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Micro Final 2
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Questions in this quiz (55)
1All else constant, as the rental price of capital increases, ________________ capital is used in production, and the marginal product of labor in production ________________.
- Aless, decreases
- Bmore, increases
- Cmore, decreases
- Dless, increases
2Developing economies that respond to environmental extremists by reducing the stock of land available for mineral and timber extraction will likely experience a(n) ________________ marginal product of labor, and a(n) __________________ marginal product of capital.
- Alower, higher
- Blower, lower
- Chigher, lower
- Dhigher, higher
3The basic neoclassical theory of the labor market predicts that
- Awages are determined entirely by market supply.
- Bworkers are compensated according to their contribution to the social value of society.
- Cworkers earn a wage equal to the value they contribute to the marketplace, or the value of their marginal product.
- Dwages are determined entirely by firms that demand labor services.
- Enone of the above.
4Differences in wages are most likely to be a result of
- Agovernment regulation which restricts the free movement of wages.
- Bthe fact that some firms make more money than others.
- Cmarket imperfections.
- Dconditions of supply and demand in different labor markets.
5Since a major league baseball player makes more money than a private preschool teacher we can conclude that
- Aa major league baseball player is valued more by society than a preschool teacher.
- Blabor markets are generally inefficient and inequitable.
- Csociety’s values are all screwed up.
- Da major league baseball player generates more revenue in the market than a private preschool teacher.
- Enone of the above.
6In recent years, the ratio of earnings of the typical U.S. college graduate to the earnings of the typical high school graduate without additional education has
- Afallen as the demand for skilled labor has increased relative to the demand for unskilled labor.
- Brisen as the demand for skilled labor has increased relative to the demand for unskilled labor.
- Crisen as the demand for unskilled labor has increased relative to the demand for skilled labor.
- Dfallen as the demand for unskilled labor has increased relative to the demand for skilled labor.
7If unskilled labor is relatively plentiful and cheap in many developing foreign countries, then as the United States expands its trade with these foreign countries, all else constant, the U.S. domestic demand for
- Aboth skilled and unskilled labor will rise proportionately.
- Bunskilled labor will rise and skilled labor will fall leading to wage compression.
- Cskilled labor will rise and unskilled labor will fall leading to rising wage inequality.
- Dboth skilled and unskilled labor will be unaffected, assuming no barriers to free trade.
8When the supply of workers is scarce, one would predict that market wages
- Awould be determined solely by factors that affect demand.
- Bwould be determined outside the domain of the neoclassical theory.
- Cwould be relatively high, other things equal.
- Dwould be relatively low, other things equal.
9A plumber that specializes in cleaning plugged sewer lines is typically paid a higher wage than a plumber that works on installing water systems in new residential housing. This is likely to be partially explained by the fact that
- Aplumbing jobs that work with sewer are likely to have an element of personal satisfaction.
- Bplumbers that work with sewer are more likely to work a standard shift.
- Ca plumber that works with clogged sewer lines is likely to be perceive it as a "dirty" job
relative to installing plumbing in new residential housing. - Dplumbers that work with clogged sewer lines necessarily require more years of
specialized training.
10Professional underwater salvage divers are known to have high wages and work an average of only 20 hours a week. The high wages are partially explained by the fact that
- Athe job does not require a college degree.
- Bthe job is likely to be dangerous relative to other occupations.
- Cthe job is likely to be dull relative to other occupations.
- Dthe job is likely to be fun.
11The term compensating differential refers to
- Aa wage difference that is distinguishable on the basis of monetary characteristics.
- Bthe fact that workers that do similar work should be paid the same wage.
- Ca wage difference that arises from the non-monetary characteristics of different jobs.
- Dall of the above.
12The statement that "Coal miners are paid more than workers with similar levels of education" is likely to reflect
- Acoal mining is a declining industry.
- Bcoal exports are rising.
- Ccoal mining jobs are potentially more dangerous than jobs with comparable education
requirements. - Dall coal mines use union labor.
13Professors at the University of Colorado-Denver, are typically paid less than professors at the University of Pittsburgh, even when wages are adjusted for cost of living differences. This wage difference is likely to be the result of
- Aa compensating differential.
- Bdemand, but not supply.
- Csupply, but not demand.
- Dconditions of regulated markets.
14Workers that have invested in human capital are
- Alikely to have a higher value of marginal product.
- Blikely to have a lower value of marginal product.
- Cnot likely to have changed the value of their marginal product.
- Duniversally less productive in "dull" jobs.
15From the perspective of market demand, human capital investment is reflected
- Ain a firm's willingness to pay more for more productive workers.
- Bin an increase in labor demand.
- Cin an increase in the marginal product of labor.
- Dall of the above
16The wage difference between jobs that require education and those that don't
- Ais not likely to be related to productivity differences.
- Bencourages workers to bear the cost of acquiring education by providing an incentive.
- Cis a barrier to obtaining an education.
- Ddoes not affect the supply of workers in the different labor markets.
17Economists that study labor markets have documented
- Aa general decline in the wages of college graduates over the last two decades.
- Ba rising trend in U.S. labor markets for employers to pay all costs of education and
training. - Can increase in the earnings gap between low skill and high skill workers over the past
three decades. - Da decrease in the earnings gap between low skill and high skill workers over the past
three decades.
18One hypothesis to explain the _____________ gap in wages between unskilled and skilled workers in the U.S. is that as the U.S. increased its participation in international trade, specialization and the pursuit of comparative advantage precipitated a _____________.
- Afalling, fall in domestic supply of skilled labor
- Bfalling, rise in domestic supply of skilled labor
- Crising, rise in domestic demand for skilled labor
- Drising, fall in domestic demand for skilled labor
19When technological enhancements are made to a work environment ,
- Athe wage gap between skilled and unskilled workers is likely to be unaltered.
- Bthe wage gap between skilled and unskilled workers is likely to fall as technological
advancements raise the demand for unskilled workers. - Cthe wage gap will rise only if marginal productivity of unskilled workers is not altered.
- Dthe wage gap between skilled and unskilled workers is likely to rise as technological
advancements raise the demand for skilled workers.
20Economists have proposed the following hypotheses to explain the rising wage gap between skilled and unskilled workers.
(i) increasing international trade
(ii) skill-biased technological change
(iii) increasing role of unions in setting skilled wage scales- A(i) and (iii) only
- B(ii) and (iii) only
- C(i) and (ii) only
- D(iii) only
- Eall of the above
21The "beauty premium" can be explained by the fact that
- Abeauty acts as an implicit signal of innate intelligence.
- Bbeautiful people are likely to reflect "good breeding".
- Cmarginal productivity in most occupations has a physical dimension.
- Din some occupations, physical attractiveness of a worker may increase the value of their
marginal product.
22When employers sort employment applications into high-ability and low-ability people based on the attainment of a college degree (irrespective of major), they are likely to be adhering to the
- Ahuman capital theory of education.
- Bsignaling theory of education.
- Cprinciple that education enhances marginal productivity.
- Dneoclassical principle that most business owners are more interested in discriminating
against a particular group than in maximizing profits.
23If empirical tests of the human capital theory find conclusive evidence that education enhances productivity, then optimal public policy would suggest that
- Aeveryone should be required to finish high school.
- Bcompulsory schooling laws always increase social well-being.
- Cthe benefits of increased productivity need to be weighed against the opportunity cost of education.
- Da college education should be required of all members of society.
24Evidence of differences in average wages of women compared to men
- Aprovides conclusive evidence of broad patterns of discrimination on the basis of gender.
- Bare solely indicative of differences in productivity between genders.
- Cdoes not alone provide conclusive evidence of discrimination.
- Dis seldom used to provide evidence of discriminatory bias.
25Evidence of irrational or taste-based discrimination in labor markets
- Ais more easily identified on the basis of race than gender.
- Bis conclusively identified in large differences in average wages rates between men and
women. - Cis very difficult to verify by reference to differences in average wage rates alone.
- Dhas been quantified by economists for most races.
26The fact that women are more likely to interrupt their careers (and thus limit their accumulation of human capital) to raise children reflects
- Aa potential market-based reason why average wages for men exceed those for women.
- Bfurther evidence that labor markets discriminate against women.
- Cevidence that society under-values the role of women in the market place.
- Devidence that markets are inefficient in allocating labor resources and thus require
government intervention.
27The __________________ is a natural antidote to employer taste-based or irrational discrimination in market economies
- Athreat of judicial review
- Bunion movement
- Cprofit motive
- Dpolitical process
28Assume that the competitive market for barbers is differentiated into two groups, those that are bald (or going bald) and those that have a full head of hair. Assume that the barbers in this market are identical in every other way. The market is represented by the two figures below:
If the market for a haircut is competitive- Abarbershops will all earn a normal economic profit.
- Bthe difference in wages is able to be maintained since a haircut is not a homogeneous
good. - Cbarbershops that hire bald barbers will be much more profitable.
- Dbarbershops that hire barbers with hair will be much more profitable.
29Assume that the competitive market for barbers is differentiated into two groups, those that are bald (or going bald) and those that have a full head of hair. Assume that the barbers in this market are identical in every other way. The market is represented by the two figures below:
If wages for bald and "hairy" barbers respectively are initially as indicated in the above graphs,- Afirms hiring "hairy" barbers will have a cost advantage, leading to an increase in the
demand for "hairy" barbers. - Bfirms that eventually hire only "hairy" workers will all go out of business.
- Call firms will eventually end-up with some "bald" and some "hairy" barbers.
- Dfirms hiring "bald" barbers will enter the market, increasing the demand for "bald" barbers
and bringing "bald" and "hairy" barber’s wages closer together.
- Afirms hiring "hairy" barbers will have a cost advantage, leading to an increase in the
30Evidence suggests that business owners are generally
- Amore interested in making a profit than in discriminating against a particular group.
- Bmore interested in discrimination than in making a profit.
- Cunable to determine the link between discrimination and profitability.
- Dinterested in profits, but only when discrimination is illegal.
31Private clubs that hire workers from specific gender groups provide an example of
- Acustomer induced discrimination.
- Bgovernment induced discrimination.
- Ca market-induced nondiscriminatory equilibrium.
- Dclubs that are not profit maximizers.
32Factors which are likely to have influenced the declining gender wage gap include
(i) young women are investing more in human capital.
(ii) women are somewhat less likely to exit the labor force for long durations during child rearing years.
(iii) an increase in government regulation of labor markets.- A(i) and (iii) only
- B(i) and (ii) only
- C(ii) and (iii) only
- D(i), (ii) and (iii)
33Research that compares wages for men and women who have similar education levels, experience and life situations suggests that
- Amarkets are inefficient in allocating labor resources that differ by gender orientation.
- Bgovernment programs have largely been responsible for reducing the gender wage gap.
- Cearnings differentials are quite small.
- Dearnings differentials are "widespread and severe".
34The income distribution in a society
- Ais largely determined by capital income.
- Bis largely determined by rental income.
- Cis independent of market allocations of resources.
- Dis largely determined by factors that determine wages.
35When a government enacts policies that redistribute income through transfer payments it
(i) distorts the incentives of both the payer and the recipient of transfers.
(ii) makes the allocation of resources more efficient.
(iii) ensures an equitable distribution of income.- A(iii) only
- B(i) only
- C(i) and (ii) only
- D(i), (ii) and (iii)
36Possible economic trade-offs from government attempts to redistribute income include
(i) productivity incentives are distorted.
(ii) people are likely to alter their market behavior.
(iii) markets become less efficient at allocating resources to their
highest and best valued uses.- A(i) and (ii) only
- B(ii) and (iii) only
- C(i) and (iii) only
- D(i), (ii) and (iii)
- Ethere are no tradeoffs to government income redistribution
37The U.S. trend of increasing income _______________ over the last 35 years, is likely to be a result of_____________.
- Aequality, increases in human capital investment
- Binequality, changes and advancements in technology that increase demand for skilled
labor relative to unskilled labor - Cinequality, increasing labor market discrimination
- Dequality, increased international trade with low-wage countries
38Economists refer to the regular pattern of income and spending variation over a person's lifetime as a ________________ effect.
- Alife pattern
- Bcyclical redundancy
- Cperiodic cycle
- Dlife cycle
39Income mobility studies suggest that poverty
- Ais not a long-term problem for most families.
- Bis a long-term problem for a relatively large number of families.
- Ccannot be alleviated by government sponsored anti-poverty programs.
- Dcannot be alleviated by privately sponsored anti-poverty programs.
40An answer to the question about the government's role in redistributing income is largely one of
- Apositive economic efficiency.
- Bnormative political philosophy.
- Cegalitarian principles.
- Denhanced opportunity.
41Founders of utilitarianism include
- AA. Kondratieff and Thomas Malthus.
- BAugustin Cournot and Jean B. Say.
- CA. C. Pigou and John Maynard Keynes.
- DJeremy Bentham and John Stuart Mill.
42The utilitarian case for redistributing income is based on the assumption of
- Aa notion of fairness engendered by equality.
- Bdiminishing marginal utility.
- Crising marginal utility.
- Dcollective consensus.
43In the parable of the leaky bucket, a fundamental problem with government redistribution programs is identified. In the parable, the leaky bucket represents
- Athe economic satisfaction delivered to the poor.
- Ban egalitarian policy without market distortions.
- Cwell intentioned programs which distort market incentives.
- Dthe economic loss caused to the rich.
44Diminishing marginal utility implies that
- Athe poor receive more satisfaction than the rich from the last dollar they each spend.
- Bmore is always preferred to less.
- Cthe poor are less efficient at spending money than the rich.
- Dthe poor are always with us.
45Suppose that Mr. Jevons' income is greater than that of Mr. Menger, and that both incomes are subject to diminishing marginal utility. According to utilitarian logic, taking a dollar from Mr.Jevons and giving it to Mr. Menger will increase the total utility to society if
- AMr. Jevons' utility falls by more than Mr. Menger's rises, and the negative distortion effects
more than offset the utility gains from greater equality. - BMr. Jevons' utility rises by less than Mr. Menger's falls, and the utility gains from greater
equality outweigh the disincentives to work. - CMr. Jevons' utility falls by less than Mr. Menger's rises, and the utility gains from greater
equality outweigh the disincentives to work. - DMr. Menger's utility rises by less than Mr. Jevons' falls, and disincentives to work are
deemed greater than the utility gains of greater equality.
- AMr. Jevons' utility falls by more than Mr. Menger's rises, and the negative distortion effects
46Liberalism is a label that is coined for the philosophy espoused by
- AJeremy Bentham.
- BJohn Rawls.
- CJohn Stuart Mill.
- DRobert Nozick.
47Liberalism is founded on a premise that behind a "veil of ignorance"
- Ano one would be considered in an "original position".
- Beveryone would agree to "just" rules to redistribute income.
- Cjustice can never be agreed upon.
- Djustice is a matter of political philosophy.
48From the perspective of the original position, behind the "veil of ignorance", support for government income redistribution policy can be thought of as a(n)
- Ainsurance policy against finding oneself in the lower half of the income distribution.
- Bsubsidy to workers.
- Ccorrection for capital income imbalances.
- Ddivinely inspired policy.
49The notion of libertarianism invokes the
- Asupremacy of individual rights over collective rights.
- Bsupremacy of process over outcomes.
- Cboth of the above
- Dnone of the above
50Libertarianism identifies a role for government only when
- Aan egalitarian distribution of income is inconsistent with market outcomes.
- Battorneys are required to facilitate a free market exchange.
- Cthe income distribution is altered by illegal means (i.e., theft of private property).
- Dworkers lose their jobs as a result of structural changes in the economy.
51In general, libertarians would conclude that equality of ________________ is more important than equality of ___________________.
- Aincome, opportunity
- Blabor compensation, capital compensation
- Ccapital compensation, labor compensation
- Dopportunity, income
52Proponents of legislation which proposes to limit the time a family can receive welfare benefits are likely to argue that time limits are desirable because
- Athey reduce government outlays for poverty programs.
- Blong periods on welfare erode work skills.
- Cwelfare programs entrench the habit of government dependency.
- Dall of the above
53Proponents of welfare reform claim that programs for the poor which do not establish a time limit on recipient benefits harm children by
- Aencouraging a generational psychological dependency on government programs.
- Bencouraging child abuse by absent fathers.
- Cforcing mothers to work outside of the home.
- Dall of the above
54As a general rule, government anti-poverty programs as a group
- Aimpose a very low marginal tax rate on income.
- Bencourage saving among recipient groups.
- Cimpose disincentives to work among recipient and taxpaying groups.
- Dare only made available to those with no other source of income.
55Specific programs designed to raise the living standards of the poor include
(i) Temporary Assistance to Needy Families (TANF)
(ii) Unemployment Insurance (UI)
(iii) Supplemental Security Income (SSI)- A(ii) and (iii) only
- B(i) and (ii) only
- C(i) and (iii) only
- D(i), (ii) and (iii)
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- Quiz on Micro Final 2, created by Derek Lasky on 25/04/2018.
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- Derek Lasky
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