Question 1

The popular TV shows Ice Road Truckers and Ax Men portray workers engaged in dangerous jobs such as driving big trucks over ice and cutting down big trees.You would expect that these workers would earn a

Accepted Answer

Workers in dangerous jobs typically receive higher salaries due to the increased risk and potential hazards that they face. The danger associated with Ice Road Truckers and Ax Men would increase the demand for workers in those industries leading to higher salaries.

Question 2

Using a compensating differential wage theory,some individuals earn more than others because workers

Accepted Answer

According to compensating differential wage theory, individuals are willing to accept dangerous working conditions only if they are compensated with higher wages. Therefore, workers who face higher risks on the job, such as those in mining, construction, or firefighting, earn more than workers in safer indoor jobs.

Question 3

Tiffany is a physician in New York City,her favorite city in the world.What would be some of the nonmonetary determinants of her wages?

Accepted Answer

Tiffany's education and qualifications increase her earning potential, but the desirability of her location may increase the competition for physician jobs, decreasing wages. Therefore, the nonmonetary determinants of her wages are a combination of her education and location, leading to a higher base wage but reduced by the competitive employment market in NYC.

Question 4

Coal mining is a dangerous occupation.For such a job,the passage of workplace safety laws would

Accepted Answer

The passage of workplace safety laws would likely decrease the severity of the negative compensating differentials, as the job would become less dangerous and therefore less compensation would be necessary to attract workers to the job.

Question 5

Mitchell has a cause: He loves cats.As an economist,he could earn $100,000 as a faculty member,but instead he decides to devote his time to the Humane Society as its chief economist.Knowing nothing else,you would expect that he would receive

Accepted Answer

Compensating differential theory suggests that individuals are willing to accept lower pay for jobs with non-pecuniary benefits, such as job satisfaction or a sense of purpose. In this case, Mitchell is willing to accept lower pay at the Humane Society because he loves cats and is passionate about the organization's mission. Therefore, choice C is the best option.

Question 6

When comparing individuals' wages,differences in their levels of education and training

Accepted Answer

While education and training are factors that contribute to different wage levels, they do not completely explain income inequality or why some individuals are more productive than others. Other factors such as experience, job demand, and negotiation skills also play a role in determining wages. Therefore, education and training can partially explain why some individuals earn higher wages than others.

Question 7

If Alexia is more educated and better trained than Felix,economists would use the ________ model to predict that Alexia should earn the higher wage.

Accepted Answer

The human capital model predicts that individuals with more education and training will earn higher wages, as their investment in their own human capital increases their productivity and value in the labor market. Therefore, if Alexia is more educated and better trained than Felix, economists would use the human capital model to predict that Alexia should earn the higher wage.

Question 8

As a college student,Bethany realizes that she has become an expert at playing video games.If Bethany saw a commercial on TV seeking applications for video game testers (her dream job),she would expect the job to pay

Accepted Answer

The answer of As a college student,Bethany realizes that she...

Question 9

Some employers are willing to provide job training for workers.The employer might be willing to pay for the training when

Accepted Answer

Employers are more likely to pay for training that is specific to their operations or needs, as this directly benefits them by enhancing the worker's productivity and effectiveness within their specific context.

Question 10

Some employers are willing to provide job training for workers.However,an employer might require the worker to pay for the training when the training is

Accepted Answer

Employers are more likely to require workers to pay for training when it involves general skills that could be used in any job for any employer, as these skills enhance the worker's employability elsewhere and do not exclusively benefit the current employer.

Question 11

What theory might partially explain why a person perceived as unattractive might earn less than a person seen as attractive?

Accepted Answer

The compensating differential theory proposes that individuals are willing to accept lower wages for jobs that involve undesirable characteristics or conditions, such as working in a hazardous environment or with unpleasant coworkers. In the case of attractiveness, it could be considered an additional characteristic that employers may value or prefer. Thus, an attractive person may be able to command a higher wage due to this perceived value, while an unattractive person may have to accept a lower wage as a compensating differential for their perceived lack of attractiveness.

Question 12

What theory would lead someone to be suspicious of a job advertisement that reads: "Help Wanted! Fun and exciting job with excellent pay"?

Accepted Answer

The theory of compensating differentials suggests that workers are willing to accept lower pay for jobs with more enjoyable working conditions, whereas they demand higher pay for jobs with more undesirable working conditions. As the job advertisement emphasizes the "fun and exciting" aspect of the job, it suggests that the working conditions are desirable and thus, the employer may be offering lower pay than what workers might otherwise expect for a job with similar skill requirements. Therefore, this might lead someone to be suspicious of the job advertisement.

Question 13

As the mayor of a local town,Wang has the power to repeal workplace safety laws.For construction workers building the local school,the repeal of all workplace safety laws would

Accepted Answer

The repeal of workplace safety laws would make the construction work more dangerous, leading to more severe positive compensating differentials. This means workers would demand higher wages to compensate for the increased risk, thus increasing their wages.

Question 14

Someone might expect a job as a college professor to pay a wage lower than the wage one could receive in the private sector because of

Accepted Answer

College professors often have positive compensating differentials, which are non-monetary benefits that make the job more valuable than just the wage alone. These benefits may include job security, flexible schedules, intellectual stimulation, and the opportunity to shape the minds of the next generation. While the wages may be lower than some private sector jobs, the positive compensating differentials may make up for it.

Question 15

An employee gains work experience by staying in a job for a long period of time.An economist would expect this employee's wages to

Accepted Answer

The longer an employee stays in a job, the more experience and skills they acquire. This increased productivity should lead to an increase in their wage as they become more valuable to the employer. Therefore, an economist would expect wages to increase as experience is gained.

Question 16

What theory would justify a job advertisement that reads: "Help Wanted! Dangerous job but excellent pay and benefits"?

Accepted Answer

Compensating differentials theory suggests that jobs that have dangerous working conditions, high risk of injury, or unpleasant work environments may offer higher pay and benefits to compensate for the negative aspects of the job. This theory justifies the job advertisement in question.

Question 17

What theory would suggest that learning material on your own generates the same benefits as those achieved by formally attending classes and receiving a degree?

Accepted Answer

The human capital theory posits that education and knowledge generate future economic benefits for the individual. Therefore, learning material on your own, even without obtaining a formal degree or attending classes, can still lead to the acquisition of knowledge and skills that may enhance an individual's productivity and earnings potential in the future.

Question 18

As the mayor of a local town,Newman has the power to repeal workplace safety laws.How would repealing all workplace safety laws affect the wages of kindergarten teachers who work in relatively safe jobs at the local school?

Accepted Answer

Repealing workplace safety laws would primarily affect jobs with significant safety risks, not relatively safe jobs like kindergarten teaching. Therefore, the impact on kindergarten teachers' wages would be minimal due to the lack of negative compensating differentials in their profession. Negative compensating differentials refer to the additional wages paid to workers to compensate for undesirable job characteristics, such as safety risks. Since kindergarten teaching is a relatively safe job, changes in workplace safety laws would not significantly affect their wages through this mechanism.

Question 19

Jasmine,a woman,is more educated and better trained than Christian,a male.Despite these differences in education and training,Christian still earns more because he is a coal miner,whereas Jasmine is a secretary.Which model best explains the fact that Christian earns more than Jasmine?

Accepted Answer

The concept of compensating differentials suggests that workers are paid more for jobs with undesirable or risky characteristics. In this scenario, Christian's job as a coal miner is more hazardous than Jasmine's job as a secretary, and he is likely compensated accordingly with a higher wage. This model explains why someone with less education and training can still earn more than someone with more education and training in certain industries.

Question 20

Late-night employees working in a 24-hour store often earn more than similar employees who work the day shift.What explains this difference in pay?

Accepted Answer

Late-night employees working in a 24-hour store face different working conditions, such as working during unconventional hours and a higher risk of safety concerns (e.g., robberies). These working conditions are compensated with a positive compensating differential, which means that they receive higher pay than similar employees who work the day shift.

Quiz 15: Income,inequality,and Poverty