The EITC ______ labor force participation and ______ work incentives for current
labor market participants.
a. encourages; may increase
b. encourages; may decrease
c. may encourage; increases
d. may discourage; decreases
e. may discourage; increases
Which of the following individuals would be considered employed, according to the
Bureau of Labor Statistics glossary?
a. a stay-at-home dad who works 40 hours a week taking care of his family
b. a mother who works 20 hours a week for her husband’s business, but is never paid
c. an individual who was recently laid off and has not found another job yet
d. an elderly woman who retires from her job but still volunteers
e. a girl who is 15 working part time at a local grocery store
The distribution of earnings in the United States is skewed to the ______ but the
distribution of intelligence is more or less symmetric. One explanation for this earnings
skew is that in most developed countries production is organized within firms in a
______.
a. right; hierarchical top-to-toe manner
b. right; inverted pyramidal shape
c. right; system with equal numbers of workers at each level
d. left; hierarchical top-to-toe manner
e. left; inverted pyramidal shape
Which of the following is a reason that long-term jobs can only partially be explained
by the accumulation of firm-specific human capital?
a. Long-term jobs also require general human capital.
b. Some workers’ real earnings decline over time.
c. Firm-specific human capital only partially explains the level of a worker’s output.
d. Workers only acquire firm-specific human capital for the first few weeks of a job.
e. Only high-ability workers are able to acquire firm-specific human capital.
Suppose a risk-neutral firm hires many risk-averse workers for two periodsex ante and
ex post. Half of the workers possess high ability, , and the other half possess low
ability, . Worker ability is revealed ex post. A worker’s lifetime utility is given by
where and are consumption in each of the periods. The firm
offers contract where is the first period wage and and are the
respective second period wage offers made to high- and low-ability workers. The labor
market is competitive ex ante. An equilibrium contract will _______ workers’ expected
utilities such that firms earn profits and ensure that wage offers are sufficient to
_______.
a. maximize; positive; deter ex post raiding
b. maximize; positive; ensure workers will not shirk
c. maximize; zero; incentivize workers to reveal their true types
d. minimize; zero; deter ex post raiding
e. minimize; zero; ensure workers will not shirk
If the marginal product of labor is , then output will as labor increases.
a. negative, decreases
b. positive, decreases
c. positive, stay the same
d. negative, stay the same
e. negative, increases
Assume that there are two occupations indexed i = 1, 2. The fractions of men and
women
employed in each of these occupations are, respectively, and ; and
and . What is the Duncan index of dissimilarity?
a. 0
b. 0.4
c. 0.5
d. 0.8
e. 0.85
Until the mid-1950s, _______ led to the separation of Blacks and Whites in much of the
South and _______ hindered women’s progress toward parity with men.
a. Jim Crow; protective legislation
b. Jim Crow; productivity differences
c. the separate but equal doctrine; productivity differences
d. productivity differences; protective legislation
e. productivity differences; Jim Crow
What is the firm’s long run optimal employment level?
a. 0 workers
b. 4 workers
c. 5 workers
d. 10 workers
e. 20 workers
Which of the following is not true about New Institutional Economics?
a. It is made up of agents who use rational choice.
b. It examines how individuals within the household behave.
c. It considers how workers who are already employed make their decisions regarding
how much or how hard to work.
d. It is a combination of law, economics, and organization.
e. It assumes agents have a limited ability to calculate the consequences of their actions.
In a screening model, ______ carefully design(s) ______ to exploit the strengths of
some groups and the weaknesses of others.
a. employers; job packages
b. the government; labor market legislation
c. workers; job packages
d. workers; educational attainment
e. the government; job packages
Which of the following is suggested by the person-specific information theory?
a. Workers’ earnings should be unrelated to experience.
b. Safe workers have constant productivity.
c. Workers’ abilities are increasing in output.
d. Workers’ productivities are constant over time.
e. Over time, workers will be assigned to more productive tasks within the firm.
Let and denote the respective abilities of worker A and worker B,
and let and . If worker A possess an absolute advantage
over worker B in task 1:
a. .
b. .
c. .
d. .
e. .
A firm sells its output in the market and buys its inputs from the and markets.
a. capital equipment, product, labor
b. labor, product, factor
c. factor, product, labor
d. factor, capital equipment, labor
e. product, capital equipment, labor
Which of the following is a feasible choice variable, in the short run, for a grocery
store?
a. increasing the price of bananas to $50 a pound
b. hiring 50 workers who are 10 years old, in violation of federal child labor laws
c. laying off 5 cashiers
d. building an addition to the store to add 10 more aisles
e. adding a bakery, which requires buying ovens and other equipment
In a competitive equilibrium, workers are and firms are .
a. price setters, price setters
b. price setters, price takers
c. price takers, price takers
d. price takers, price setters
e. price neutral, price setters
Suppose time periods are denoted t=1,2,3, . . . ,T, where t=1 is the beginning and t=T is
the end. The discount rate is 1/2. Each period the firm can hire a worker (who is
employed for a single period). If no worker is hired, profits are zero. The worker’s
reservation utility is $20. Upon employment, the worker chooses whether to exert effort
e=1 or e=0. His utility is where $c is his consumption and $40 is the
value of shirking. The level of effort is soft information. In each of the periods, the firm
produces output valued at $y(e) where and y(1)=$80. Which of the
following is NOT a credible bonus payment with which workers will be motivated?
a. $40
b. $50
c. $60
d. $65
e. $70
How many workers are employed in the steel industry?
a. 19
b. 20
c. 23
d. 25
e. 27
Suppose that male, m, and female, f, wages depend upon q, a perfect measure of
productivity, according to and . Let the wage gap
between men and women be equal to . The term Δα0 can be
interpreted as:
a. the difference between the slopes of the male and female wage functions.
b. the wage gap between men and women.
c. the difference between the base wages (wages at zero marginal productivity) of men
and women.
d. the change in the coefficient of employer discrimination from the short run to the
long run.
e. the coefficient of employer discrimination against women.
Which of the following groups are not part of the working population?
a. individuals over the age of 16 who can work but currently are not looking for a job
b. individuals over the age of 16 and currently working
c. individuals over the age of 16 and are in prison
d. individuals over the age of 16 who are not working but are looking for a job
e. both A and C
Which of the following statements is true?
a. A perfectly competitive firm operates in a market where marginal revenues are
greater than the price.
b. A perfectly competitive firm operates in a market where marginal revenues are less
than the price.
c. A monopolist operates in a market where marginal revenues are greater than the
price.
d. A monopolist operates in a market where marginal revenues are less than the price.
e. A monopolist operates in a market where marginal revenues are equal to the price.
Under the Roy model, workers’ heterogeneous abilities are:
a. known by both workers and firms.
b. known only by workers.
c. known only by firms.
d. unknown by both workers and firms.
e. sometimes known by workers and always known by firms.
Welfare reform in the ______ beefed up restrictions on welfare eligibility requirements.
In the years following welfare reform, the labor force rate of single women with
children ______ and the number of welfare recipients ______.
a. 1970s; increased; rose
b. 1970s; increased; fell
c. 1980s; increased; fell
d. 1980s; decreased; fell
e. 1990s; decreased; fell
Which of the following is a true statement about marginally attached workers?
a. The individual has looked for a job within the past year, but not within the past
month.
b. A marginally attached worker is a subset of the group considered to be discouraged
workers.
c. The reason marginally attached workers are not looking for work is always because
they do not believe there is a job for them.
d. The individual would like a job but has not looked for a job in the past two years.
e. Marginally attached workers are considered part of the labor force.
Card, Katz, and Krueger published a series of influential papers in the 1990s that 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
If the training is firm specific, who will pay for the training?
a. The individual will pay the full $60.
b. The firm will pay the full $60.
c. The firm will pay $40 and the individual will pay $20.
d. The firm will pay $20 and the individual will pay $40.
e. The individual will not receive training because the costs are greater than the
benefits.
What is the employment-to-population rate?
a. 2.4%
b. 72.7%
c. 74.5%
d. 78.4%
e. 88.9%
Which of the following is true about point P on the indifference curve ?
a. It corresponds to the utility maximizing solution.
b. It represents a corner solution where the worker chooses to remain out of the labor
force.
c. It is not feasible given the constraints.
d. It satisfies the tangency condition.
e. It represents a feasible outcome that does not maximize the worker’s utility.
What is the long run optimal level of output?
a. 2
b. ln 2
c. 4
d. 2?9· ln 2
e. 15
The contemporaneous nature of the implementation of policies designed to combat
discrimination in the workplace and the narrowing of the observed earnings gaps
between men and women does not imply causality because:
a. these policies mainly focused on combating discrimination against Black workers.
b. the wage gap between men and women has not narrowed substantially.
c. the policies were largely ineffective.
d. many other developments were occurring as well.
e. discrimination against female workers is based on statistics rather than prejudices.