18) Suppose the wage rate in a certain industry falls, and firms hire more workers. The best
explanation of this is that labor
A) demand fell.
B) demand increased.
C) supply fell.
D) supply increased.
19) Consider a labor market in equilibrium. If the demand curve shifts to the right while the
supply curve shifts to the left, then the wage rate in the market will ________.
A) increase
B) decrease
C) remain unchanged
D) either increase or decrease or remain unchanged
20) Consider a labor market in equilibrium. If the demand curve shifts to the left while the
supply curve shifts to the left, then the number of workers hired in the market will ________.
A) increase
B) decrease
C) remain unchanged
D) either increase or decrease or remain unchanged
21) Consider a labor market in equilibrium. If both demand curve and supply curve of labor shift
to the right, then the wage rate in the market will ________.
A) increase
B) decrease
C) remain unchanged
D) either increase or decrease or remain unchanged
22) Consider a labor market in equilibrium. If both demand curve and supply curve of labor shift
to the right, then the number of workers hired in the market will ________.
A) increase
B) decrease
C) remain unchanged
D) either increase or decrease or remain unchanged
23) Suppose that a labor market is initially in equilibrium. If the minimum wage is set above the
initial equilibrium wage rate,
A) all workers in the labor market will be better off, receiving a higher wage per hour.
B) the labor supply curve will shift to the right.
C) the quantity demanded of labor will decrease along the given labor demand curve.
D) all of the above
Figure 10.3
24) In Figure 10.3 a decrease in the supply of labor will cause the equilibrium
A) wage and hours of labor used to increase.
B) wage and hours of labor used to decrease.
C) wage to increase and hours of labor used to decrease.
D) wage to decrease and hours of labor used to increase.
25) In Figure 10.3 an increase in the demand for labor will cause the equilibrium
A) wage and hours of labor used to increase.
B) wage and hours of labor used to decrease.
C) wage to increase and hours of labor used to decrease.
D) wage to decrease and hours of labor used to increase.
26) In Figure 10.3 a decrease in the demand for labor will cause the equilibrium
A) wage and hours of labor used to increase.
B) wage and hours of labor used to decrease.
C) wage to increase and hours of labor used to decrease.
D) wage to decrease and hours of labor used to increase.
27) In Figure 10.3 an increase in the supply of labor will cause the equilibrium
A) wage and hours of labor used to increase.
B) wage and hours of labor used to decrease.
C) wage to increase and hours of labor used to decrease.
D) wage to decrease and hours of labor used to increase.
28) Figure 10.3 describes the labor market for a manufacturing industry. In the short run an
increase in the price of the good made by the workers will
A) cause the equilibrium wage and the hours of labor used to increase.
B) not have an effect on this market.
C) cause the equilibrium wage to increase but will not change the hours of labor used.
D) cause the equilibrium wage and the hours of labor used to decrease.
29) Figure 10.3 describes the labor market for a manufacturing industry. In the short run an
increase in the productivity of the workers will
A) cause the equilibrium wage and the hours of labor used to increase.
B) not have an effect on this market.
C) cause the equilibrium wage to increase but will not change the hours of labor used.
D) cause the equilibrium wage to increase and the hours of labor used to decrease.
30) A minimum wage that is less than the prevailing market wage will
A) have no effect on the market.
B) increase unemployment.
C) increases wages.
D) reduce wages.
31) Suppose that a minimum wage is set that is higher than wages for retail workers. This is
________ news for shoppers and ________ retail workers.
A) bad; good news for some, but not all
B) bad; good news for all
C) good; good news for some but not all
D) good; good news for all
32) Suppose that studies show that a 10% increase in the minimum wage decreases the number
of minimum wage jobs by 1%. That would be the case if
A) demand for labor is inelastic.
B) demand for labor is elastic.
C) supply of labor is inelastic.
D) supply of labor is elastic.
33) An increase in the minimum wage will have a large effect on the number of workers
employed in minimum wage occupations if
A) demand for workers is elastic.
B) demand for workers is inelastic.
C) supply of workers is elastic.
D) supply of workers is inelastic.
34) Raising the minimum wage would
A) help some workers while hurting others.
B) help all workers and hurt all firms.
C) hurt all workers and help some consumers.
D) help workers and help consumers.
35) The supply of workers in a particular occupation could be relatively small if
A) training costs are high.
B) job features are undesirable.
C) there are few people with the required skills.
D) All of the above are correct.
36) The supply of workers in a particular occupation could be relatively large if
A) training costs are low.
B) job features are undesirable.
C) there are few people with the required skills.
D) there are artificial barriers to enter that profession.
37) One reason that professional baseball players earn higher incomes than college professors is
that
A) the training costs to enter the baseball profession are low.
B) there no barriers to entry in the baseball profession.
C) few people have the skill to play professional baseball.
D) being a college professor requires less education.
38) Medical doctors earn higher incomes than Ph.D.s in economics. This is partly because
A) medical doctors are more likely to face malpractice lawsuits.
B) the costs of receiving necessary medical education are higher.
C) a relatively small number of students are admitted to medical schools.
D) all of the above
39) Given their skills and education, steelworkers earn higher incomes than they would in other
occupations. This is partly because
A) steel workers face the higher risk of getting injured or killed.
B) it is costly to acquire skills necessary for jobs at steel mills.
C) few people have skills and knowledge required for jobs at steel mills.
D) all of the above
40) Given their skills and knowledge, mine workers earn higher incomes than they would in
another occupation. This is partly because
A) mine workers take the higher risk of injury or death.
B) few people have skills and knowledge required for mining works.
C) the skills required of mine workers can be acquired through costly training.
D) all of the above
41) Given their skills and education, those who work the night shift earn more than those who
work in the daytime. This is partly because
A) working the night shift is relatively more desirable.
B) a relatively small number of people are willing to work the night shift.
C) working the night shift is safer.
D) few people have the required skills for the night shift.
42) Given their skills and education, American workers in hostile regions such as Iraq earn
higher incomes than American workers in the homeland. This is partly because
A) American workers in Iraq face the higher risk of getting kidnapped and killed.
B) jobs in Iraq in general require more education.
C) the U.S. government restricts the number of American workers to work in Iraq.
D) only few people have skills necessary for jobs in Iraq.
43) Undesirable job features lead to a ________ labor ________.
A) lower; demand
B) higher; demand
C) lower; supply
D) higher; supply
44) If the number of people with the skills necessary to perform a job decreases, labor ________
shifts ________.
A) demand; left
B) demand; right
C) supply; left
D) supply; right
45) If the number of people with the skills necessary to perform a job increases, labor ________
shifts ________.
A) demand; left
B) demand; right
C) supply; left
D) supply; right
46) If the costs of the training necessary to perform a job decrease, labor ________ shifts
________.
A) demand; left
B) demand; right
C) supply; left
D) supply; right
47) If the worker’s costs of the training necessary to perform a job increase, labor ________
shifts ________.
A) demand; left
B) demand; right
C) supply; left
D) supply; right
48) Suppose that the steelworkers’ association introduces a new steel worker licensing
requirement. What do you expect will happen?
A) More steelworkers will be employed, at a lower wage.
B) More steelworkers will be employed, at a higher wage.
C) Fewer steelworkers will be employed, at a lower wage.
D) Fewer steelworkers will be employed, at a higher wage.
49) Which of the following is partially responsible for the male-female wage gap in the United
States?
A) Women have, on average, less education than their male counterparts.
B) Women have, on average, less work experience than their male counterparts.
C) Women have been denied access to many occupations, leading to increased supply in a few
occupations.
D) All of the above are correct.
50) Which of the following statements about the gender gap in income is incorrect?
A) Women are underrepresented in more lucrative majors such as computer science and
engineering.
B) Women in many occupations have less experience, compared to men.
C) Women have been denied access to high-paying male-dominated occupations.
D) none of the above
51) Which of the following statements about the gender gap in income is correct?
A) The typical woman in the U.S. earns about 75% as much as the typical man.
B) In higher education, women are under-represented in more lucrative majors such as physics
and chemistry.
C) The gender discrimination against women resulted in the excess supply of female workers in
the female-dominated occupations.
D) all of the above
52) Suppose that a male police officer earns more than a female administrative assistant, but they
both have the same amount of education. The difference in wages
A) can be attributable to the increased danger of being a police officer.
B) must be due to discrimination against women among police departments.
C) will disappear once the labor market has reached equilibrium.
D) is a violation of anti-discrimination laws.
53) Studies have shown that differences in wages between men and women
A) are explained in part by differences in productivity and in part by discrimination.
B) are fully explained by differences in productivity, education, and skill.
C) have disappeared in the last five years.
D) are fully explained by discrimination.
54) Lower wages for women relative to those for men constitute wage discrimination if women
earn lower wages
A) but are equally productive.
B) and have lower productivity than men.
C) in clerical and service occupations.
D) due to career interruptions to raise children.
55) Which of the following explains the differences in earnings by race?
A) differences in productivity
B) racial discrimination
C) differences in education and work experience
D) all of the above
56) Pay disparity by race
A) is caused by a combination of discrimination and differences in skills.
B) is caused solely by discrimination.
C) is caused solely by differences in skills.
D) has disappeared in the last five years.
57) Suppose that differences in skills explain part of the difference in wages by race. Wage
differences arising from skill differences
A) may result from past discrimination in access to education.
B) are not attributable to present or past discrimination.
C) will disappear when labor markets are in equilibrium.
D) are always classified as racial discrimination.
58) One reason that college graduates earn higher wages than non-graduates is because
A) college graduation serves as a signal of the individual’s productivity.
B) there are no additional skills learned in college that increase productivity.
C) college graduates are always less intelligent than non-college graduates.
D) college graduates are less equipped to deal with technological change, as their skills are
technology-specific.
59) One reason that college graduates earn higher wages than non-graduates is because college
graduates
A) acquire additional skills to allow them to work in more industries than non-graduates.
B) always work in more dangerous jobs than non-graduates.
C) are always more intelligent than non-graduates.
D) are less equipped to deal with technological change, as their skills are technology-specific.
60) College students who increase their human capital by acquiring the skills required for certain
occupations typically earn higher incomes than high school graduates. This is called
A) the learning effect of a college education.
B) the signaling effect of a college education.
C) the discriminatory effect of a college education.
D) none of the above
61) Compared to the typical high-school graduate, the typical college graduate has greater human
capital and thus more options for both low-skill and high-skill jobs. This is called
A) the signaling effect of a college education.
B) the learning effect of a college education.
C) the discriminatory effect of a college education
D) all of the above
62) People who complete college provide a signal to employers about their skills and thus face
better employment opportunities than equally skilled high school graduates. This is called
A) the learning effect of a college education.
B) the signaling effect of a college education.
C) the discriminatory effect of a college education.
D) none of the above
63) Given their skills, a college graduate may be perceived as a good manager of time and the
better fit for a managerial job than a high school graduate. This is an example of
A) the learning effect of a college education.
B) the signaling effect of a college education.
C) the discriminatory effect of a college education.
D) all of the above
64) The difference in wages between college graduates and high school graduates
A) has increased in recent years.
B) is smaller than in the past.
C) is nonexistent when labor markets are in equilibrium.
D) has been stable for several decades.
65) Over the last three decades the “college premium” has ________ because of ________.
A) increased; technological advances
B) decreased; technological advances
C) increased; racial and gender discrimination
D) decreased; laws that prohibit discrimination
66) The unionization rate of private sector workers is about
A) 8.2%.
B) 12.5%.
C) 35.5%.
D) 37.7%.
67) The unionization rate of public sector workers is about
A) 10.3%.
B) 17.1%.
C) 24.4%.
D) 39.8%.
68) Which of the following statements is correct?
A) For the United States, union workers earn 10 to 20% more than nonunion workers doing the
same work.
B) Most other industrialized countries have a larger union markup.
C) The union markup is relatively small for unionized firms in a competitive market.
D) none of the above
69) If a union is successful in increasing wages, it may find that
A) demand for workers falls.
B) demand for workers increases.
C) the price of union-made goods falls.
D) the demand for union-made goods rises.
70) Which of the following statements about featherbedding is correct?
A) It may or may not increase the demand for labor.
B) It may or may not increase wages.
C) It forces a firm to hire more workers than it needs.
D) all of the above