Question 1

The Arrow-Capon model of a dynamic shortage results from which of the following?&#10;A) Lags in decision-making as a result of institutional arrangements&#10;B) A failure to raise wages&#10;C) The ubiquity of monopsonistic labour markets&#10;D) Technological change.

Accepted Answer

The Arrow-Capon model of a dynamic shortage is a result of lags in decision-making as a result of institutional arrangements. It is based on the assumption that institutions, such as unions and governments, create delays in wage adjustments, which can lead to labor shortages.

Question 2

Which of the following adjustments are most often used to overcome labour shortages&#10;A) Raising wages&#10;B) Increasing overtime working&#10;C) Reducing output&#10;D) Increasing capital intensity.

Accepted Answer

B

Question 3

Over-education means that&#10;A) An individual has a higher level of education than is the norm in a particular occupation&#10;B) The individual has a higher level of education than his or her ability suggests is appropriate&#10;C) The individual is merely in a transitional job&#10;D) None of these.

Accepted Answer

Over-education refers to an individual having a higher level of education than is typically required for a particular occupation. This can lead to dissatisfaction with the job and underutilization of the individual's skills and education. Option B may refer to underperformance or lack of qualifications, while option C is unrelated to the concept of over-education. Option D is incorrect as one of the options must be correct.

Question 4

Under-education may persist because&#10;A) Such workers are unable to obtain a job which requires their own level of education&#10;B) Experience is a substitute for education&#10;C) The individual has higher productivity compared to matched workers with the same level of education&#10;D) None of these.

Accepted Answer

The answer of Under-education may persist because&#10;A) Such workers are...

Question 5

Employer discrimination will result in&#10;A) Greater profits for the employer&#10;B) Firm or occupational segregation&#10;C) An increase in the monopoly power of the employer&#10;D) Lower wages for those subject to the discrimination.

Accepted Answer

The answer of Employer discrimination will result in&#10;A) Greater profits...

Question 6

The index number problem means that&#10;A) The equilibrium outcome has been ignored&#10;B) The intercept term has not been included in the estimating equation&#10;C) No allowance has been made for differing personal characteristics between groups&#10;D) Different estimates of discrimination are derived according to which group is the reference group.

Accepted Answer

The index number problem refers to the fact that different estimates of discrimination can be derived depending on which group is chosen as the reference group. This problem arises when trying to measure the difference in outcomes between different groups, such as wages between men and women, or test scores between different racial groups. Simply comparing the averages of these groups can be misleading, as there may be other factors at play. Instead, economists often use measures such as the percentage difference in outcome or the index number, but the choice of reference group can affect the magnitude and sign of these measures.

Question 7

Statistical discrimination arises because&#10;A) Employers are non-profit maximisers&#10;B) There are difficulties in estimating the amount of discrimination precisely&#10;C) There is misspecification.&#10;D) There are differences in mean abilities across groups.

Accepted Answer

Statistical discrimination arises due to differences in mean abilities across groups.

Question 8

Non-work-limited disabled workers&#10;A) Are not covered by anti-discrimination legislation&#10;B) Are workers who have been misclassified as disabled as a result of justification bias&#10;C) Always suffer from discrimination&#10;D) Have similar earnings to the non-disabled.

Accepted Answer

The answer of Non-work-limited disabled workers&#10;A) Are not covered by...

Deck 5: Extensions of Labour Demand: Mismatches in the Labour Market