Question 1

The wage difference between jobs that require education and those that don't:

Accepted Answer

The wage difference between jobs that require education and those that don't encourages workers to bear the cost of acquiring education. Since these jobs have higher wage rates, workers are incentivized to acquire education and qualifications that make them suitable for these jobs.

Question 2

A prestigious private high school requires all of its teachers to have a PhD in the subject they teach.This requirement is likely to:

Accepted Answer

A) This requirement is likely to decrease the supply of teachers to the private school. Not all potential teachers may have a PhD, and some may not be willing or able to obtain one. Therefore, the pool of available candidates to hire from would likely decrease, reducing the supply of teachers to the school.

B) Increasing the education requirement for teachers will likely increase their wages, as the school is looking for highly qualified and skilled individuals. This will make their wages at the private school more attractive relative to wages at public schools, where such a high level of education is not always a requirement.

C) Requiring teachers to have a PhD in the subject they teach will likely increase their marginal product, as they would be highly knowledgeable and qualified to teach the subject. This could lead to higher student performance and better outcomes for the school.

Therefore, all three options are likely outcomes of the private school's decision to require its teachers to have a PhD.

Question 3

The return to investment in human capital is observed:

Accepted Answer

The return to investment in human capital can be observed through the wage differential between workers. Those with more education and skills tend to receive higher wages than those without, reflecting the added value and productivity they bring to the workforce.

Question 4

The ownership of human capital:

Accepted Answer

Human capital refers to the skills, knowledge, and experience possessed by an individual, which are inherently personal and not transferable to others.

Question 5

Technology is an important factor in explaining the high incomes of superstars because:

Accepted Answer

Technology allows for the best producer to efficiently produce and distribute their product to a large audience at a relatively low cost. This widens the audience of potential customers for superstars, allowing them to earn high incomes due to their widespread popularity and accessibility.

Question 6

On the basis of knowledge obtained in his economics class, Ferris is likely to conclude that:

Accepted Answer

This is based on the principle of supply and demand in the labor market. If a job doesn't require any special skills, there are likely to be more people who are qualified for it and thus the employer can offer a lower wage. The other choices are not necessarily true in all cases.

Question 7

Both Lee and John have got a business degree from a university.They both got jobs as research analysts in the same firm.Two years later Lee is earning more money than John.This wage difference is likely caused by:

Accepted Answer

Compensating differentials refer to differences in wages due to differences in job characteristics such as risk, unpleasant working conditions, or long hours. It is likely that Lee's job duties have more compensating differentials than John's, resulting in a higher wage. Discrimination by the firm or regulations in the labor market are unlikely to be the main causes of the wage difference as both Lee and John have the same degree and job position. Differences in work experience may be a factor but are not mentioned in the scenario.

Question 8

The statement, 'coal miners are paid more than workers with similar levels of education', is likely to reflect the fact that:

Accepted Answer

Coal mining jobs are potentially more dangerous than jobs with comparable education requirements, which means that coal miners are compensated for the risk they take. This is commonly seen in industries with higher levels of risk, such as oil rig workers and firefighters, who are often paid more than workers with similar levels of education. The other options are not relevant to the given statement.

Question 9

The statement that 'public school teachers are paid less than engineers, but have similar amounts of education', is likely to reflect market conditions such that:

Accepted Answer

This statement reflects the concept of compensating wage differentials, which suggests that jobs that are less desirable or have less favorable working conditions will pay more to compensate for those drawbacks. Public school teachers may be paid less than engineers due to the perceived drawbacks of the profession such as lower job satisfaction, job security, and limited opportunities for advancement. Therefore, public school teachers must receive a compensating wage differential to attract workers to the profession.

Question 10

The wage differential between educated workers and uneducated workers in developing economies is typically:

Accepted Answer

The wage differential between educated workers and uneducated workers in developing economies is typically larger than that which exists in developed economies. This can be attributed to the fact that there is a shortage of skilled and educated workers in developing economies, leading to an increased demand for these workers and subsequently higher wages. Additionally, education may be a more significant factor in determining productivity in developing economies, where technology and capital investment are less prevalent.

Question 11

Professors often have similar levels of education to lawyers and doctors, but typically get much lower salaries.This difference in income is likely to mean that:

Accepted Answer

The fact that professors, who have similar levels of education to lawyers and doctors, earn much lower salaries suggests that they must receive a compensating wage differential. This means that the non-financial benefits of being a professor, such as the opportunity to conduct research and mentor students, must be significant enough to outweigh the lower pay. This does not necessarily mean that university education is not valuable or that professors have a job that is more difficult than a doctor or lawyer.

Question 12

On the basis of knowledge obtained in his economics class, Ferris is likely to conclude that:

Accepted Answer

According to the principles of supply and demand, a job with a requirement for special training or certification will have a smaller pool of qualified candidates and therefore can command a higher wage. This is known as the concept of "monopsony power" in labor economics. None of the other choices mention factors that would affect wage offers.

Question 13

From the perspective of market demand, human capital investment is reflected in:

Accepted Answer

human capital investment is reflected in a firm's willingness to pay more for more productive workers. When a company invests in their employees through training, education, and development opportunities, it increases the employees' productivity, which translates into a higher willingness to pay for such workers. Hence, option A is the correct answer. Option B is incorrect because human capital investment results in an increase in labor demand, not a decrease. Option C is also incorrect because investment in human capital will lead to an increase, not a decrease, in the marginal product of labor.

Question 14

When workers who work the night shift are paid more than those who do identical work on the day shift, this is referred to as:

Accepted Answer

When workers who work the night shift are paid more than those who do identical work on the day shift, this is referred to as a compensating differential. This is because workers who work the night shift often experience inconvenience and disruption to their personal lives, which is why they are compensated with higher pay. This is not considered wage inequity, discriminatory wage practice, or inefficient markets.

Question 15

Doppelsöldners were sixteenth century German soldiers that received double pay for fighting in the front of their unit.The likely difference in wages was caused by:

Accepted Answer

Doppelsöldners had a more dangerous job as they were positioned in the front of their unit, where they were more likely to face enemy fire and be attacked first. This risk factor may have motivated commanders to offer them higher pay as compensation for the risk they were taking.

Question 16

An increase in the human capital of workers is:

Accepted Answer

An increase in human capital, such as education or training, generally leads to an increase in productivity and skill level, thereby increasing their value of marginal product.

Question 17

When an employer pays the cost of educating a worker, it is likely that:

Accepted Answer

When an employer pays for the cost of educating a worker, they are making an investment in labor productivity increases for the future. This is because the worker will have gained skills and knowledge that can be applied to their job, which ultimately benefits the employer. Therefore, the employer hopes to recapture its investment through increased productivity and profits.

Question 18

Identify the statement below that would be an investment in human capital?

Accepted Answer

Investing in a university degree is an investment in human capital as it increases the knowledge and skills of an individual, ultimately making them more valuable in the workforce. The other options are investments in physical capital, such as equipment and technology.

Question 19

Expenditure on human capital:

Accepted Answer

Expenditure on human capital is an investment of resources today, such as education and training, to increase productivity and performance in the future. This reflects an expectation of future returns on the investment, such as higher wages or increased job opportunities. The investment is typically embodied in a specific individual, such as through their knowledge, skills, and abilities. Therefore, all of the above options are true.

Question 20

A compensating differential means that:

Accepted Answer

A compensating differential refers to the wage difference that compensates for the non-monetary characteristics of different jobs, such as risk, working conditions, or location.

Quiz 20: Earnings, Unions and Discrimination

The wage difference between jobs that require education and those that don't:

A prestigious private high school requires all of its teachers to have a PhD in the subject they teach.This requirement is likely to:

The return to investment in human capital is observed:

The ownership of human capital:

Technology is an important factor in explaining the high incomes of superstars because:

On the basis of knowledge obtained in his economics class, Ferris is likely to conclude that:

Both Lee and John have got a business degree from a university.They both got jobs as research analysts in the same firm.Two years later Lee is earning more money than John.This wage difference is likely caused by:

The statement, 'coal miners are paid more than workers with similar levels of education', is likely to reflect the fact that:

The statement that 'public school teachers are paid less than engineers, but have similar amounts of education', is likely to reflect market conditions such that:

The wage differential between educated workers and uneducated workers in developing economies is typically:

Professors often have similar levels of education to lawyers and doctors, but typically get much lower salaries.This difference in income is likely to mean that:

On the basis of knowledge obtained in his economics class, Ferris is likely to conclude that:

From the perspective of market demand, human capital investment is reflected in:

When workers who work the night shift are paid more than those who do identical work on the day shift, this is referred to as:

Doppelsöldners were sixteenth century German soldiers that received double pay for fighting in the front of their unit.The likely difference in wages was caused by:

An increase in the human capital of workers is:

When an employer pays the cost of educating a worker, it is likely that:

Identify the statement below that would be an investment in human capital?

Expenditure on human capital:

A compensating differential means that: