and training tend to earn more than those with less education and training, as they have acquired valuable skills and knowledge that are in high demand in the labour market. Therefore, education and training are important factors contributing to wage differences among workers.

Question 6

One implication of compensating differentials is that laws passed to protect the health and safety of workers may not make workers better off than they were prior to the passages of the laws.Why is this so?

Accepted Answer

The answer of One implication of compensating differentials is that...

Question 7

Most economists believe that a small amount of the gap between the wages of white males and the wages of other groups is due to discrimination.Which of the following factors is not another factor that explains part of this gap?

Accepted Answer

The answer of Most economists believe that a small amount...

Question 8

In labour economics,the term 'customer discrimination' refers to a situation where customers are charged different prices for services rendered by a firm.

Accepted Answer

Customer discrimination refers to a situation where firms treat customers differently based on their personal characteristics such as race, gender, or age. It is not related to the pricing of services. The correct term for charging different prices to different customers is price discrimination.

Question 9

An organisation of employees that has the legal right to bargain with employers about wages and working conditions is called a

Accepted Answer

The legal right to bargain with employers about wages and working conditions is a defining characteristic of a labour union. A closed shop refers to a workplace where only union members are hired, while a guild is typically associated with medieval craftsmen's associations. Monopsony refers to a market with a single buyer.

Question 10

The difference between the salaries paid to movie stars and to actors who play supporting roles is much greater today than it was in the 1930s and 1940s.What factor explains this increase in relative salaries over time?

Accepted Answer

The answer of The difference between the salaries paid to...

Question 11

Worker discrimination occurs when

Accepted Answer

The answer of Worker discrimination occurs when
...

Question 12

While labour unions tend to negotiate above-equilibrium wage rates for their members,they also tend to reduce the quantity of labour hired.

Accepted Answer

Labour unions negotiate higher wages for their members, but this increase in wages leads to a decrease in demand for labour, as employers may not be willing or able to pay the higher wages for the same amount of workers. This results in a reduction of the quantity of labour hired.

Question 13

In a study conducted by Marianne Bertrand and Sendhil Mullianthan,identical resumés were sent in response to help wanted ads in newspapers,with half of the resumés assigned an African-American-sounding name and half assigned a white-sounding name.The study found that

Accepted Answer

The study found that employers were 50 per cent more likely to interview workers with white-sounding names, indicating a clear bias against those with African-American-sounding names.

Question 14

Customer discrimination occurs when

Accepted Answer

Customer discrimination occurs when customers refuse to buy products produced by a racially diverse workforce or a company that hires employees based on non-merit factors like race, religion, or gender. A, C, and D are forms of discrimination, but they are not customer discrimination.

Question 15

The primary purpose of labour unions is to

Accepted Answer

The primary purpose of labour unions is to negotiate with employers about wages and working conditions on behalf of their members. While safety training may be included in these negotiations, it is not the sole purpose of the union. Similarly, while unions may advocate for fair and equitable wages, ensuring that all members earn identical incomes would not be feasible or practical. Finally, while unions may endorse political candidates and donate money to them, this is not their primary purpose.

Question 16

Competitive markets tend to eliminate economic discrimination,but there are many historical examples of firms that hired few,or no,black or female workers.Which of the following is not a reason for the persistence of this form of discrimination?

Accepted Answer

Laws passed by the federal government that made it more expensive to hire black or female workers would have actually encouraged employers to hire more white male workers, as it would have been less expensive. Therefore, this is not a reason for the persistence of discrimination, but rather a potential exacerbating factor. The other options (A, B, and C) present valid reasons for the persistence of discrimination.

Question 17

Differences in marginal revenue products are the most important factor in explaining wage differences.Other factors that explain wage differences include all but one of the following.Which factor does not help explain differences in wages?

Accepted Answer

Cognitive differentials refer to differences in mental abilities and skills, which directly impact productivity and thus can explain wage differences. However, they are not considered an external factor like the others listed (B, C, D) that influence wage differences beyond individual productivity.

Question 18

Paying a person a lower wage or excluding a person from an occupation on the basis of an irrelevant characteristic such as race or gender

Accepted Answer

Economic discrimination refers to the practice of treating individuals differently in their employment or wages based on irrelevant characteristics like race or gender.

Question 19

Which of the following is a reason why it is difficult to estimate the extent of economic discrimination in the labour market?

Accepted Answer

Differences in wages can be attributed to many other factors besides discrimination, such as differences in productivity and preferences. This makes it difficult to isolate discrimination as the sole cause of wage gaps. A, B, and C are not accurate reasons why it is difficult to estimate the extent of economic discrimination in the labour market.

Question 20

That some talented people may not enter an occupation because they have heard that people with their personal characteristics do not get hired in that occupation is known as

Accepted Answer

This situation is referred to as a negative feedback loop, where talented individuals may not enter an occupation due to perceived discrimination, which in turn reinforces the stereotype that individuals with certain characteristics are not suited for the job. This creates a self-perpetuating cycle of discrimination, with qualified individuals being excluded from certain occupations.

Quiz 10: Monopoly and Antitrust