Question 1

What theory would lead you to be suspicious of a job advertisement that reads: "Help Wanted! Fun and exciting job with excellent pay"?

Accepted Answer

Compensating differentials suggest that higher pay is offered for jobs that are less desirable or involve unpleasant working conditions. The use of buzzwords such as "fun" and "exciting" in a job advertisement without mentioning any specific job duties or qualifications could indicate that the job may be less desirable or involve unpleasant working conditions, leading to the use of compensating differentials to attract workers.

Question 2

Leroy has a cause: He loves cats.As an economist,he could earn $100,000 as a faculty member,but instead he decides to devote his time to the Humane Society as its chief economist.Knowing nothing else,what do you expect his salary with the Humane Society to be,and why?

Accepted Answer

The compensating differential theory suggests that individuals may accept lower wages in return for non-monetary benefits such as job satisfaction or personal beliefs. Therefore, Leroy's decision to leave his higher-paying job to work for the Humane Society, driven by his love for cats, suggests that he values this non-monetary benefit more than his potential higher salary as a faculty member. Hence, his salary at the Humane Society is likely to be lower than $100,000.

Question 3

What theory might partially explain why an ugly person might earn less than a beautiful person?

Accepted Answer

The compensating differential theory suggests that individuals are paid more or less based on the undesirable or desirable aspects of a particular job or profession. In this case, beauty is considered desirable, and therefore, beautiful people might earn more than those who are considered unattractive. This is not to say that all attractive people will earn more or that unattractive people will always earn less, but the theory suggests that attractiveness can be one factor that affects earnings.

Question 4

As the mayor of a local town,I have the power to repeal workplace safety laws.How would repealing all workplace safety laws affect the wages of construction workers building the local school?

Accepted Answer

The answer of As the mayor of a local town,I...

Question 5

As the mayor of a local town,I have the power to repeal workplace safety laws.How would repealing all workplace safety laws affect the wages of kindergarten teachers,who work in relatively safe jobs,at the local school?

Accepted Answer

The answer of As the mayor of a local town,I...

Question 6

The popular TV shows Ice Road Truckers and Ax Men portray workers engaged in dangerous jobs such as driving big trucks over ice and cutting down big trees.What would you expect the salary of these workers to be,and why?

Accepted Answer

Workers in dangerous jobs such as driving big trucks over ice and cutting down big trees are often compensated with high salaries due to the risks associated with their work. The possibility of injury or even death on the job justifies higher pay.

Question 7

What theory would justify a job advertisement that reads: "Help Wanted! Dangerous job but excellent pay and benefits"?

Accepted Answer

Compensating differentials theory states that workers will demand higher wages to compensate them for working in jobs that are more dangerous, uncomfortable, or unpleasant. Therefore, the job advertisement is justifying the higher pay by acknowledging the danger of the job.

Question 8

Why might I expect a job as a college professor to pay a wage lower than the wage one could receive in the private sector?

Accepted Answer

College professors may receive positive compensating differentials in the form of job stability, greater flexibility with scheduling, intellectual freedom, and the opportunity to work on research projects. However, these benefits may come at the expense of lower wages compared to private sector jobs.

Question 9

Nicole,a woman,is more educated and better trained than Tom,a male.Despite these differences in education and training,Tom still earns more because he is a coal miner,whereas Nicole is a secretary.Which model best explains the fact that Tom earns more than Nicole?

Accepted Answer

The model of compensating differentials explains that individuals are paid different salaries based on the compensation necessary to attract them to different types of jobs. In this case, Tom's higher salary is a result of the compensation he receives for the potentially dangerous and physically demanding nature of his job as a coal miner, while Nicole's lower salary is a result of the lower compensation needed to attract individuals to work as a secretary. Despite differences in education and training, the compensating differential adjusts for these factors and explains the difference in salary between Tom and Nicole.

Question 10

An employee gains work experience by staying in a job for a long period of time.What would an economist expect to happen to this employee's wages?

Accepted Answer

Economists generally expect wages to increase as an employee gains experience in a given field. This is because experience typically leads to improved job performance and increased productivity, which can then signal greater value to employers and result in higher wages. However, other factors such as supply and demand in the labor market can also impact wage levels.

Question 11

Using a compensating differential wage theory,why do some individuals earn more than others?

Accepted Answer

The answer of Using a compensating differential wage theory,why do...

Question 12

I'm a physician in New York City,my favorite city in the world.What would be some of the non-monetary determinants of my wages?

Accepted Answer

Education typically increases wages for physicians, but the desirability of working in New York City may offset some of that increase due to higher competition for jobs. Therefore, physicians in high-demand locations may not see the full benefits of their education in terms of wages.

Question 13

Some employers are willing to provide job training for workers.The employer might be willing to pay for the training when:

Accepted Answer

Employers are more likely to pay for training that is specific to their operations or needs, as this directly benefits them by enhancing the worker's productivity and effectiveness within their specific context.

Question 14

If Nicole is more educated and better trained than Tom,economists would use the ___________________ model to predict that Nicole should earn the higher wage.

Accepted Answer

The human capital model emphasizes that education and training increase individuals' productivity and earning potential. Therefore, it would predict that Nicole, who is more educated and better trained than Tom, should earn a higher wage.

Question 15

As a college student,you realize that you have become an expert at playing video games.If you saw a commercial on TV seeking applications for video-game testers (your dream job),what would you expect the job to pay?

Accepted Answer

The answer of As a college student,you realize that you...

Question 16

When comparing individuals' wages,what effect do differences in their levels of education and training have?

Accepted Answer

Education and training can partially explain why some individuals earn higher wages than others, as these factors can increase an individual's productivity and competitiveness in the job market, leading to higher wages. However, other factors such as innate abilities, job market conditions, and discrimination can also play a role in determining wages.

Question 17

What theory would suggest that learning material on your own generates the same benefits as those achieved by formally attending classes and receiving a degree?

Accepted Answer

The human capital theory suggests that individuals can increase their value to society by investing in themselves through education and training. Learning material on their own can still contribute to this increase in value, even if not formally attending classes and receiving a degree. Therefore, the theory supports the idea that self-learning can generate similar benefits to formal education.

Question 18

Late-night employees working in a 24-hour store often earn more than similar employees who work the day shift.What explains this difference in pay?

Accepted Answer

Late-night employees working in a 24-hour store face different working conditions, such as working during unconventional hours and a higher risk of safety concerns (e.g., robberies). These working conditions are compensated with a positive compensating differential, which means that they receive higher pay than similar employees who work the day shift.

Question 19

Coal mining is a dangerous occupation.Which example correctly depicts the effects of new safety regulations on the negative compensating differential for the job of a coal miner?

Accepted Answer

The passage of workplace safety laws decreases the severity of the negative compensating differentials for such a job. When safety regulations are implemented, the job becomes less dangerous and workers require less compensation for the risks they take. Therefore, the negative compensating differential becomes less severe.

Question 20

Some employers are willing to provide job training for workers.However,an employer might require the worker to pay for the training when the training is:

Accepted Answer

Employers are more likely to require workers to pay for training when it involves general skills that could be used in any job for any employer, as these skills enhance the worker's employability elsewhere and do not exclusively benefit the current employer.

Quiz 15: Income,inequality,and Poverty