Question 1

In 1914, Henry Ford began paying his workers $5 per day, about twice the going wage. As a result, turnover and absenteeism fell and productivity and profits rose.

Accepted Answer

This statement is true. Henry Ford did in fact begin paying his workers $5 per day in 1914, which was significantly more than the industry standard at the time. This move contributed to increased worker loyalty and productivity, as well as overall profitability for the company.

Question 2

Suppose that there is an excess supply of economics professors. Should universities necessarily reduce salaries? What does standard economic theory suggest? What does efficiency-wage theory suggest?

Accepted Answer

The answer of Suppose that there is an excess supply...

Question 3

Teenage unemployment is higher than unemployment of people ages 20 and over. Explain why economists would attribute at least part of this difference to minimum-wage laws.

Accepted Answer

The answer of Teenage unemployment is higher than unemployment of...

Question 4

A firm might offer efficiency wages in order to reduce shirking.

Accepted Answer

Efficiency wages are higher than the market wage in order to provide a monetary incentive for workers to be more productive and reduce shirking behavior.

Question 5

What is the theory of efficiency wages? Provide four reasons that employers might pay efficiency wages.

Accepted Answer

The answer of What is the theory of efficiency wages?...

Question 6

Since unemployment rates are consistently higher in Canada and some Western European countries than in the United States, it appears that the natural rate of unemployment is lower in the United States. What might explain this difference?

Accepted Answer

The answer of Since unemployment rates are consistently higher in...

Question 7

Following the recession of 2001, there was a month in which employment and the unemployment rate both rose. Assuming the computations were correct, how is it possible for both to have increased?

Accepted Answer

The answer of Following the recession of 2001, there was...

Question 8

Most spells of unemployment are short, and most unemployment observed at any given time is long term. How can this be?

Accepted Answer

The answer of Most spells of unemployment are short, and...

Question 9

Why might a favorable change in the economy, such as technological improvement or a decrease in the price of imported oil, be associated with an increase in frictional unemployment?

Accepted Answer

The answer of Why might a favorable change in the...

Question 10

Why have labor-force participation rates for women in the United States increased since World War II while labor-force participation rates for men have decreased?

Accepted Answer

The answer of Why have labor-force participation rates for women...

Question 11

The table below uses data for the year 2003 provided by the Bureau of Labor Statistics and adjusted to be comparable to U.S. data. All values are in thousands. Fill in the blank entries in the table. $\begin{array}{|c|c|c|c|c|c|c|}
\hline \text { Country } & \begin{array}{c}
\text { Adult } \
\text { Population }
\end{array} & \begin{array}{c}
\text { Labor } \
\text { Force }
\end{array} & \text { Employed } & \text { Unemployed } & \begin{array}{c}
\text { Unemployment } \
\text { Rate }
\end{array} & \begin{array}{c}
\text { Labor-Force } \
\text { Participation } \
\text { Rate }
\end{array} \
\hline \text { Japan } & 109,474 & & 62,510 & 3,500 & & \
\hline \text { France } & & 26,870 & & 2,577 & & 57.41 \
\hline \text { Germany } & 70,159 & 39,591 & & & 9.69 & \
\hline
\end{array}$

Accepted Answer

The answer of The table below uses data for the...

Quiz 15: Unemployment