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Exam 19: Earnings and Discrimination

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Question 1

True/False

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A study using data from the late 1960s showed that black baseball players earned less than comparable white players. Studies of more recent salaries in baseball, however, have found no evidence of discriminatory wage differentials.

A) True
B) False

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Question 2

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Scenario 19-4 Assume that the labor market for barbers is competitive and that it is differentiated into two groups: barbers who are bald (or going bald) and those who have a full head of hair. Assume that the barbers in this market have identical hair-cutting ability, regardless of whether they are bald or not. Currently, the equilibrium wage in the bald barber market is lower than that in the nonbald market. Further assume that the market for haircuts is competitive. -Refer to Scenario 19-4. If consumers do not discriminate between bald barbers and barbers with hair, then

A) all barbershops now earn a normal economic profit.
B) competition will ensure the difference in wages will persist.
C) barbershops that hire barbers with hair will be more profitable than those that don't.
D) barbershops that hire bald barbers will be more profitable than those that don't.

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

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Question 3

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The fact that doctors are paid more than economics professors is an example of a compensating differential.

Profit-maximizing, competitive firms will not discriminate in the hiring of workers unless consumers exercise a preference for discrimination in product markets or governments mandate discrimination.

Kalene and Jin both work at the local factory producing cars. Kalene earns $24 per hour working the day shift, and Jin earns $26 per hour working the night shift. Kalene and Jin do the same job, have the same experience, and have the same level of education. This means that the

According to economists Hamermesh and Biddle, how much more do people who are deemed more attractive than average earn?

Traci is a nurse, and she gets paid an additional $1.00 per hour for agreeing to work the night shift. Carol is also a nurse, but she works the day shift and does not get paid this extra dollar per hour. This difference in pay is an example of a compensating differential.

Figure 19-1 -Refer to Figure 19-1. If the minimum wage in this market is $9, then

If a good is produced with technology that allows the best producer to supply every customer at a low cost and every customer in the market wants to enjoy the good supplied by the best producer, the best producer will be called a

One example of labor-market discrimination is that firms may be less likely to interview job-market candidates whose names suggest that they are members of a racial minority.

Efficiency wages will raise the quantity of labor supplied to the market.

Benjamin and Ian are identical twins who attended elementary school through high school together. Benjamin got a job after high school, and Ian got a job after graduating from college. Benjamin earns $33,000 a year, and Ian earns $62,000 a year. Select the best explanation for this wage difference.

Scenario 19-3 In the small town of Houghton, Michigan, 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. -Refer to Scenario 19-3. Which of the following statements would strengthen the discrimination complaint against Eddy's Hardware?

The accumulation of investments in people is called

Figure 19-7 ​ ​ -Refer to Figure 19-7. Given demand, D1, and supply, S2, how many workers are unemployed if a minimum wage of $8 per hour is imposed on this market?

Why do college graduates earn more in wages than workers with only a high school diploma?

Consider two groups of workers of equal skill level and experience: those who collect garbage and those who stuff envelopes with campaign fliers. Which group is likely to be paid more and why?

Certain factors that are probably important in determining wages are nevertheless difficult to measure. Consequently, labor economists find those factors difficult to incorporate into their studies of labor markets and wages. Those factors include

About what proportion of the variation of wages across workers is explained by factors that can be measured? What are the other factors that explain wage differences but are difficult to measure?

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?