Which of the following is an example of labor-market discrimination?
a. A man who makes 5 widgets an hour is paid a higher wage than a man who makes 2
widgets an hour.
b. Tim and Alexis are equally popular and productive bartenders but Tim makes $2 per
hour more than Alexis.
c. Minorities are accepted into college at lower rates than non-minorities.
d. Only workers with college degrees are interviewed for a job as a high school science
teacher.
e. Hannah works at an ice cream shop and makes more money in tips than Hillary
because Hannah is nicer to the customers.
What would be the optimal level of employment if a union came in and set a minimum
wage at $30?
a. 30 workers
b. 50 workers
c. 60 workers
d. 80 workers
e. 90 workers
The structural transformation from 1950 to 2000 has caused total employment to in the
agricultural sector and in the manufacturing sector.
a. decrease, increase
b. decrease, decrease
c. increase, increase
d. increase, decrease
e. decrease, remain the same
The poverty rate in the United States was ______ (or approximately ______ million
people lived in poverty) in 2007.
a. 12.5 percent; 37.5
b. 22 percent; 20
c. 12.5 percent; 20
d. 22 percent; 37.5
e. 25 percent; 40
Assume that there are two types of workers: safe and risky. At the beginning of the first
period a firm must decide to hire a safe or risky worker. Safe workers have constant
ability worth $200 per period. There is a 50 percent chance a risky worker will have
ability worth $300 per period and a 50 percent chance a risky worker will have ability
worth $100 per period. Safe workers can be hired for a per-period wage of $190 and
risky workers can be hired for a per-period wage of $210. What are the firm’s profits if
it hires a safe worker?
a. $5
b. $10
c. $20
d. $30
e. $50
Which of the following does not limit a worker’s choices?
a. Each individual has to contribute 30% of their income toward an income tax.
b. A new state law states each person can only work 40 hours a week.
c. An individual is given $200 a week for disability payments.
d. A worker prefers to not work 40 hours a week.
e. There are 24 hours in a day.
_______ occurs because we can only collect wage data for workers who choose to
work.
a. Self-selection bias
b. The Oaxaca transformation
c. A productivity gap
d. Occupational discrimination
e. Risk aversion
What is the restaurant’s economic profit?
a. $50
b. $150
c. $200
d. $300
e. $350
What is the firm’s long run optimal capital stock?
a. 0
b. 1
c. 2
d. 3
e. 8
Which of the following is true of the peer effects literature?
a. Students are homogeneous in their abilities.
b. Students can only use their educational choices to speak to the community at large.
c. Students use low levels of education to signal their commitment to the community.
d. The presence of gangs in crime-prone neighborhoods is thought to increase
educational attainment.
e. More able students complete more year of education.
The labor force is made up of
a. the entire working population.
b. the entire working population over the age of 16.
c. the entire working population over the age of 16 who currently have a job.
d. the entire working population over the age of 16 who are looking for a job or
currently have a job.
e. the entire working population over the age of 16 and individuals in prison.
Which statement about economic models is not true?
a. Analytical models consist of a clear set of assumptions and conclusions that are
drawn from them.
b. Economic models simplify reality because the economic reality is too complicated.
c. Economic models consist of exogenous variables which are the response to changes
in endogenous variables.
d. Models are used in both theoretical and empirical work.
e. Economic models must be coherent to be effective.
Which of the following is NOT true of tournaments?
a. A tournament has a fixed set of prizes.
b. Tournaments use subjective rankings.
c. Tournaments are opposed by unions.
d. Prizes are allocated on the basis of cardinal rankings.
e. The payment of discretionary bonuses is an example of a tournament.
Card, Katz, and Krueger’s minimum wage findings have come under close scrutiny
since their publication. Recent studies have found ______ that in the minimum wage
can ______ employment.
a. an increase; increase
b. an increase; decrease
c. a decrease; increase
d. a decrease; decrease
e. no change; decrease
Labor-market discrimination is defined as:
a. a situation in which persons are treated unequally on the basis of an observable
characteristic.
b. a situation in which equally materially productive persons are treated unequally on
the basis of an observable characteristic.
c. a situation in which equally materially productive persons are treated unequally on
the basis of an observable or unobservable characteristic.
d. a worker’s decision of which industry to enter.
e. a situation in which persons are treated unequally on the basis of an observable or
nobservable characteristic.
The value of the minimum wage has declined markedly since:
a. the 1950s.
b. 1963.
c. the mid-1970s.
d. the 1980s.
e. the 1990s.
The poverty rate in the United States has eductuated over time. But rapid declines
occurring in ______ and ______ are particularly striking.
a. 1959″1969; 2005″2009
b. 1963″1973; 2005″2009
c. 1959″1969; 1996″2005
d. 1963″1973; 1996″2005
e. 1963″1973; 2008″2011
What is Mark’s baseline utility?
a. 42 utils
b. 100 utils
c. 119 utils
d. 168 utils
e. 200 utils
The short run production function is concave because
a. hiring more employees is always more efficient for the firm.
b. the best employees are hired first, so the quality of employees decreases as more
workers are added.
c. it is harder for a firm to manage a higher level of capital.
d. the level of capital can be adjusted.
e. hiring more workers, holding capital fixed, leads to overcrowding.
The relative _______ and_______ of Blacks and Whites add credence to the selective
withdrawal hypothesis.
a. employment-to-population ratios; educational attainment
b. unemployment rates; productivity differences
c. occupational choices; unemployment rates
d. employment-to-population ratios; unemployment rates
e. coefficient of market discrimination; coefficient of employer discrimination
Which is not a pillar of the neoclassical approach?
a. Pareto efficiency
b. positive economics
c. methodological individualism
d. equilibrium
e. rational choice
What is the net return to Carolina’s educational investment?
a. 1
b. 3
c. 6
d. 7
e. 9
Affirmative action was established under _______.
a. The Equal Pay Act of 1963
b. The Civil Rights Act of 1964
c. Executive Order 11246
d. The Civil Rights Act of 1991
e. The Equal Rights Act of 1991
The poverty rate hovered around ______ in the ______ and began to rise during the
______.
a. 12 percent; 1950s; 1970s
b. 10 percent; 1960s; 1980s
c. 12 percent; 1970s; 1980s
d. 15 percent; 1960s; 1970s
e. 10 percent; 1950s; 1990s
Which of the following is an example of a fringe benefit?
a. overtime
b. Christmas bonus
c. raises
d. federal holidays off
e. paid dental benefits
How many years of schooling does Carolina acquire?
a. 1 year
b. 2 years
c. 3 years
d. 4 years
e. 5 years
In screening models ______ act first, while in signaling ______ models act first.
a. firms; workers
b. firms; the government
c. workers; the government
d. workers; firms
e. workers; workers
The wage in the market is $500, and the firing cost of each worker is $300. What is the
cost to the firm of replacing one worker with another?
a. $200
b. $300
c. $500
d. $800
e. $1100
Suppose the labor supply curve shifts upward. Which of the following could have
caused the shift?
a. The wage in an alternative industry increased.
b. The price of capital increased, and capital and labor are gross complements.
c. The price of capital decreased, and capital and labor are gross complements.
d. A hurricane caused thousands of people to leave New Orleans, decreasing the size of
the labor force in the area.
e. none of the above
There are two tasks, 1 and 2, and two workers, A and B. The level of output, y, is
governed by the task-based production technology: where and denote
the respective amount of task 1 and task 2 that are carried out during the period. A‘s
ability is (8, 4), which represents the maximum amount of task 1 and task 2 he can
perform if he devotes all of his time to it. B‘s ability is (9, 9). Which worker has an
absolute advantage in task 2?
a. A; A
b. A; B
c. B; A
d. B; B
e. neither; A
As Susan’s wage increases, she decides to work fewer hours. This implies leisure is a(n)
a. normal good.
b. inferior good.
c. luxury good
d. Giffen good.
e. A and C
Suppose the government imposes an income tax of 30%. How much can Sarah spend
on consumption now (assume she can spend her initial wealth)?
a. $390
b. $416
c. $620
d. $716
e. $806
In a hedonic wage model, heterogeneous workers and firms engage in positive
assortative
matching in equilibrium. Which of the following is an example of positive assortative
matching?
a. Dangerous jobs are matched with brave workers and safe jobs are matched with
wimpy workers.
b. Workers who are comparatively brave are paid less than wimpier workers.
c. Workers who are not equally skilled are paid the same wage.
d. Workers who are more able have more education.
e. Firms that employ comparatively brave workers earn positive economic profits.