Question 1

In 2012, the median earnings of union members were actually lower than the wages of workers not represented by unions.

Accepted Answer

Union members typically have higher median earnings compared to non-union workers due to collective bargaining agreements that often secure better wages and benefits.

Question 2

Regardless of gender and ethnicity, more education is associated with higher median earnings.

Accepted Answer

Studies have consistently shown that having more education is positively correlated with higher median earnings, regardless of gender and ethnicity.

Question 3

Wage differences across jobs reflecting the fact that some jobs are less pleasant than others are called efficiency wages.

Accepted Answer

Efficiency wages refer to higher-than-market wages paid by employers to increase worker productivity and reduce turnover, not to compensate for unpleasant job conditions. The term for wage differences due to job unpleasantness is "compensating differentials."

Question 4

Differences in the attractiveness of different types of jobs resulting in differences in wages is NOT consistent with the marginal productivity theory of income distribution.

Accepted Answer

The answer of Differences in the attractiveness of different types...

Question 5

Above-equilibrium wages paid by some employers as an incentive for better performance are called compensating differentials.

Accepted Answer

Compensating differentials refer to wage differences across jobs that compensate workers for the non-monetary characteristics of different jobs, such as risk or undesirable hours, not for better performance. Above-equilibrium wages paid as an incentive for better performance are often referred to as efficiency wages.

Question 6

Holly and Emily both have a bachelor's degree in nursing from the same college. Both have been nurses for eight years. Holly works from 11 P.M. until 7 A.M., and Emily works from 7 A.M. until 3 P.M. Holly's salary is $1,000 per month higher than Emily's salary. This is an example of an efficiency wage disparity.

Accepted Answer

An efficiency wage disparity refers to differences in pay intended to increase worker productivity, not necessarily due to shift differences. Holly's higher salary is likely due to the night shift differential, not efficiency wage.

Question 7

The fact that Tom Brady, the quarterback of the New England Patriots, is paid more than a high school football coach is an example of a wage disparity caused by compensating differentials.

Accepted Answer

Compensating differentials refer to wage differences that arise to compensate workers for non-monetary aspects of different jobs, such as risk or undesirable conditions. The wage disparity between Tom Brady and a high school coach is more about differences in skill level, market demand, and revenue generation, not compensating differentials.

Question 8

Differences in talent and ability of workers resulting in differences in their wages is consistent with the marginal productivity theory of income distribution.

Accepted Answer

According to the marginal productivity theory of income distribution, wages are determined by the marginal contribution of each worker to the production process. Differences in talent and ability can result in differences in the marginal productivity of workers, which in turn can lead to differences in their wages. Therefore, the statement is true.

Question 9

Above-equilibrium wages paid by some employers as an incentive for better performance are called efficiency wages.

Accepted Answer

Efficiency wages are wages that are deliberately set above-market levels in order to motivate workers to provide better-than-average performance.

Question 10

Wage differences across jobs reflecting the fact that some jobs are less pleasant than others are called compensating differentials.

Accepted Answer

Compensating differentials refer to the additional wages paid to workers to compensate for the less desirable aspects of a job, such as unpleasant conditions or higher risk.

Question 11

In 2012, the median earnings of union members were 25% to 30% higher than the wages of workers not represented by unions.

Accepted Answer

In 2012, data from the Bureau of Labor Statistics indicated that union members had significantly higher median earnings compared to non-union workers, with a difference in the range of 25% to 30%.

Question 12

A lumberjack cutting giant redwoods in California being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to differences in human capital.

Accepted Answer

The answer of A lumberjack cutting giant redwoods in California...

Question 13

In 2012, fewer than 10% of the employees of private businesses were represented by unions.

Accepted Answer

In 2012, union membership among private sector employees was indeed below 10%, reflecting a long-term decline in union representation in the private sector.

Question 14

An efficiency wage is higher than the equilibrium wage to motivate the employee to work hard.

Accepted Answer

An efficiency wage is intentionally set higher than the equilibrium wage to provide an incentive for workers to increase their productivity and remain with the company.

Question 15

The fact that members of labor unions often have higher wages than workers who are not members of a union is proof that the marginal productivity theory of income distribution is not valid.

Accepted Answer

The marginal productivity theory of income distribution suggests that wages are determined by the marginal productivity of labor. Union members may have higher wages due to collective bargaining, which can secure wages above the marginal productivity level, but this does not invalidate the theory itself.

Question 16

Holly and Emily both have a BS in nursing from the same college. Both have been nurses for eight years. Holly works from 11 P.M. until 7 A.M., and Emily works from 7 A.M. until 3 P.M. Holly's salary is $1,000 per month higher than Emily's salary. This is an example of a wage disparity due to a compensating differential.

Accepted Answer

A compensating differential is a higher wage paid to compensate for less desirable job conditions, such as working night shifts, which is likely why Holly earns more.

Question 17

Workers with more human capital usually generate a higher value of the marginal product.

Accepted Answer

This is because workers with more human capital have higher skills, knowledge, and experience which enables them to be more productive and generate more output, leading to a higher marginal product.

Question 18

The fact that Tom Brady, the quarterback of the New England Patriots, is paid more than a high school football coach is an example of a wage disparity most likely caused by differences in ability and talent.

Accepted Answer

Tom Brady's higher salary compared to a high school football coach is due to his exceptional talent and ability in professional football, which is valued more in the market.

Question 19

A lumberjack cutting giant redwoods in California being paid more than a person cutting and selling small Christmas trees is an example of wage disparity due primarily to compensating differentials.

Accepted Answer

Compensating differentials refer to the higher wages paid to workers to compensate for the undesirable aspects of a job, such as danger or difficulty. Cutting giant redwoods is more dangerous and requires more skill than cutting small Christmas trees, justifying higher pay.

Question 20

Unions are organizations of workers that try to raise wages and improve working conditions for their members through collective bargaining with employers.

Accepted Answer

Unions represent the collective voice of workers and negotiate on their behalf for better wages, benefits, and working conditions with employers.

Quiz 19: Factor Markets and the Distribution of Income