71) Which of the following statements about featherbedding is correct?
A) It could increase production costs, resulting in higher prices for products.
B) The quantity of labor demanded by firms could actually decrease.
C) It could lead to a lower wage and smaller employment in the long-run.
D) all of the above
72) The practice of featherbedding is intended to help unions
A) reduce the tradeoff between higher wages and fewer jobs.
B) negotiate for higher wages by assuring more efficient labor practices.
C) increase membership by guaranteeing job growth.
D) defeat “right-to-work” laws.
73) Which of the following is a possible benefit of labor unions?
A) It may facilitate a smooth relationship between labor and management.
B) It may provide workers an intermediary to discuss job issues with managers.
C) It may lead to an increase in productivity.
D) all of the above
74) Which of the following is a possible benefit of labor unions?
A) It may help firms to retain a more experienced workforce.
B) It may help firms reduce training costs of new employees.
C) It may facilitate communications between workers and managers.
D) all of the above
Recall the Application about how physical attractiveness affects wages to answer the
following question(s).
75) Recall the Application. Relative to people of average appearance workers receive ________
wages if they are ________.
A) higher; unattractive
B) the same; either attractive or unattractive
C) lower; more attractive than average
D) higher; more attractive than average
76) The wage for a particular occupation will be relatively low if supply is small relative to
demand.
77) An increase in the market supply of clerks leads to an increase in the market wage rate for
clerks.
78) A minimum wage above the equilibrium wage leads to an excess quantity supplied of labor.
79) Waiters in countries where it’s customary to tip waiters will tend to have lower wages than
will waiters in countries where tipping is not customary.
80) One would expect people who work the night shift to have higher wages than their day-shift
counterparts.
81) If few people have the skill required for a job, it will pay less.
82) Airline pilots make more than bus drivers in part because the training costs of being an
airline pilot are higher.
83) A construction laborer might make more than a similarly skilled book store clerk because the
working conditions in the book store are more desirable.
84) The signaling effect leads to college graduates earning more because a college degree signals
that a person has learned the required job skills.
85) In the United States, the unionization rate of private-sector workers is much higher than that
of public-sector workers.
86) Labor unions tend to drive wages higher than they would be otherwise.
87) A possible benefit of unions is lower turnover among workers, which in turn leads to lower
training costs.
88) Labor unions may increase worker productivity by facilitating smooth relations between
labor and management.
89) Explain what will happen to the demand for labor, the equilibrium wage, and the equilibrium
quantity of labor if a technological innovation makes workers more productive.
90) Name two factors that will increase the demand for labor, and two factors that will increase
the supply of labor.
91) Evaluate the statement: All minimum wage workers will be better off if the minimum wage
rises.
92) Professional football players earn much higher wages than do accountants. Why?
93) Lawyers are required to pass a comprehensive bar exam to be licensed to practice law. What
effect should this have on the number of lawyers, the wages they receive, and the price people
have to pay to receive legal services?
94) Explain why women, on average, earn less than men in the United States.
95) Why do college graduates earn higher wages than non-graduates?
96) What is featherbedding and why do unions engage in the practice?
97) Explain why featherbedding may or may not increase the demand for labor.
98) Explain possible benefits of labor unions.
10.4 The Distribution of Income
1) Suppose that we compare shares of income earned by different U.S. groups by dividing all
households into five groups. Which of the following statements about the income distribution in
the United States is correct?
A) Shares of income remain roughly constant as we move from the lowest quintile to the highest
quintile.
B) Shares of income decrease as we move from the lowest quintile to the highest quintile.
C) Shares of income increase as we move from the lowest quintile to the highest quintile.
D) none of the above
2) Which of the following is a main factor that explains the differences in the incomes of U.S.
households?
A) inheritances
B) luck and misfortune
C) discrimination
D) all of the above
3) Which of the following is the most important reason for growing inequality in the income
distribution in the United States.?
A) an increase in demand for highly educated workers
B) inheritances
C) discrimination
D) a steady increase in tuition and fees for a college education
4) Which of the following explains the impact of technological advances on the wage gap
between less skilled workers and highly skilled workers?
A) Advances in technology have increased the demand for higher education degrees and
widened the wage gap between the two groups.
B) Advances in technology have increased the productivity of less skilled workers and thus
narrowed the wage gap between the two groups.
C) Advances in technology have increased the demand for less skilled workers and highly skilled
workers alike, and thus the wage gap between the two groups remains unchanged.
D) none of the above
5) Which of the following explains the impact of the expansion of international trade on the
demand for less skilled workers in the United States?
A) An increase in international trade has increased the demand for less skilled workers.
B) An increase in international trade has decreased the demand for less skilled workers.
C) An increase in international trade has had little impact on the demand for less skilled workers.
D) The impact of the expansion of international trade on the demand for less skilled workers in
the United States varies from year to year.
Recall the Application about who benefits from the immigration of low-skilled workers to
the United States to answer the following question(s).
6) Recall the Application. If the majority of new immigrants are low-skill workers,
A) it will increase wages for the low-skill native workers.
B) it will decrease wages for the high-skill native workers.
C) high-skill native workers benefit from low product prices.
D) all of the above
7) Recall the Application. If lower wages due to immigration dominate the benefits of lower
consumer prices,
A) low-skill workers will be worse off.
B) high-skill workers gain at the expense of low-skill workers.
C) immigration creates winners and losers within the economy.
D) all of the above
8) Recall the Application. Among the losers when there is an increase in labor migration to the
United States are
A) U.S. consumers
B) U.S. firms.
C) U.S. workers with the same skill level of the immigrants.
D) all of the above.
9) Recall the Application. Among the winners when there is an increase in labor migration to the
United States are
A) U.S. consumers.
B) firms in the country the workers left.
C) U.S. workers with the same skill level of the immigrants.
D) all of the above
10) From 1979-2007, the share of market income for the bottom 99% of U.S. households has
decreased.
11) From 1979-2007, labor income for U.S. households became more evenly distributed.
12) List and briefly describe the three key reasons for income inequality in a market-based
economy.
10.5 Public Policy and the Distribution of Income
1) Without the government’s redistribution programs, the income share of the lowest quintile
would ________ and the income share of the highest quintile would ________.
A) decrease; remain the same
B) decrease; increase
C) remain the same; increase
D) increase; decrease
2) Government taxes and transfers
A) increase the wealth of the poorest Americans and reduce the wealth of the richest Americans.
B) reduce the wealth of all Americans.
C) increase the wealth of all Americans.
D) reduce the wealth of the poorest Americans and increase the wealth of the richest Americans.
3) The poverty rate in the United States is highest for
A) married couples.
B) childless households.
C) female headed households.
D) single people.
4) The poverty rate in the United States is lowest for
A) whites.
B) blacks.
C) Hispanics.
D) Asians.
5) Poverty rates among the elderly are
A) much lower than poverty rates among children.
B) higher than the poverty rates among children.
C) approximately the same as the poverty rates among children.
D) rising more rapidly than the poverty rates among children.
6) A means tested government program is one that
A) is pilot tested to see if it works.
B) provides assistance to those below a certain income level.
C) is temporary and ends after a short period of time.
D) all of the above
7) Government means tested programs ________ the overall poverty rate.
A) substantially decrease
B) have not changed
C) lead to an increase in
D) drop to zero
8) The Temporary Aid to Needy Families program
A) requires that recipients participate in work activities.
B) is associated with a decrease in single mothers working.
C) has caused a rise in national welfare case loads.
D) was an important factor in the increase in poverty among children between 1993 and 2002.
9) Under the Temporary Aid to Needy Families, work activities are defined to include
A) vocational training.
B) community service.
C) on-the-job training.
D) all of the above
10) A relatively high base income in a cash assistance program
A) reduces the incentive to work.
B) increases the incentive to work.
C) does not affect the incentive to work.
D) will reduce the incentive to work through the substitution effect but will increase the
incentive to work through the income effect.
11) Compared with a low benefit reduction rate, a relatively high benefit reduction rate in a cash
assistance program
A) reduces the incentive to work.
B) increases the incentive to work.
C) does not affect the incentive to work.
D) will reduce the incentive to work through the substitution effect but will increase the
incentive to work through the income effect.
12) Between 1992 and 1999, the employment rate for single mothers in the United States
A) increased by 15 percentage points.
B) decreased by 19 percentage points.
C) remained fairly constant.
D) more than doubled.
13) From 2002-2004, the earned income tax credit ________ the poverty rate among
participants.
A) slightly increased
B) decreased
C) had little to no effect on
D) more than doubled
Recall the Application about how lottery contributions are distributed among income
groups to answer the following question(s).
14) Recall the Application. As a percentage of household income, the amount spent on lotteries
by households of varying income levels is
A) progressive.
B) regressive.
C) proportional.
D) exponential.
15) Recall the application. The average annual spending on state lotteries per adult living in a
lottery state is
A) less than $20.
B) $56.
C) $212.
D) more than $500.
16) The poverty rate in the United States has been growing for people over age 65.
17) The poverty rate in the United States is lowest for whites.
18) Black and Hispanics poverty rates in the United States are about twice as high as Asian and
white poverty rates.
19) States can allow exceptions to Temporary Aid to Needy Families 60 month rule for up to
20% of recipients.
20) Under Temporary Aid to Needy Families a recipient loses their cash benefits when they get a
job.
21) The earned income tax credit is an earnings subsidy for low-income households.
22) The earned income tax credit has been a successful anti-poverty policy by encouraging
participation in the workforce.
23) What is means testing?
24) What does Temporary Aid to Needy Families require of recipients?
25) What does Temporary Aid to Needy Families provide to recipients?