1. Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by
a.
race.
b.
level of education.
c.
attitudes toward risk.
d.
All of the above are forms of discrimination.
2. Discrimination occurs when the marketplace offers different opportunities to similar individuals who differ only by
a.
age.
b.
years of experience.
c.
years of education.
d.
All of the above are forms of discrimination.
3. By definition, there is discrimination when the marketplace offers different opportunities to similar individuals who
differ only by
a.
race, ethnic group, sex, age, or other personal characteristics.
b.
qualifications, experience, or job preferences.
c.
levels of human capital.
d.
All of the above are correct.
4. Offering different opportunities to similar individuals who differ only by race, ethnic group, sex, age, or other personal
characteristics is called
a.
b.
c.
d.
5. Which of the following represents an example of labor-market discrimination?
a.
An employer is more likely to grant an interview to a person graduating from Yale than from the local
community college.
b.
An employer is more likely to grant an interview to a person graduating from the local community college
than from Yale.
c.
An employer is more likely to grant an interview to a woman with a traditionally “white” name such as Emily
than to a woman with a traditionally “black” name such as Lakisha.
d.
An employer is as likely to grant an interview to person with a traditionally “masculine” name such as “Alex”
as a person with a traditionally “feminine” name such as “Emily.”
6. Labor-market discrimination is evident when
a.
wages of individuals differ on the basis of some recognizable attribute that is unrelated to productivity.
b.
wage rates differ for similar jobs.
c.
consumers prefer to shop at some stores, and not at others.
d.
wages reflect workers’ human capital.
7. Which of the following statements does not accurately describe the market for labor?
a.
The characteristics of workers, such as their education and experience, the characteristics of jobs, such as their
pleasantness or unpleasantness, and the presence or absence of discrimination by employers all determine
equilibrium wages.
b.
Labor unions, minimum wage laws, and efficiency wages all may increase wages above their equilibrium
level.
c.
Firms are willing to pay more for better-educated workers as long as there is an excess supply of this type of
worker.
d.
Discrimination by employers against a group of workers may artificially lower wages for that group.
8. According to evidence provided by the U.S. government, the median black
a.
woman is paid roughly the same as the median white woman.
b.
woman is paid roughly the same as the median black man.
c.
man is paid 21 percent less than the median white man.
d.
All of the above are correct.
9. According to evidence provided by the U.S. government, the median black
a.
man earns more than the median black woman.
b.
woman earns less than the median white woman
c.
man earns less than the median white man.
d.
All of the above are correct.
10. Which of the following statements is correct?
a.
Differences in human capital may explain differences in wages between blacks and whites.
b.
Racial discrimination is the strongest explanation for differences in wages between blacks and whites.
c.
Gender discrimination is the strongest explanation for differences in wages between blacks and whites.
d.
None of the above statements is correct.
11. Which of the following can be used to help explain wage differences among different groups of workers?
a.
human capital acquired through education
b.
human capital acquired through job experience
c.
compensating differentials
d.
All of the above can explain wage differences.
12. Given that the median male is better paid than the median female, which of the following is a valid explanation for
wage differences?
a.
compensating differentials
b.
differences in human capital
c.
discrimination
d.
All of the above can be a partial explanation.
13. Which of the following is an example of discrimination in the labor market?
a.
Women earn less than men because women are more likely to be employed in occupations that pay less, such
as elementary school teachers rather than electrical engineers.
b.
Women earn less than men because women have, on average, fewer years of experience in the labor force
because women, on average, periodically leave the labor force to raise children.
c.
A pharmaceutical sales company pays women less than men because the company’s customers, physicians and
pharmacists, say that they prefer to deal with men rather than women.
d.
All of the above are examples of discrimination.
14. Which of the following can be used to help explain wage differences among different groups of workers?
a.
human capital
b.
discrimination
c.
unions
d.
All of the above could explain wage differences among groups.
15. Which of the following can be used to help explain wage differences among different groups of workers?
a.
human capital and compensating differentials
b.
human capital but not compensating differentials
c.
compensating differentials but not human capital
d.
neither human capital nor compensating differentials
16. Evidence of differences in the average wages of black workers compared to white workers
a.
does not alone provide conclusive evidence of discrimination.
b.
clearly indicates differences in productivity between races.
c.
is seldom used to provide evidence of discriminatory bias.
d.
clearly indicates discrimination on the basis of race.
17. Evidence of differences in average wages of women compared to men
a.
clearly illustrates differences in productivity between genders.
b.
provides conclusive evidence of discrimination on the basis of gender.
c.
is seldom used to provide evidence of discriminatory bias.
d.
does not provide conclusive evidence of discrimination.
18. White women earn an average of 25% less than white men. A labor economist who wants to investigate whether the
differences in earnings indicate labor-market discrimination against women should consider whether white men and
women have similar
(i)
years of work experience.
(ii)
educational attainments.
(iii)
occupations.
(iv)
child care responsibilities.
a.
(i) and (ii) only
b.
(iii) and (iv) only
c.
(ii) only
d.
(i), (ii), (iii), and (iv)
19. Black men earn an average of 21% less than white men. A labor economist who wants to investigate whether the
differences in earnings indicate labor-market discrimination against black men should consider whether black and white
men have similar
(i)
years of work experience.
(ii)
years of education.
(iii)
occupations.
(iv)
quality of education.
a.
(i) and (ii) only
b.
(iii) and (iv) only
c.
(ii) only
d.
(i), (ii), (iii), and (iv)
20. Regarding wage differences among various groups of workers — blacks and whites, men and women, etc. — most
economists believe that
a.
no such differences are evident from the available data.
b.
most of the differences are attributable to discrimination.
c.
some of the wage differences are attributable to discrimination, but there is disagreement about how much.
d.
none of the differences are attributable to discrimination.
21. Economists generally agree that
a.
human capital theory provides the best explanation of discriminatory practices.
b.
differences in average wages do not by themselves provide conclusive evidence about the magnitude of
discrimination in labor markets.
c.
discrimination is exclusively an economic, rather than political, phenomenon.
d.
most of the wage differentials observed in the U.S. economy are due to discrimination.
22. A consensus view among economists regarding the possibility of labor-market discrimination is that
a.
most wage differences among groups are attributable to discrimination.
b.
many employers use compensating differentials to hide discriminatory practices.
c.
wage differences among groups are not sufficient by themselves to determine how much discrimination there
is.
d.
all wage differences among groups are attributable to differences in human capital and compensating
differentials.
23. Politicians often point to wage differentials as evidence of labor market discrimination against ethnic minorities and
women. Economists, however, argue against this approach because
a.
they don’t believe the wage differential really exists.
b.
they can’t agree on a definition of the term “discrimination.”
c.
they believe compensating differentials account for all wage differences.
d.
different people may have different wages for reasons unrelated to discrimination.
24. It is likely that, if we could measure the quality as well as the quantity of education,
a.
the human-capital argument would become less compelling as a means of explaining wage differentials
between white workers and black workers.
b.
the human-capital argument would become less compelling as a means of explaining wage differentials
between male workers and female workers.
c.
wage differentials between white workers and black workers would be more puzzling than they are now.
d.
wage differentials between white workers and black workers would be more fully explained.
25. Men and women tend to choose different types of occupations, and so
a.
a source of wage differences between men and women is differences in human capital.
b.
a source of wage differences between men and women is compensating differentials.
c.
the gap between the earnings of men and the earnings of women is likely even more significant than the data
alone indicate.
d.
we should expect the earnings of women to rise relative to the earnings of men, in order to induce women to
accept jobs that they have been reluctant to accept in the past.
26. Assume men, on balance, have lower amounts of human capital than women have. Then we would expect
a.
the demand for female labor to be lower than the demand for male labor.
b.
the demand for female labor to be higher than the demand for male labor.
c.
the supply of female labor to be lower than the demand for male labor.
d.
the supply of female labor to be higher than the supply of male labor.
27. Evidence of discrimination in labor markets
a.
applies only to race and gender.
b.
is conclusively identified by large differences in average wages rates between men and women.
c.
is difficult to verify by reference to differences in average wage rates.
d.
is more easily identified on the basis of race than gender.
28. Most economists believe that the higher average salaries earned by men in comparison to women arise from
a.
discrimination.
b.
a variety of factors, including differences in human capital and compensating differentials; few economists
believe that gender discrimination in earnings exists.
c.
differences in human capital as the primary reason.
d.
a variety of factors, including differences in human capital, compensating differentials, and discrimination.
29. If an employer pays a man a higher wage than a woman, the employer
a.
is discriminating against the woman but is still maximizing profit.
b.
is not discriminating against the woman.
c.
may or may not be discriminating against the woman.
d.
is discriminating against the woman and is not maximizing profit.
30. Which of the following is least likely to be the reason women are underrepresented in the economics profession?
a.
labor market discrimination
b.
the choice of women to select other occupations
c.
cultural bias in primary and secondary education
d.
the inability of women to solve problems in economics
31. If men, on average, earn 20 percent more than women in a particular occupation,
a.
this is clear evidence of discrimination.
b.
some of this differential could be due to differences in educational levels.
c.
some of this differential could be due to differences in human capital.
d.
Both b and c are correct.
32. Empirical work that does not account for differences in the productivity of workers
a.
is unlikely to find evidence of wage differentials.
b.
can provide strong evidence of labor market discrimination.
c.
is likely to misinterpret apparent evidence of labor market discrimination.
d.
is accepted as superior to empirical work that does correct for differences in productivity of workers.
33. Attributing the gender wage gap to ongoing discrimination by employers will likely be incorrect because
a.
some of the wage gap is explained by efficiency wages.
b.
differences in years of work experience likely lead to productivity differences between men and women.
c.
compensating differentials usually lead to higher wages for women.
d.
All of the above are correct.
34. One of the problems with calculating the true amount of discrimination that takes place in the market for labor is
a.
the inability to calculate wage differentials.
b.
the inability to see changes in the wage differentials over a period of time.
c.
the difficulty in measuring productivity differences between workers.
d.
the difficulty in measuring female labor-force participation.
35. Differences in human capital are likely to
a.
be unrelated to wage rate differences across gender classifications, since both men and women are required to
complete requirements for a high school diploma.
b.
be most helpful in explaining age discrimination, but unhelpful in explaining race discrimination.
c.
explain some of the differences in average wage rates across age classifications.
d.
explain all of the differences in average wage rates across gender classifications.
36. Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B
have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because
worker A
a.
has more education.
b.
is willing to work the night shift.
c.
is a man, whereas worker B is a woman.
d.
has better performance reviews, indicating higher productivity.
37. Which of the following is an example of labor-market discrimination? You may assume that worker A and worker B
have identical characteristics except for the ones listed. A firm offers a higher salary to worker A than worker B because
worker A
a.
has more experience.
b.
is willing to travel two weeks out of each month, whereas worker B will not travel more than three nights a
month.
c.
has a special certification that directly relates to her job, whereas worker B does not.
d.
is a young blonde woman, whereas worker B is an older, gray-haired man.
38. Allen and Ellen both work at Burger Ranch. Allen is paid more than Ellen. Which of the following could explain why
Allen is paid more?
a.
The manager discriminates against women.
b.
Allen works the undesirable early morning shift.
c.
Allen has more experience and so more human capital.
d.
All of the above could be correct.
39. George and Susan work at the same brewery. George works in advertising. Susan works as a forewoman in the
bottling plant. George is paid more than Susan.
a.
Because the male worker earns a higher salary than the female worker, the employer must be discriminating
against women.
b.
If George has better performance reviews than Susan, the company might be rewarding George for his high
productivity.
c.
If forepersons at bottling plants typically earn more than employees in the advertising department, then the
brewery must be discriminating against women.
d.
George might be earning more because he works the day shift while Susan works the night shift.
40. Mary and Mike are twins who attended grammar school through college together. Both twins got jobs in the same
department of an accounting firm. They both work equally hard and have received similar performance reviews. Mary
earns $62,000 a year, and Mike earns $80,000 a year. Select the best explanation for this wage difference.
a.
Mary has less human capital than Mike.
b.
Mary has more human capital than Mike.
c.
Mike has been discriminated against because he is male.
d.
Mary has been discriminated against because she is female.
41. Marcia is a white 23-year-old female, and Joan is a black 23-year-old female. Both Marcia and Joan were economics
majors, and they graduated from the same college in the same year with the same GPA. Marcia and Joan both got
identical jobs at a brokerage firm after graduating from college. They both work equally hard. Marcia earns $38,000 a
year, and Joan earns $30,000 a year. Select the best explanation for this wage difference.
a.
Marcia has less human capital than Joan.
b.
Marcia receives a compensating wage differential that Joan does not.
c.
Joan has been discriminated against because she is black.
d.
Marcia has been discriminated against because she is white.
42. John is an Asian 23-year-old male, and Ken is an Asian 43-year-old male. Both John and Ken are economics majors,
and they graduated from the same college with the same GPA — John in 2006 and Ken in 1986. John and Ken are both
financial advisers at the same brokerage firm. John earns $52,000 a year, and Ken earns $88,000 a year. Select the best
explanation for this wage difference.
a.
John has more human capital than Ken.
b.
John has less human capital than Ken.
c.
John has been discriminated against because he is young.
d.
Ken has been discriminated against because he is old.
43. Harry is 40 and black. Dan is 40 and white. Both work as plumbers, but Harry earns more.
a.
Dan is being discriminated against.
b.
Harry might be discriminated against if he has more experience as a plumber.
c.
Harry might be discriminated against if he has less training as a plumber.
d.
Harry might be discriminated against if he works the day shift and Dan works the night shift.
44. Tiffany is a black 21-year-old female, and Danielle is a black 41-year-old female. Both Tiffany and Danielle were
1992. Tiffany and Danielle are both auditors at the same accounting firm. Tiffany earns $63,000 a year, and Danielle
earns $95,000 a year. Select the best explanation for this wage difference.
a.
Tiffany has more human capital than Danielle.
b.
Tiffany has less human capital than Danielle.
c.
Tiffany has been discriminated against because she is young.
d.
Danielle has been discriminated against because she is old.
45. Al and Steve are both reporters at the same newspaper. Al is black and Steve is white. Al earns less than Steve. Which
of the following can explain why Al earns less?
a.
Although both have BA’s in Journalism, Al’s K-12 and college education were of a lower quality than Steve’s.
b.
Al has greater experience.
c.
Al works the night shift and Steve works the day shift.
d.
Al writes editorials which are very popular with customers, while Steve covers the police report which fewer
subscribers read.
46. Which of these instances would constitute labor-market discrimination? Henry receives a higher wage than Ryan.
Henry and Ryan are identical in all of their labor-market characteristics except that
a.
Henry is a college graduate, and Ryan has only a high school diploma.
b.
Henry has 10 years of experience at his job, whereas Ryan has only five years of experience.
c.
Henry is white and Ryan is Black.
d.
by objective measures Henry consistently outperforms Ryan.
47. People who grew up in the western part of Aquilonia have an accent distinct from people who grew up in the eastern
part of the country. People from the west also receive lower wages than people from the east. From this information alone,
we can conclude that it is possible that
a.
discrimination against people from the west exists.
b.
people from the east receive compensating differentials.
c.
people from the west have lower levels of human capital.
d.
All of the above could be correct.
48. In the country of Freedonia, men and women have the same level of education and choose different forms of work in
the same proportions. The only real difference is that men typically stay home to raise young children, returning to the
work force after their children enter elementary school. If no discrimination exists, then we would expect that, on average,
a.
women would earn less than men.
b.
women would earn more than men.
c.
men and women would earn the same wage.
d.
wage differences between men and women would be due to differences in beauty.
49. Which of these instances would constitute labor-market discrimination? Courtney and Nicole are identical in all of
their labor-market characteristics except that Courtney earns a higher salary than Nicole because
a.
Courtney is beautiful and Nicole is not.
b.
Courtney is 40 years old and Nicole is 60 years old.
c.
Courtney works the night shift and Nicole works the day shift.
d.
Courtney attended on the job-training seminars which allows her to do tasks Nicole is not qualified for.
Scenario 19-3
In the small town of Hamilton, Montana, there is a local hardware store called Eddy’s Hardware. There are only two types
of workers who apply for jobs at Eddy’s Hardware: cowboys and farm boys. Local politicians have received numerous
complaints that Eddy’s Hardware is practicing wage discrimination against farm boys. Eddy’s Hardware denies the
complaint and says the store is only trying to maximize profit.
50. Refer to Scenario 19-3. Which of the following statements would weaken the discrimination complaint against
Eddy’s Hardware?
a.
Farm boys are more productive than cowboys.
b.
Farm boys work longer hours than cowboys and their effort is greater.
c.
Farm boys are generally less educated than cowboys in the field of hardware.
d.
All of the above would weaken the discrimination complaint.
51. Refer to Scenario 19-3. Which of the following statements would strengthen the discrimination complaint against
Eddy’s Hardware?
a.
Cowboys call in sick to work more often than farm boys.
b.
Farm boys are more likely than cowboys to work the day shift rather than the night shift.
c.
Cowboys’ experience using hardware generally exceeds farm boys’ experience using it.
d.
On average farm boys have less experience working at the hardware store than cowboys.
52. Major league baseball players get paid more than minor league baseball players because of
a.
compensating differentials.
b.
higher levels of educational attainment.
c.
greater abilities.
d.
All of the above are correct.
53. That some schools direct females away from science and math courses is evidence of
a.
labor-market discrimination
b.
discrimination that occurs prior to people entering the labor market
c.
discrimination by customers
d.
discrimination by employers
54. Two economists created fake resumes with either common African-American names such as Lakisha and Jamal or
common white names such as Emily and Greg. After sending them to potential employers with “Help Wanted” ads in
Boston and Chicago newspapers, they found that
a.
black employees earned 50 percent less than white employees in Chicago but that blacks and whites had
similar wages in Boston.
b.
black employees earned 50 percent less than white employees in Boston but that blacks and whites had similar
wages in Chicago.
c.
job applicants with white names received 50 percent more phone calls from interested employers.
d.
job applicants with white names received 7 percent more phone calls from interested employers.
55. A study conducted by economists Marianne Bertrand and Sendhil Mullainathan found evidence of labor-market
discrimination based on which of the following findings?
a.
Restaurant customers preferred to be waited on by white waitresses rather than black waitresses.
b.
Black basketball players earned more than white basketball players.
c.
Employers were more likely to request interviews with job applicants with “white” names such as Greg than
from applicants with “black” names such as Jamal.
d.
Employers were more likely to request interviews with job applicants with “masculine” names such as Mark
than from applicants with “feminine” names such as Lisa.
56. Which of the following factors does not affect the value of a worker’s marginal product?
a.
discrimination against a particular group of workers by a firm’s customers
b.
a worker’s level of disposable income
c.
a worker’s level of human capital
d.
compensating wage differentials
57. Discrimination by a manager in the hiring process
a.
decreases the firm’s costs.
b.
increases the firm’s costs.
c.
is evident if a white manager refuses to hire a certain black applicant.
d.
is evident if a male manager fails to hire a certain female applicant.
58. Economists are skeptical that discrimination is employer driven because
a.
discrimination cannot exist in markets.
b.
employers are not really interested in maximizing profit.
c.
employers typically base wages paid on the prevailing market wage.
d.
holding productivity constant, a profit-maximizing employer will hire the cheapest labor available.
59. Suppose that an employer can hire workers with brown hair and workers with blonde hair. Each type of worker has the
same productivity. Which of the following is correct if the employer discriminates by hiring only workers with brown
hair?
a.
The employer will be just as efficient as a nondiscriminating employer.
b.
The employer will face higher costs than firms that focus only on maximizing profits.
c.
The employer will immediately go out of business because discrimination is illegal.
d.
The employer will face union strikes.
60. Evidence suggests that business owners are generally
a.
interested in profits only when discrimination is illegal.
b.
more interested in discrimination than in making a profit.
c.
unable to determine the link between discrimination and profitability.
d.
more interested in making a profit than in discriminating against a particular group.
61. Firms that operate in competitive product markets and choose to practice discrimination in hiring workers
a.
will survive if they increase production and garner a larger market share.
b.
will eventually earn zero economic profits.
c.
will survive as long as they are willing to have a smaller market share.
d.
are likely to eventually go out of business.
62. Why would a wage differential due to discrimination in hiring be unlikely to persist in a competitive labor market?
a.
There is a cost advantage for firms that do not discriminate.
b.
Workers who are victims of discrimination will eventually drop out of the labor market.
c.
Competing firms will hire fewer of the workers who are temporarily victimized by discrimination.
d.
Discrimination cannot exist in markets.
63. In what way do competitive markets have a “natural remedy” for discriminatory hiring practices?
a.
Governments regulate to resolve problems of discrimination.
b.
Profit-maximizing firms that do not discriminate tend to replace firms that discriminate.
c.
Wages paid to groups that are victimized by discrimination are eventually bid up to above-equilibrium levels.
d.
Discrimination is usually the outcome of rational decision-making processes, and competitive markets produce
rational outcomes.