Question 1

Economists who study labor markets have documented

Accepted Answer

Economists who study labor markets have found that there has been an increase in the earnings gap between low-skill and high-skill workers over the past two decades. This trend can be attributed to technological advancements that have increased the demand for workers with specialized skills and education, while decreasing the demand for low-skill workers.

Question 2

Which of the following is not an interpretation of the "beauty premium"?

Accepted Answer

The interpretation that beautiful workers are not willing to work for lower wages is not a commonly accepted explanation for the beauty premium phenomenon.

Question 3

Over the past several years, the earnings gap between high-skilled and low-skilled workers has widened because (i) international trade has altered the relative demand for skilled and unskilled labor.
(ii) changes in technology have altered the relative demand for skilled and unskilled labor.
(iii) the return to education for men has decreased, whereas the return to education for women has increased.

Accepted Answer

The widening earnings gap between high-skilled and low-skilled workers can be attributed to the changes in technology and international trade. Due to advancements in technology, there is a higher demand for workers who possess higher education and specialized skills. Additionally, international trade has led to the outsourcing of low-skill jobs to countries where labor is cheaper, further widening the earnings gap between high and low-skilled workers. However, there is no evidence to suggest that the return to education for men has decreased or that it has increased for women. Therefore, option D is incorrect.

Question 4

Christy and Claudia are aspiring models. Talent scouts consider them to be similarly beautiful. Both enter a talent show. Claudia contracts food poisoning the night before the competition and withdraws. Christy wins the competition and signs a multi-million dollar contract. The differences in their earnings likely reflect

Accepted Answer

The answer of Christy and Claudia are aspiring models. Talent...

Question 5

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

Accepted Answer

The answer of Workers whose skills become obsolete as a...

Question 6

In determining wages, ability, effort, and chance

Accepted Answer

Ability, effort, and chance are all difficult to measure accurately and consistently, so the extent to which they determine wages is hard to gauge. While human capital and age may capture some aspects of ability and effort, they do not fully explain the role of these factors in determining wages. Compensating differentials may help explain wage variations for certain types of jobs or industries, but they do not account for the broader factors of ability, effort, and chance that affect wages across the labor market as a whole.

Question 7

A study by labor economists Hamermesh and Biddle found that

Accepted Answer

The study found that above-average looking people earn more than average-looking people, all else equal. The other options given in the answer choices are incorrect according to the study's findings.

Question 8

Economists have found evidence that differences in wages can be explained by

Accepted Answer

Economists have found evidence that differences in wages can be explained by each of these factors. Experience and job characteristics (such as education level, job responsibilities, and working conditions) are commonly cited as reasons why some workers earn more than others. Additionally, studies have shown that physical attractiveness can also impact earnings, with more attractive individuals often earning higher wages.

Question 9

Studies of wages by labor economists indicate that measurable variables such as age, job characteristics, years of education, and years of experience account for

Accepted Answer

Studies have shown that measurable variables such as age, job characteristics, years of education, and years of experience only account for some, but less than 50 percent of the variation in wages in our economy. Other factors such as discrimination and bargaining power may play a larger role in wage determination.

Question 10

Which of the following does not affect the wages a worker earns?

Accepted Answer

The answer of Which of the following does not affect...

Question 11

Economists who study labor markets have discovered that

Accepted Answer

Economists have found that ability, effort, and chance all play a role in explaining wage differences. While ability and effort are important factors, chance events such as being in the right place at the right time or having a lucky break can also contribute to higher earnings.

Question 12

Certain factors that are probably important in determining wages are nevertheless difficult to measure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include

Accepted Answer

Effort and natural ability are difficult to measure and therefore difficult to incorporate into studies of labor markets and wages.

Question 13

Which of the following helps to explain the differences in earnings in the United States?

Accepted Answer

The answer of Which of the following helps to explain...

Question 14

In empirical analyses of factors that help explain wages,

Accepted Answer

Empirical studies have shown that measurable factors such as education, experience, and occupation explain less than half of the variation in wages. Effort and ability are difficult to measure and their impact on wages is debated among economists. Additionally, unmeasurable influences such as discrimination and social networks can also affect wage differences. Therefore, option B is the best choice.

Question 15

Which of the following variables related to a worker's wage are the most difficult to measure?

Accepted Answer

Ability and effort are difficult to measure because they are subjective and can vary greatly from one worker to another. Chance is also difficult to measure because it is often based on luck or external factors outside of the worker's control. The other variables listed in the other answer choices are generally easier to measure, such as with demographic data or objective educational records.

Question 16

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

Accepted Answer

As a salesperson, Hunter will have the potential to earn a higher wage through commission on the sales he makes. This appeals to his competitive nature and ambition to do well. The other options either have fixed salaries or a limited work schedule, which may not be as financially rewarding in the long run.

Question 17

Tom and Eric went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Eric's employer is not a good business manager, and the sales manager lost a major deal. Because of the decrease in profits, the employees did not receive raises last year. Tom's employer is a savvy business manager and the sales manager is experienced and works hard. If Tom has higher earnings than Eric, the difference is most likely a function of

Accepted Answer

The answer of Tom and Eric went to trade school...

Question 18

According to the Hamermesh and Biddle study, people deemed more attractive than average earn

Accepted Answer

According to the Hamermesh and Biddle study, people deemed more attractive than average earn about 5 percent more than average looking people.

Question 19

A compensation scheme that pays salespeople a percentage of the sales they make is attempting to reward

Accepted Answer

A percentage of sales directly rewards work effort and incentivizes salespeople to make more sales. The other options do not necessarily have a direct correlation with sales performance.

Question 20

The difference in wages paid to major-league baseball players and minor-league baseball players is most likely due to

Accepted Answer

The answer of The difference in wages paid to major-league...

Quiz 19: Earnings and Discrimination