Question 1

Which of the following examples best illustrates a compensating wage differential?
A)Sara and Tom are each 30 years old.Tom earns more than Sara because he has 8 years of work experience, whereas Sara only has 4.
B)Sara earns more than Tom because she has a bachelor's degree, whereas Tom has an associate's degree.
C)Sara earns more than Tom because Sara is an electrical engineer, whereas Tom is a fast-food worker.
D)None of the above is correct.

Accepted Answer

A compensating wage differential refers to the additional amount of income that a worker requires to accept a less desirable job, such as one with higher risk or less pleasant conditions. None of the options provided illustrate this concept.

Question 2

Human capital is
A)an important determinant of wages, but it does not affect the production of goods and services.
B)an important determinant of wages, and it affects the production of goods and services.
C)a specific type of physical capital.
D)very different from physical capital in that physical capital represents an investment, while human capital does not represent an investment.

Accepted Answer

Human capital refers to the knowledge, skills, and abilities that individuals possess that are valuable in the production of goods and services. As such, human capital not only affects wages but also affects the production process. It is therefore an important factor in determining a country's economic growth and prosperity.

Question 3

Scenario 19-2
Travis, a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for workers to help a disaster relief agency distribute food aid in Africa. Recruiter B is looking for custodial help to clean motel rooms in a motel located near the entrance to a famous national park.
-Refer to Scenario 19-2.Travis is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Travis concludes that
A)if the job in Africa has a lot of job satisfaction, the wage will be higher.
B)if the job in Africa has a lot of job satisfaction, the wage will be lower.
C)if the job cleaning motel rooms is disagreeable, the wage will be lower.
D)Both a and c are correct.

Accepted Answer

Jobs with higher job satisfaction often offer lower wages because the non-monetary benefits compensate for the lower pay.

Question 4

Human capital
A)represents the accumulation of investments in people, such as education and on-the-job training.
B)represents the types of capital built by people rather than by machines.
C)is less important to the economy's production than physical capital.
D)Both a and b are correct.

Accepted Answer

Human capital represents the accumulation of investments in people, such as education and on-the-job training. Choice B is incorrect because both humans and machines can build physical capital. Choice C is incorrect because human capital is an essential ingredient in the production process and complements physical capital.

Question 5

The following jobs are ranked from most desirable to least desirable from a survey of college seniors: personal fitness trainer,financial analyst,insurance agent,and sales clerk.Which of the four jobs will pay the least?
A)personal fitness trainer because of compensating differentials in wages
B)sales clerk because it requires the least education
C)insurance agent because the supply of them is very high
D)Any of the above explanations could be correct.

Accepted Answer

The answer of The following jobs are ranked from most...

Question 6

Coal mining is a dangerous and dirty job.Suppose someone developed new machinery that made coal mining safer and cleaner;at the same time,it made coal miners more productive.We would expect that the wages of coal miners would
A)rise.
B)fall.
C)stay exactly the same.
D)rise, fall, or stay the same.

Accepted Answer

The answer of Coal mining is a dangerous and dirty...

Question 7

Scenario 19-2
Travis, a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for workers to help a disaster relief agency distribute food aid in Africa. Recruiter B is looking for custodial help to clean motel rooms in a motel located near the entrance to a famous national park.
-Refer to Scenario 19-2.Travis is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Travis concludes that
A)if the motel job requires some night shift work, wages will be lower than otherwise.
B)the job that is more fun will have a higher wage.
C)if the motel job doesn't require any special skills, the wage offer will be lower than otherwise.
D)All of the above are correct.

Accepted Answer

Travis concludes that if the motel job doesn't require any special skills, the wage offer will be lower than otherwise. This means that he should consider the disaster relief agency job, which may require more skills and therefore offer a higher wage. Additionally, working for a disaster relief agency may also have more fulfilling and meaningful work.

Question 8

The accumulation of investments in people,such as education and on the job training,is known as
A)physical capital.
B)human capital.
C)efficiency wage.
D)a union.

Accepted Answer

The accumulation of investments in people, such as education and on-the-job training, is known as human capital. Physical capital refers to the man-made resources used in production, efficiency wage is a wage above the market equilibrium that firms pay to motivate workers, and a union is an organization that represents workers in collective bargaining with employers.

Question 9

Scenario 19-2
Travis, a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for workers to help a disaster relief agency distribute food aid in Africa. Recruiter B is looking for custodial help to clean motel rooms in a motel located near the entrance to a famous national park.
-Refer to Scenario 19-2.Travis is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Travis concludes that
A)if the motel job also requires an ability to do general plumbing repairs, the wage offer will be higher than otherwise.
B)if the food distribution job has a requirement for special training or certification, the wage offer will be higher than otherwise.
C)if the food distribution job exposes him to the Ebola virus, the wage will be high.
D)All of the above are correct.

Accepted Answer

Jobs that require additional skills, training, or involve higher risks typically offer higher wages to attract workers willing to take on those responsibilities or risks.

Question 10

Store clerks are known to have low wages.This is likely to be reflect the fact that
A)store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers.
B)store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers..
C)many people perceive the job of store clerk as having an element danger.
D)store clerks are required to have a college degree.

Accepted Answer

The statement mentions that store clerks are known to have low wages, which suggests that there is a lack of incentive to pay higher wages for this job. This may be due to the perception that store clerk jobs are relatively easy and do not require high levels of skill or education. Therefore, option A is the most reasonable choice. B, C, and D are not mentioned in the statement and are therefore unlikely to be accurate explanations.

Question 11

When two workers work for the same company but get paid different wages,there is likely to be a
A)compensating differential.
B)difference in years of experience.
C)difference in productivity.
D)Any of the above explanations are possible.

Accepted Answer

Different wages can be due to compensating differentials, differences in experience, or differences in productivity, among other factors.

Question 12

Scenario 19-1
Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp.
-Refer to Scenario 19-1.Ferris is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Ferris concludes that
A)the lifeguard job will be more fun than the summer camp job, so the wage for that job will be higher than otherwise.
B)if the summer camp job doesn't require any special skills, the wage for that job will be lower than otherwise.
C)since the summer camp job requires some night shift work, the wage for that job will be lower than otherwise.
D)All of the above are correct.

Accepted Answer

The answer of Scenario 19-1
Ferris B., a student at a...

Question 13

Taxi cab drivers in large cities are likely to earn more than taxi cab drivers in rural areas.One reason for this wage differential could be that
A)driving in large cities is more dangerous than driving in rural areas.
B)driving in large cities is more fun than driving in rural areas.
C)driving in large cities is easier than driving in rural areas.
D)it is unlikely that a taxi cab driver in a large city will be involved in a traffic accident with farm animals.

Accepted Answer

Driving in large cities is generally considered more dangerous than in rural areas due to heavier traffic, more pedestrians and bicyclists, and higher likelihood of accidents. This increased risk may justify higher wages for taxi cab drivers in these areas.

Question 14

Bob and Rob are identical twins who attended grammar school through college together.Bob took a job as an engineer who must travel out of state once a week.Rob took a job as an engineer who does not have to travel out of the state.Bob earns $100,000 a year,and Rob earns $85,000 a year.Select the best explanation for this wage difference.
A)Rob has more human capital relative to Bob.
B)Rob has less human capital relative to Bob.
C)Bob receives a higher wage to compensate for the disagreeable nature of business travel.
D)Bob's higher salary supports the signaling theory of education.

Accepted Answer

Bob's higher salary compensates for his need to travel for work, which is often considered inconvenient and disruptive to personal life. This is known as a compensating wage differential.

Question 15

Mary and Ashley are identical twins who attended grammar school through high school together.Mary got a job after high school,and Ashley got a job after graduating from college.Mary earns $36,000 a year,and Ashley earns $69,000 a year.Select the best explanation for this wage difference.
A)Ashley has more human capital relative to Mary.
B)Mary has more human capital relative to Ashley.
C)Mary has received a compensating differential
D)Ashley has received a compensating differential.

Accepted Answer

Ashley has more human capital relative to Mary because she has completed a college education, which typically increases skills and qualifications, leading to higher earnings.

Question 16

Scenario 19-1
Ferris B., a student at a community college, is considering what he should do for summer employment. Two recruiters show up at his school in search of summer workers. Recruiter A is looking for lifeguards to patrol the beach at an exclusive island resort in the Caribbean. Recruiter B is looking for workers to staff positions at a summer youth camp.
-Refer to Scenario 19-1.Ferris is carefully considering the options that each recruiter presents.On the basis of knowledge obtained in his economics class,Ferris concludes that
A)wages are unlikely to be affected by job requirements.
B)since the lifeguard job would expose him to a threat of skin cancer, the wage will be low.
C)if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise.
D)if the lifeguard job also requires a willingness to clean public restrooms, the wage offer will be lower than otherwise.

Accepted Answer

Based on Ferris's knowledge from his economics class, if the lifeguard job has a requirement for special training or certification, the wage offer will be higher than otherwise. Therefore, Ferris should consider this factor when deciding between the two job offers. However, ultimately the decision should also consider personal preferences and factors such as location, work environment, and job duties.

Question 17

Professional underwater divers are known to have high wages and work an average of only 20 hours per week.The high wages are partially explained by the fact that the job is likely
A)to be very dull.
B)to be fun.
C)to be very dangerous.
D)to require a college degree.

Accepted Answer

Underwater diving can be a very dangerous profession, as divers are exposed to various hazards such as decompression sickness, drowning, equipment failure and underwater creatures. These risks can contribute to high salaries for professional divers.

Question 18

A difference in wages between a highly-educated worker and a less-educated worker is
A)a compensating differential for the cost of becoming educated.
B)a signal that the market is indifferent to a worker's level of human capital.
C)considered unfair by economists.
D)considered unfair by everyone.

Accepted Answer

The wage difference between a highly-educated worker and a less-educated worker is considered a compensating differential for the cost of becoming educated. Highly-educated workers are likely to have invested significant time and money in their education, and the higher wages they receive are a reflection of the higher opportunity cost of their education. This is a well-established concept in labor economics and is not considered unfair.

Question 19

Assuming that all other things are equal,including the wage,which of the following statements is correct?
A)The quantity of labor supplied for easy jobs exceeds that for difficult jobs.
B)The quantity of labor supplied for fun jobs exceeds that for dull jobs.
C)The quantity of labor supplied for safe jobs exceeds that for dangerous jobs.
D)All of the above are correct.

Accepted Answer

The answer of Assuming that all other things are equal,including...

Question 20

Which of the following is an example of human capital?
A)machines built by people
B)formal education acquired in schools
C)on-the-job training
D)Both b and c are correct.

Accepted Answer

Human capital refers to the knowledge, skills, and abilities possessed by individuals as a result of their education, training, and experience. Both formal education acquired in schools and on-the-job training are examples of human capital. Machines built by people are not considered human capital as they are physical assets rather than knowledge or skills possessed by individuals.

Quiz 19: Earnings and Discrimination

Which of the following examples best illustrates a compensating wage differential?

Human capital is

Human capital

The following jobs are ranked from most desirable to least desirable from a survey of college seniors: personal fitness trainer,financial analyst,insurance agent,and sales clerk.Which of the four jobs will pay the least?

Coal mining is a dangerous and dirty job.Suppose someone developed new machinery that made coal mining safer and cleaner;at the same time,it made coal miners more productive.We would expect that the wages of coal miners would

The accumulation of investments in people,such as education and on the job training,is known as

Store clerks are known to have low wages.This is likely to be reflect the fact that

When two workers work for the same company but get paid different wages,there is likely to be a

Taxi cab drivers in large cities are likely to earn more than taxi cab drivers in rural areas.One reason for this wage differential could be that

Mary and Ashley are identical twins who attended grammar school through high school together.Mary got a job after high school,and Ashley got a job after graduating from college.Mary earns $36,000 a year,and Ashley earns $69,000 a year.Select the best explanation for this wage difference.

Professional underwater divers are known to have high wages and work an average of only 20 hours per week.The high wages are partially explained by the fact that the job is likely

A difference in wages between a highly-educated worker and a less-educated worker is

Assuming that all other things are equal,including the wage,which of the following statements is correct?

Which of the following is an example of human capital?