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The changing gap in wages between unskilled and skilled workers is most likely related to a larger increase in demand for unskilled occupations relative to skilled occupations.

A) True
B) False

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How does the theory of efficiency wages explain above-equilibrium wages?


A) Employers are forced by competition to pay higher wages in efficient markets.
B) Employers give their workers a higher wage in the hope that it will lead to increased productivity.
C) Workers get higher wages when they prove they are increasing their productivity.
D) Workers demand higher wages to compensate for poor fringe benefits.

E) None of the above
F) A) and D)

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Why do economists study sports teams when looking for evidence of labor-market discrimination?


A) because the salaries paid to professional athletes exhibit the superstar phenomenon, which is highly correlated with discrimination
B) because all four United States professional sports leagues (football, basketball, hockey, and baseball) require discrimination studies every five years
C) because nonwhites comprise a majority of starters for many professional sports teams
D) because the wide availability of performance statistics allows economists to control for individual player productivity in ways that are difficult to do for other types of firms

E) B) and D)
F) C) and D)

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Figure 19-2 Figure 19-2 -Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. If the minimum wage were $7.50, employment in this market would be A) 400 B) 500 C) 600 D) 700 -Refer to Figure 19-2. This figure depicts labor demand and supply in a nonunionized labor market. If the minimum wage were $7.50, employment in this market would be


A) 400
B) 500
C) 600
D) 700

E) A) and C)
F) None of the above

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A recent law school graduate is considering two offers to practice law, one in New York and one in Illinois. The New York bar exam is very difficult to pass compared with Illinois's exam. Assuming all other things equal, the attorney would expect


A) to be unable to predict the wage difference between Illinois and New York.
B) to make a lower wage in New York.
C) to make a lower wage in Illinois.
D) wages in Illinois and New York to be identical.

E) None of the above
F) A) and B)

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Store clerks are known to have low wages. This is likely to reflect the fact that


A) store clerk jobs are perceived to be relatively easy, thus attracting low-skill workers.
B) store clerk jobs are perceived to be relatively difficult, thus attracting high-skill workers.
C) many people perceive the job of store clerk as having significant risk of death on the joc.
D) store clerks are required to have a college degree.

E) A) and D)
F) A) and C)

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Which of the following would be considered an investment in human capital?


A) education
B) a teacher's blackboard
C) the purchase of a new computer to enhance labor productivity
D) All of the above are correct.

E) A) and C)
F) C) and D)

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Which of the following theories explains why increased education translates into higher wages?


A) human-capital theory
B) the theory of compensating differentials
C) the theory of supply and demand
D) comparative advantage

E) A) and B)
F) B) and D)

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According to economic historians, streetcars in southern cities in the early 1900s were racially segregated because the owners of the firms believed that segregation raised the firms' profits.

A) True
B) False

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Figure 19-5 Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, which of the following could be considered an efficiency wage? A) $4 B) $5 C) $6 D) $7 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S2, which of the following could be considered an efficiency wage?


A) $4
B) $5
C) $6
D) $7

E) C) and D)
F) A) and B)

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Scenario 19-5 Jason works part-time at a grocery store after school. Jason has worked at the store for two years but still hasn't received a wage increase, even though newer employees have received raises. Jason has threatened his employer with a lawsuit if he doesn't get a raise in the next few weeks. Jason believes he is a victim of labor-market discrimination. -Refer to Scenario 19-5. Why might an economist be skeptical of Jason's discrimination complaint?


A) Through antitrust laws, discriminating firms can be penalized with large fees.
B) Differences in wages alone do not by themself prove discrimination.
C) Discrimination leads to profit maximization.
D) Even if customers dislike Jason because he's not helpful, if the store operates in a competitive market the store will pay Jason the same as other workers.

E) All of the above
F) None of the above

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Between 1975 and 2011, the wage gap between women with a high school education and women with a college education increased. In particular, in 2011 women with a college degree earned about


A) 12% more than women with a high school education.
B) 26% more than women with a high school education.
C) 70% more than women with a high school education.
D) 81% more than women with a high school education.

E) A) and B)
F) B) and D)

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Increases in international trade and technological change have been offered as explanations for the


A) increase in demand for both skilled and unskilled workers in the United States.
B) increase in demand for skilled workers and decrease in demand for unskilled workers in the United States.
C) decrease in demand for skilled workers and increase in demand for skilled workers in the United States.
D) decrease in demand for both skilled and unskilled workers.

E) A) and B)
F) None of the above

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Air-traffic controllers get paid high wages given their level of education. They also get frequent breaks and may only work a few days a week. Which of the following could explain their high wage?


A) the long breaks and limited work days
B) the stress they face
C) the comparatively low level of education required
D) All of the above are correct.

E) A) and D)
F) C) and D)

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Figure 19-5 Figure 19-5 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what are the equilibrium wage and quantity of labor? A) $5 and 250 B) $6 and 200 C) $8 and 100 D) $8 and 400 -Refer to Figure 19-5. Given demand for labor, D1, and supply of labor, S1, what are the equilibrium wage and quantity of labor?


A) $5 and 250
B) $6 and 200
C) $8 and 100
D) $8 and 400

E) All of the above
F) A) and B)

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If the signaling theory of education is correct,


A) education increases productivity and educated workers are paid more.
B) education increases productivity but educated workers are not paid more.
C) education does not increase productivity but educated workers earn more.
D) education does not increase productivity and educated workers do not earn more

E) B) and C)
F) All of the above

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The job of night watchman at the Punxsutawny Phil Groundhog museum is known to have a high wage. Which of the following would push the night watchman's wage higher?


A) The job does not require specialized skills.
B) The job is easy.
C) The job is incredibly dull.
D) The job has minimal risk of injury.

E) A) and C)
F) B) and C)

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Most of the time, a profit motive eliminates discriminatory behavior from a market; however, a discriminatory wage gap can persist even if the firm owners only care about profit if there is

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customer d...

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Which of the following would tend to lessen the wage gap between a country's skilled and unskilled workers?


A) technology increases the productivity of unskilled workers more than that of skilled workers
B) the country increases trade with countries that have a higher proportion of skilled workers
C) both A and B
D) neither A nor B

E) None of the above
F) A) and C)

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Which of the following is not considered human capital?


A) the golf clubs a professional golfer uses to play golf
B) the skills a professional golfer has gained by practicing on the driving range
C) the professional golfer's knowledge of how to play a better game learned from talking with other players
D) none of the above would be considered human capital

E) A) and B)
F) B) and C)

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