_______ prohibits sexual discrimination in the workplace.
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
Which of the following increases the power of unions?
a. Deregulation of an industry, removing a firm’s monopoly power.
b. An increase in the tariff on foreign inputs.
c. An elastic demand curve.
d. An increase in the price elasticity of demand for the industry’s product.
e. The firm not agreeing to a set number of union workers that it must employ (manning
levels)
If Sarah works 8 hours a day, what is the amount she can spend on consumption in one
day (assume she also can spend her initial wealth)?
a. $300
b. $320
c. $620
d. $800
e. $1020
In the long run, when the price of labor increases,
a. the demand for labor will decrease and demand for capital will decrease.
b. the demand for labor will decrease and demand for capital will increase.
c. the demand for labor will decrease and demand for capital will either decrease or
increase.
d. the demand for labor will increase and demand for capital will increase.
e. the demand for labor will increase and demand for capital will either decrease or
increase.
Which of the following will make an individual less likely to attend college?
a. a decrease in the interest rate
b. an increase in the wage paid to college educated students
c. an increase in the wage paid to individuals with a high school education
d. an increase in the number of years until retirement
e. an increased demand for skilled workers
In an economic sense, individuals are defined as poor:
a. according to a relative standard.
b. according to an absolute standard.
c. if their incomes fall below the poverty line.
d. if they receive public assistance.
e. if they spend more than 1/3 of their income on food.
The marginal concept is important in economics because
a. it provides a convenient means of locating an optimal choice.
b. it assumes individuals operate using limited rationality.
c. it allows for economists to predict how an agent will respond to a change in their
environment.
d. A and C only
e. all of the above
When there are compensating wage differentials,
a. individuals no longer maximize utility.
b. firms no longer maximize profits.
c. all workers receive the same non pecuniary benefits.
d. workers are homogeneous.
e. there are a large number of firms.
What is Brian’s reservation schooling cost?
a. $75K
b. $80K
c. $85K
d. $90K
e. $95K
What is a factor which may cause majority workers to receive a positive wage
differential for working with minority workers in the presence of positive employee
discrimination?
a. population ratios
b. completely segregated firms
c. homogeneous workers
d. heterogeneous workers
e. a coefficient of employee discrimination equal to zero
Which of the following best represents the gross total earnings of an employee?
a. base salary.
b. base salary and overtime payments
c. base salary, production benefits, overtime, and cost of living allowances
d. base salary, production benefits, overtime, cost of living allowances, and shift
differentials
e. base salary, production benefits, overtime, cost of living allowances, and shift
differentials net of any tax deductions
In an economy with two distinct sectors, the imposition of a minimum wage above the
competitive equilibrium wage in one of those sectors will:
a. reduce the demand for labor in the non-minimum-wage sector.
b. cause workers to move to the non-minimum-wage sector.
c. decrease the equilibrium wage in the minimum-wage sector.
d. increase unemployment in the non-minimum-wage sector.
e. decrease employment in the non-minimum-wage sector.
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
Monopsony power may occur when:
a. the supply of labor is perfectly elastic.
b. there are psychic costs of moving across locations.
c. workers have perfect information about employment opportunities.
d. workers can switch employers instantly.
e. workers have full information about wages offered by all employers.
Suppose a 2% increase in wages decreases the demand for labor by 1%. What is the
own wage elasticity?
a. – 5%
b. -1%
c. -1.5%
d. -2%
e. -3%
Suppose a firm currently offers workers $60K a year without health care benefits. The
workers want health insurance and are willing to take a pay cut to get the benefit.
Which of the following employment packages does the employer value equally to the
current employment package?
a. $70K salary and $30K in health benefits
b. $60K salary and $30K in health benefits
c. $40K salary and $30K in health benefits
d. $30K salary and $30K in health benefits
e. $10K salary and $30K in health benefits
If two inputs are gross substitutes, their substitution elasticity will be
a. zero.
b. positive.
c. negative.
d. –
e. 1.
Which of the following is an example of learning-by-doing?
a. An individual who wants to become an account studies for the CPA exam.
b. A parent helps a child with his math homework.
c. A student takes an engineering course in order to obtain an engineering degree.
d. A prelaw student obtains a summer internship at a law firm and learns how to write a
brief.
e. An adult goes to the doctor to make sure she is ready to work after surgery.
How many chefs will work in the diner?
a. 6 workers
b. 8 workers
c. 12 workers
d. 14 workers
e. 20 workers
Fatality rates vary considerably from one industry to the next. _______ is a particularly
dangerous occupation while _______ is considerably safer.
a. Forestry; agriculture
b. Agriculture; fishing
c. Mining; forestry
d. Fishing; the service sector
e. Agriculture; mining
Suppose the supply of capital is relatively inelastic. If capital and labor are gross
complements, the labor demand elasticity will be , but if capital and labor are gross
substitutes, the labor demand elasticity will be .
a. high, high
b. low, low
c. low, high
d. high, low
e. zero, zero
Which of the following is NOT a reason that a firm might make a reputational
nvestment?
a. in order to improve or retain its reputation among potential workers
b. in order to reap immediate rewards
c. in order to induce workers to make costly effort
d. in order to reap future benefits
e. in order to attract high-quality workers
Specific training is:
a. training that raises a worker’s productivity at all firms.
b. training that is only useful for one firm.
c. training that always occurs on site.
d. training that is always planned and off site.
e. training that is always gained through information conversations.
The value of a statistical life is defined as VSL=$B/S. What is the interpretation of B in
this equation?
a. The number of lives saved.
b. The benefit derived from saving S lives.
c. The proportion of lives saved to the total population.
d. The total number of citizens considering the adoption of a new safety policy.
e. The amount it will cost a firm to save S lives.
Which of the following is NOT a prediction of Becker’s model of discrimination?
a. In the short run, equilibrium wage discrimination is determined by the tastes of the
average employer.
b. A firm hires a Black worker only if the wage is greater than the coefficient of
employer discrimination.
c. In the short run, equilibrium wage discrimination may be greater than zero.
d. Over the long run, competitive forces are predicted to eliminate the effects of
employer prejudice.
e. The coefficient of employer discrimination dictates whom an employer will hire.
What is the equilibrium wage?
a. 1
b. 2
c. 3
d. 4
e. 5
Why do mainly young people attend college?
a. Young people are further from retirement and thus have a higher expected return
from college.
b. Young people face lower tuition costs.
c. Older individuals have jobs and would not be able to obtain better employment
opportunities if they were better educated.
d. Older individuals have financial responsibilities and children they are unable to
leave.
e. Younger individuals are smarter.
Suppose the substitution elasticity between capital and labor is ?2- 2.6%. What does
this imply about the demand for labor?
a. The long run demand for labor is relatively inelastic.
b. The long run demand for labor is relatively elastic.
c. The short run demand for labor is relatively inelastic.
d. The long run supply of labor is relatively inelastic.
e. The long run supply of labor is relatively elastic.
If the price of capital decreases, the labor will.
a. demand for, increase or decrease
b. demand for, increase
c. quantity demanded of, decrease
d. quantity demanded of, increase
e. quantity demanded of, increase or decrease
Suppose a competitive labor market is populated by equal numbers of high-ability (H)
and low-ability (L) workers. Each-high ability worker produces output valued at $100
and each low-ability worker produces output valued at $20. In terms of time for their
effort, it costs $50 for high-ability students to acquire a college degree while it costs
low-ability students $85 to acquire a college degree. Firms will offer workers with
college degrees ______ and workers without college degrees ______.
a. $20; $100
b. $150; $85
c. $60; $60
d. $100; $20
e. $50; $20
Which of the following does not occur in a competitive equilibrium?
a. The demand for labor will be perfectly elastic.
b. The supply of labor will be perfectly elastic.
c. If there’s an increase in the supply of labor, wages will adjust appropriately.
d. When the supply of labor decreases, the hours worked by individuals will adjust.
e. When the demand for labor increases, the firms will not adjust the number of workers
employed.
If a firm incurs the same cost to hire each worker, the firm faces
a. a positive labor demand elasticity.
b. linear adjustment costs.
c. concave adjustment costs.
d. convex adjustment costs.
e. lumpy adjustment costs.
What does the term hedonic mean when used in the phrase hedonic pricing?
a. variable
b. increasing returns to scale
c. quality adjusted
d. constant returns to scale
e. constant
Suppose there are two workers: individual A goes to college and individual B does not.
What does this imply?
a. Individual A faces a higher market interest rate.
b. Individual A faces a lower market interest rate.
c. Individual A faces a higher reservation schooling cost.
d. Individual A faces a higher marginal return to schooling.
e. Individual A faces a lower marginal return to schooling.
How many years of schooling will Matt acquire?
a. 1 year
b. 2 years
c. 3 years
d. 4 years
e. 5 years