Question 1

Someone might expect a fast-food job to pay a wage higher than the minimum wage because it

Accepted Answer

Fast-food jobs have high turnover rates, and employers may offer efficiency wages (wages higher than minimum wage) to reduce turnover and retain employees. B, C, D, and E do not provide a compelling reason for a fast-food job to pay higher than minimum wage.

Question 2

Using an efficiency wage theory,why do some individuals earn more than the market equilibrium wage?

Accepted Answer

Efficiency wage theory suggests that employers pay their workers more than the market equilibrium wage to encourage them to be more productive. This is because higher wages can motivate workers to put in more effort, reduce turnover and absenteeism, and improve the quality of work. Therefore, individuals who earn more than the market equilibrium wage are likely to be those who are more productive and valuable to the company.

Question 3

As an employer,Giselle wants productive employees who will stay with the firm for an extended period of time,so she should pay

Accepted Answer

The answer of As an employer,Giselle wants productive employees who...

Question 4

One frequently sees a strong relationship between median annual earnings and education level.What theory would suggest that education provides valuable skills?

Accepted Answer

The theory that suggests that education provides valuable skills is the human capital theory. This theory posits that education and training increase individuals' human capital, which in turn enhances their productivity and earning potential in the labor market. Therefore, the strong relationship between median annual earnings and education level can be explained by the notion that more education leads to more valuable skills and higher productivity.

Question 5

In recent decades,more women than men have received undergraduate degrees.Consequently,women's wages will ________ according to ________ theory.

Accepted Answer

The human capital theory suggests that education and training lead to higher productivity and therefore higher wages. As more women than men have received undergraduate degrees in recent decades, women's wages are likely to increase due to their increased human capital.

Question 6

The cost of education at an Ivy League university is more than $50,000 per year.At a community college,the cost of education is only a few thousand dollars per year.What economic theory could justify enrolling in an Ivy League school?

Accepted Answer

The economic theory of signaling suggests that attending an Ivy League school sends a signal to potential employers that the student is exceptional and has the ability to handle rigorous coursework. This perceived higher ability can lead to higher wages and better job opportunities, making the high cost of education at an Ivy League school potentially worth it in the long run.

Question 7

When workers of the same ability are not paid the same amount because of a group characteristic such as ethnic origin or age,we call this

Accepted Answer

This situation is clearly wage discrimination, as workers are not being paid equally despite having the same ability. Efficiency wage theory refers to the idea that paying workers more can lead to increased productivity, compensating differential theory refers to paying workers more for more unpleasant or risky jobs, winner-take-all theory refers to situations where a few top performers earn a disproportionate amount of income, and occupational crowding refers to certain groups being overrepresented in certain occupations.

Question 8

As the owner of a television studio,Kelvin is concerned about the high wages he must pay his employees relative to wages paid by other television studio owners.A consultant has suggested that his location is a contributing factor to these higher wages because he has built his studio in a(n)

Accepted Answer

The answer of As the owner of a television studio,Kelvin...

Question 9

If Hanna were the chief economics planner in Mitchell,South Dakota,a rural location that boasts the world's largest corn palace,what would be her biggest challenge in encouraging economic development in terms of location?

Accepted Answer

The biggest challenge for economic development in a rural location like Mitchell, South Dakota would be attracting and retaining skilled workers. If the location is deemed undesirable by potential employees, employers will have to pay higher wages to attract them. This can make it difficult for businesses to compete with those located in more desirable areas, which can hinder economic growth. Therefore, option B is the best choice as it addresses this challenge.

Question 10

A white male from the Midwest earns $50,000 a year and a white female earns $40,000 a year.What can we conclude about this situation?

Accepted Answer

The information provided does not include details about the job roles, experience, education, or other factors that could explain the pay difference, making it impossible to conclude if discrimination is present based solely on the salary difference.

Question 11

What theory suggests that learning material on your own would not generate the same benefits as those achieved by formally attending classes and receiving a degree?

Accepted Answer

The signal theory suggests that attending classes and receiving a degree serve as a signal to employers that the individual possesses the necessary skills and knowledge to perform well in their job. Learning material on your own may not generate the same signal and may not be valued by employers as much as a formal degree.

Question 12

Christine's mother told her that she needed to go to college because it would be the only way she could get a high-paying job.What economic theory would justify her advice?

Accepted Answer

The human capital theory suggests that investing in education and training can increase a person's skills and knowledge, and consequently their productivity and earning potential in the labor market. Christine's mother's advice aligns with this theory as she believes that attending college will provide Christine with the skills and knowledge necessary to obtain a high-paying job.

Question 13

As an employee at a convenience store,Jorge is content to stay with his employer because his wage is 50 percent higher than the market rate.What economic theory could justify his employer's willingness to pay above the market rate?

Accepted Answer

The efficiency wage theory justifies an employer's willingness to pay above the market rate. It suggests that paying higher wages can lead to increased productivity, lower turnover, and better morale among employees, making it a beneficial strategy for the employer.

Question 14

As an Internet retailer,Luciana needs to find a location for her headquarters.If Luciana is primarily concerned with the cost of labor and wants to pay those she hires as little as possible,Luciana should establish her business in a(n)

Accepted Answer

The answer of As an Internet retailer,Luciana needs to find...

Question 15

Between two unionized firms,one would expect workers to receive higher wages in a firm

Accepted Answer

In a unionized firm where the threat of a strike is high, workers have more bargaining power and are able to negotiate higher wages. The threat of a strike gives them leverage over the firm, which incentivizes the firm to meet their demands.

Question 16

What theory would justify a job advertisement that reads: "Help Wanted! Looking for a person willing to stay with the firm for a long time.Excellent pay"?

Accepted Answer

The advertisement offers "excellent pay" for a person willing to stay with the company for a long time. This aligns with the efficiency wage theory, which suggests that firms may offer higher wages than necessary to attract and retain high-quality workers who are productive and motivated. By offering higher wages, the theory posits that companies can reduce employee turnover and increase worker effort and productivity, ultimately benefiting the company's bottom line.

Question 17

Besides sex discrimination,women might earn less than men in the workplace because women

Accepted Answer

Studies have shown that women tend to have fewer years of work experience than men due to factors such as taking time off for child-rearing or caregiving responsibilities. This can result in lower wages as experience tends to correlate with higher pay.

Question 18

What is a significant difference between a union job and a nonunion job in terms of pay?

Accepted Answer

Union jobs often pay more than nonunion jobs because unions have the power to negotiate wages on behalf of their members, and the threat of a strike is a significant bargaining tool that can lead to higher wages.

Question 19

What theory would suggest that an employee should receive a wage higher than the equilibrium wage rate?

Accepted Answer

The efficiency wage theory suggests that paying employees above the equilibrium wage rate can increase their productivity and reduce turnover, ultimately benefiting the company.

Question 20

When comparing a union job to a nonunion job,we would expect to see

Accepted Answer

Union jobs typically offer higher wages and better benefits compared to nonunion jobs due to the collective bargaining power of the union. The union negotiates with the employer on behalf of its members, and this results in better pay and benefits for the employees holding union jobs.

Quiz 15: Income,inequality,and Poverty