Wage differentials across individual workers are determined in part by:
A. Effort.
B. Productivity.
C. Social capital.
D. Luck.
E. All of the above.
What is the 50-10 wage gap if the 10th percentile wage is $25,000; the 50th percentile
wage is $62,000; and the 90th percentile wage is $95,000?
A. 0.52
B. 0.75
C. 1.48
D. 2.25
E. 2.78
Which of the following is best considered an implicit contract?
A. A union contract that specifies hourly wages and fringe benefits.
B. A union contract that specifies how overtime wages will be calculated.
C. An informal agreement between a firm and its employees to reduce hours of work
for everyone a little bit during an economic contraction in order to prevent firing
anyone.
D. An informal agreement between a firm and its employees to have the firm fire its
most expensive workers first during an economic contraction.
E. A historical agreement between a firm and its employees that the firm pays workers
based on a combination of age, experience and education.
The assumption that a firm operates in a competitive labor market means that
A. the firm offers a real wage rate that is indexed for inflation.
B. the firm faces an upward-sloped marginal cost of labor curve.
C. the firm faces a downward-sloped marginal cost of labor curve.
D. the firm faces a constant wage regardless of how much labor it employs.
E. the firm doesnt use capital in the production process.
What is the union wage gap if the average union salary is $50,000 while the average
non-union salary is $40,000?
A. 10%
B. 20%
C. 25%
D. 40%
E. 50%
Abbys reservation price for working in a risky job is $5 per hour while Rudys
reservation price for working in a risky job is $8 per hour. Characterize Abby and
Rudys job selections if safe jobs pay $12 per hour and risky jobs pay $18 per hour.
A. Abby and Rudy both work a safe job.
B. Abby works a safe job while Rudy works a risky job.
C. Abby works a risky job while Rudy works a safe job.
D. Abby and Rudy both work risky jobs.
E. Rudy works a risky job while Abby doesnt care which type of job she works.
The correlation between wages and the probability of encountering a fatal injury while
on the jobs can be used to calculate:
A. the value of risk.
B. the value of safety.
C. the value of life.
D. the value of injury.
E. the value of work.
Which of the following is not a property of standard indifference curves in a
leisure-consumption model?
A. Indifference curves tend to be downward sloping.
B. Higher indifference curves (to the northeast) indicate higher levels of utility.
C. Indifference curves tend to be convex to the origin.
D. There is an indifference curve passing through every leisure-consumption bundle.
E. Indifference curves intersect one another.
Negative selection in a migration model means that
A. immigrants from the source country are highly skilled relative to labor in the
destination country.
B. immigrants from the source country are not highly skilled relative to labor in the
destination country.
C. all workers in the source country would earn a higher return on their skills if they
would remain in the source country.
D. all workers in the source country would earn a higher return on their skills if they
would not immigrate to the destination country.
E. anyone in the source country who can afford the cost of migrating to the destination
country will do so.
Which of the following is not true regarding the incentives different pay structures
impose on workers?
A. Piece rates are an option when individual output is easily measured by firms.
B. Tournaments can elicit more effort than a time rate.
C. Worker effort can be a function of the pay structure.
D. Worker productivity is unrelated to the pay structure.
E. Profit sharing is a pay structure designed to elicit more effort from workers, but it
can suffer from free-riding.
Which of the following is not an accurate summary of the equilibrium associated with a
single competitive labor market?
A. Firms receive surplus equal to the area above the wage rate and below the demand
for labor.
B. Workers receive surplus equal to the area below the wage rate and above the supply
of labor.
C. All workers are paid the same market-clearing wage.
D. Total firm surplus equals total worker surplus.
E. Total economic surplus is maximized.
If immigrant workers are complementary to native workers, then
A. native workers will be better off with open borders.
B. immigrant workers will receive a higher wage than native workers.
C. immigration will shift the demand for native labor to the left.
D. there will be no immigration surplus.
E. each firm will hire only immigrants or only natives but not a mixture of the two.
Consider an economy with a labor force of 100 million people. Each period, 60% of the
unemployed population find a job while 15% of the employed population lose their job.
What is the steady-state unemployment rate in the economy?
A. 5%
B. 10%
C. 15%
D. 20%
E. 60%
Consider an economy with a particular distribution of income. Over the next 10 years,
the income of all households increases by $20,000. How will the Gini coefficient
change over those 10 years?
A. The Gini coefficient will increase.
B. The Gini coefficient will decrease.
C. The Gini coefficient will stay the same as all households received the same increase
in income.
D. The Gini coefficient will become more negative.
E. It is impossible to determine how the Gini coefficient will change as it will depend
on the original income distribution.
Fertility in the U.S. declined in the last 100 years primarily because
A. real income has increased and children are inferior goods.
B. the tax benefits for families with children have expanded.
C. the cost of having children has decreased, primarily in terms of healthcare and
education costs.
D. the cost of having children has increased, primarily in terms of the opportunity cost
of the mothers foregone wages.
E. economic growth has slowed, prohibiting households from efficiently having large
families.
When the wage was $10 per hour, a group of workers supplied 30 hours of work per
week on average. The wage then increased to $12 per hour, and the same group of
workers supplied 33 hours of work per week on average. What is the elasticity of labor
supply for this group of workers?
A. 0
B. 0.5
C. 1.0
D. 1.5
E. 2.0
Which one of the following statements about piece rate compensation schemes is false?
A. Piece rate systems attract more able workers.
B. Piece rate systems elicit high levels of effort.
C. Piece rate systems are preferred by discriminatory firms.
D. Piece rate systems discourage nepotism.
E. Piece rate systems tie pay to performance.
The earnings distribution refers to the distribution of
A. wages or earnings in an economy.
B. earnings over an individuals life.
C. wages between races.
D. wages between genders.
E. wage offers throughout an economy.
What is likely to happen to the demand for firemen as building codes change to require
firewalls and sprinklers to be included in all new construction?
A. The demand for firemen will fall as the demand for fire protection services falls.
B. The demand for firemen will increase as the supply of firemen falls when old
buildings are replaced with newer buildings.
C. The demand for firemen will remain unchanged as firemen dont build new
construction.
D. The demand for firemen will increase as long as wages paid to workers on new
construction projects exceed the minimum wage.
E. The demand for firemen will decrease as long as the property tax-base increases
when the new construction projects are completed.