Question 1

Which statement best represents the idea behind signalling in education

Accepted Answer

Signalling theory in education suggests that education serves as a signal of a person's inherent productivity and abilities, rather than actually increasing their productivity. This aligns with option C, which suggests that individuals who are naturally more productive may be more inclined to pursue education.

Question 2

What does a signalling theory of education suggest

Accepted Answer

The answer of What does a signalling theory of education...

Question 3

According to the human-capital view,what effect does education have

Accepted Answer

The human-capital view posits that education enhances an individual's productivity by increasing their knowledge and skills. This, in turn, leads to higher lifetime earnings. Therefore, the most appropriate choice is C, which accurately reflects the effect of education according to the human-capital view.

Question 4

When computers are used to replace workers on a factory production line,what will happen to the wage gap between skilled and unskilled workers

Accepted Answer

When computers replace workers on a factory production line, the demand for unskilled labor decreases, which can lead to a decrease in their wage rate. Meanwhile, skilled workers who can operate and maintain the machines will be in higher demand, leading to an increase in their wage rate. This leads to a widening of the wage gap between skilled and unskilled workers. Therefore, the most likely outcome is that the wage gap is likely to increase.

Question 5

When employers sort employment applications into high-ability and low-ability people based on the attainment of a university degree (irrespective of major),they are providing evidence in support of which of the following

Accepted Answer

Employers sorting applicants based solely on the attainment of a university degree reflects the signalling theory of education. This theory suggests that education does not necessarily act as a skill-enhancing investment, but rather it signals the individual's pre-existing abilities and qualities (such as intelligence, determination, and work ethic) to potential employers. Employers may use education as a signal that the applicant possesses these desirable traits, making them a more desirable hire.

Question 6

What are business firms attempting to reward when they pay salespeople a percentage of their sales

Accepted Answer

When business firms pay salespeople a percentage of their sales, they are attempting to reward their work effort, i.e., the amount of effort they put into their work to generate more sales. This motivates salespeople to work harder and sell more, which eventually benefits the firm. Loyalty, years of schooling, and years of experience may be factors in determining a salesperson's salary or incentives, but they are not directly related to the percentage of their sales.

Question 7

What can we find in empirical research of wage differentials

Accepted Answer

Empirical research on wage differentials has found that measurable factors (such as education, experience, and job characteristics) explain less than half of the variation in wages. This suggests that factors such as discrimination, social networks, and unmeasurable individual characteristics may also contribute to wage differences.

Question 8

Which scenario would serve to decrease the demand for unskilled labour in Canada

Accepted Answer

Increased international trade with countries where unskilled labour is more plentiful would lead to increased imports of goods produced by unskilled labour, decreasing the demand for unskilled labour in Canada.

Question 9

Which finding have economists who study labour markets discovered

Accepted Answer

Economists have found that ability, effort, and chance are all likely to contribute to wage differences. While ability may not be difficult to measure, it is often not the most significant factor in explaining wage differences. Similarly, work effort may be difficult to measure, but it is not likely to be a major driver of wage differences. Chance may be difficult to measure, but it is estimated to account for only a small portion (around 5%) of wage differences. Therefore, the most accurate statement is that all three factors are likely to be significant contributors to wage differences.

Question 10

Workers whose skills become obsolete as a result of technological change are often paid a lower wage.What is this a result of

Accepted Answer

Technological change can lead to certain skills becoming obsolete by chance, as it is not directly related to a worker's natural ability, geographic location, or work effort.

Question 11

Nemedia and Aquilonia have just started to trade with each other.Nemedia exports goods produced with skilled labour and imports goods made with unskilled labour from Aquilonia.Over time,what would we expect will happen to the wages of skilled and unskilled labour in Nemedia

Accepted Answer

As Nemedia exports goods produced with skilled labor, the demand for skilled labor will increase, leading to higher wages. Conversely, as Nemedia imports goods made with unskilled labor, the demand for unskilled labor will decrease, leading to lower wages.

Question 12

Why do major-league hockey players get paid more than minor-league players

Accepted Answer

Major-league players are generally considered better athletes, which is why they are paid more. They have higher skill levels, attract larger audiences, and generate more revenue for their teams.

Question 13

Which view of education is best characterized by the belief that education makes a person more productive and thereby raises his or her wage

Accepted Answer

The human-capital view of education holds that education is an investment in an individual's skills and knowledge, which in turn increases their productivity and earning potential. This view emphasizes the long-term economic benefits of education for both individuals and society as a whole.

Question 14

A recent law school graduate is considering two offers to practice law,one in Ontario and one in Nova Scotia.Rumour has it that it is very difficult to pass the Nova Scotia bar exam and meet other certification requirements required by the Nova Scotia Bar Association.Assuming all other things equal,where would the attorney expect to make a higher wage

Accepted Answer

Higher difficulty in passing the bar exam and meeting certification requirements in Nova Scotia could lead to a lower supply of qualified lawyers, potentially resulting in higher wages due to scarcity.

Question 15

Which statement explains the "beauty premium"

Accepted Answer

The beauty premium refers to the phenomenon in which people who are physically attractive may receive higher pay or other benefits in certain occupations because their appearance enhances the value of their work. Therefore, statement B best explains the concept. Statements A, C, and D do not directly relate to the beauty premium.

Question 16

What is most likely the reason for the difference in wages paid to major-league baseball players and minor-league baseball players

Accepted Answer

The answer of What is most likely the reason for...

Question 17

According to the signalling theory of education,what is correlated with educational attainment

Accepted Answer

According to the signalling theory of education, education serves as a signal of an individual's natural ability, rather than increasing their marginal productivity or directly impacting wage gaps. Therefore, the level of educational attainment is highly correlated with an individual's natural ability.

Question 18

Liberal arts majors are typically told that a liberal arts degree "does not restrict one's ability to find successful employment in business." This statement is likely to reflect a philosophy that a liberal arts degree is valuable for what reason

Accepted Answer

The answer of Liberal arts majors are typically told that...

Question 19

The technology hypothesis has been advanced as an explanation for the widening earnings gap between skilled and unskilled workers in the U.S.What does this hypothesis emphasize as the likely effect of technological advances

Accepted Answer

The technology hypothesis emphasizes that technological advances have increased the demand for skilled workers and decreased the demand for unskilled workers as automation and computerization replace routine manual and clerical tasks. This leads to a widening earnings gap between the two groups of workers.

Question 20

Which idea has challenged the human-capital theory explanation for why people invest in education

Accepted Answer

The idea that schooling acts as a signal to future employers challenges the human-capital theory because it suggests that the primary purpose of education is not to improve productivity and skills, but rather to signal to employers that an individual is intelligent and capable.

Quiz 19: Earnings and Discrimination