Question 1

A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market discrimination based on which of the following findings?

Accepted Answer

The study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence that employers were more likely to request interviews with job applicants with "white" names such as Greg than from applicants with "black" names such as Jamal. This finding indicates discrimination based on race in the labor market.

Question 2

Economists are skeptical that discrimination is employer driven because

Accepted Answer

The answer of Economists are skeptical that discrimination is employer...

Question 3

In the presence of discrimination by customers,

Accepted Answer

Discriminatory wage differentials can exist even if firms themselves do not discriminate and if there are no discriminatory laws in place. If customers discriminate against certain workers, firms may respond by offering lower wages to those workers or even refusing to hire them altogether. This can prevent the affected workers from being able to compete on an equal playing field and limit their economic opportunities. While market forces can sometimes work to reduce discrimination, they are not foolproof and may not always be effective in eliminating discriminatory practices.

Question 4

Discrimination by a manager in the hiring process may be consistent with the decision to maximize profits if

Accepted Answer

If customers are willing to pay higher prices to maintain the discrimination, then the manager may justify their decision to discriminate in the hiring process as a way to maximize profits. However, discrimination based on race or gender is not ethical or legal, even if it can potentially increase profits. Therefore, choices B and C are not valid options. The statement in choice D is overly simplistic and not always true, as unfortunately discrimination can occur even when it goes against the profit motive.

Question 5

Major league baseball players get paid more than minor league baseball players because of

Accepted Answer

The answer of Major league baseball players get paid more...

Question 6

Evidence suggests that business owners are generally

Accepted Answer

Research has shown that business owners prioritize making a profit over discriminating against a particular group. While discrimination may occur in some settings, this is usually due to biases or prejudices of individual employees rather than a deliberate strategy by the business owner. Additionally, studies have found that diverse workforces can actually be beneficial for a company's profitability, as they offer different perspectives and ideas that can lead to innovation and better decision-making.

Question 7

The profit motive counteracts

Accepted Answer

The profit motive refers to the desire to earn financial gain and does not directly address issues of discrimination or beauty premiums. Therefore, none of the given options are correct.

Question 8

Why would a wage differential due to discrimination in hiring be unlikely to persist in a competitive labor market?

Accepted Answer

In a competitive labor market, firms that discriminate will have a cost disadvantage compared to firms that do not discriminate. Discriminating firms may miss out on talented workers who may go to their non-discriminating competitors, which can lead to increased costs for the discriminating firms. Thus, the wage differential due to discrimination in hiring is unlikely to persist in a competitive labor market.

Question 9

In what way do competitive markets have a "natural remedy" for discriminatory hiring practices?

Accepted Answer

In competitive markets, firms that do not discriminate are more likely to attract a diverse pool of workers and customers, thereby increasing their profits. Discriminatory firms, on the other hand, limit their pool of workers and customers and may eventually lose market share to non-discriminatory firms. This natural competition incentivizes firms to avoid discriminatory hiring practices in order to remain profitable.

Question 10

It is argued that competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the potency of that natural remedy?

Accepted Answer

The answer of It is argued that competitive markets provide...

Question 11

Two economists created fake resumes with either common African-American names such as Lakisha and Jamal or common white names such as Emily and Greg. After sending them to potential employers with "Help Wanted" ads in Boston and Chicago newspapers, they found that

Accepted Answer

The study found that job applicants with white names received 50 percent more phone calls from interested employers, indicating that racial discrimination was a factor in hiring decisions. The study did not find significant differences in wages based on race/ethnicity in either city.

Question 12

That some schools direct females away from science and math courses is evidence of

Accepted Answer

The statement "some schools direct females away from science and math courses" indicates that discrimination is happening prior to people entering the labor market, as these courses are usually prerequisites for jobs in STEM fields. Therefore, option B is the correct answer. Options A, C, and D are not relevant in this context.

Question 13

Suppose that an employer can hire workers with brown hair and workers with blonde hair. Each type of worker has the same productivity. Which of the following is correct if the employer discriminates by hiring only workers with brown hair?

Accepted Answer

By discriminating based on hair color, the employer is limiting the potential pool of workers, which may lead to higher costs due to a shortage of available workers. This can have a negative impact on the firm's profitability and competitiveness.

Question 14

Firms that operate in competitive product markets and choose to practice discrimination in hiring workers

Accepted Answer

Firms that discriminate in hiring workers are likely to miss out on talented workers that could increase productivity and profits. Over time, competitors that do not discriminate will gain a competitive advantage and will be able to offer better products at lower prices. This will eventually lead to lost market share and decreased profits for the discriminatory firm, increasing the likelihood that they will eventually go out of business.

Question 15

Which of the following factors does not affect the value of a worker's marginal product?

Accepted Answer

A worker's level of disposable income does not affect the value of their marginal product. Marginal product is determined by the worker's productivity, which is in turn affected by factors such as their level of human capital, technology, and the amount of physical capital they have to work with. Disposable income is the income a person has left over after paying taxes and other necessary expenses, and it is not directly related to their productivity or ability to produce goods and services.

Question 16

A natural correction to employer discrimination in market economies is the

Accepted Answer

In market economies, the profit motive incentivizes employers to make decisions based on merit and qualifications rather than discriminatory factors. Discrimination can lead to decreased productivity, decreased innovation, and increased employee turnover, all of which can harm a company's profitability. As a result, employers have a natural incentive to avoid discriminatory practices in order to maximize profits. While the other options may also play a role in correcting employer discrimination, the profit motive is the most fundamental and effective mechanism.

Question 17

Discrimination by a manager in the hiring process

Accepted Answer

Discrimination by a manager in the hiring process increases the firm's costs because it limits the potential pool of qualified candidates and may lead to lower productivity, turnover, and legal costs. Options C and D provide examples of discriminatory behavior, but they do not address the impact on the firm's costs, therefore B is the best answer.

Question 18

Economists argue competitive markets provide a "natural remedy" to discriminatory wage practices. Which of the following is widely recognized as a potential limit to the effectiveness of that natural remedy?

Accepted Answer

Discriminatory practices by customers can potentially limit the effectiveness of competitive markets in addressing wage discrimination. Even if employers are willing to pay higher wages to minority workers, discriminatory customers may refuse to do business with them, reducing the demand for their labor and limiting the upward pressure on wages.

Question 19

Some economists are skeptical of the argument that employers are responsible for discriminatory wage differences. They argue that market economies provide a natural remedy to employer discrimination, and that remedy is

Accepted Answer

The profit motive dictates that employers will want to hire the most qualified and productive workers at the lowest possible cost. Discrimination based on gender or race would be rational only if those factors are somehow related to productivity. However, there is no evidence to suggest that they are, so market forces should deter wage discrimination.

Question 20

Which of the following is an example of customer discrimination?

Accepted Answer

Discrimination based on race or ethnicity is evident in the preference of white theater goers for movies with white stars rather than black stars. Choice A refers to gender discrimination and choice C refers to discrimination due to skill level or experience, which may not necessarily be unfair.

Quiz 19: Earnings and Discrimination