Question 1

The "beauty premium" can be explained by the fact that
A)marginal productivity in all occupations has a physical dimension.
B)in some occupations, physical attractiveness of workers may enhance the value of their marginal product.
C)beauty acts as an implicit signal of innate intelligence.
D)beautiful people are likely to reflect "good breeding."

Accepted Answer

The "beauty premium" refers to the phenomenon of attractive individuals earning higher wages than less attractive individuals. This can be explained in some occupations where physical attractiveness of workers may enhance the value of their marginal product. For example, in jobs that require face-to-face interaction with customers or clients, an attractive person may be able to sell more or negotiate better deals.

Question 2

Studies of wages by labor economists indicate that measurable variables such as age, job characteristics, years of education, and years of experience account for
A)virtually none of the variation in wages in our economy.
B)some, but less than 50 percent of the variation in wages in our economy.
C)about 75 percent of the variation in wages in our economy.
D)almost all of the variation in wages in our economy.

Accepted Answer

While measurable variables such as age, job characteristics, years of education, and years of experience do have some impact on wages, they do not account for all of the variation in wages in our economy. Studies have shown that these variables account for less than 50 percent of the variation in wages. Other factors such as discrimination, bargaining power, and even luck can also play a significant role in determining wages.

Question 3

George and Brad are waiters at a local restaurant. The female customers prefer to be seated at the tables that George waits on because they think George is better looking than Brad. If George earns more than Brad because of his better looks, this is an example of
A)effort playing a key role in wage differences.
B)differences in human capital.
C)a beauty premium.
D)a compensating differential.

Accepted Answer

This situation is an example of a beauty premium, where individuals who are considered more attractive earn more than those who are less attractive, even if they have similar skills or qualifications. This is a type of discrimination based on physical appearance, rather than differences in human capital or effort. It is not a compensating differential, which refers to higher pay for jobs with negative aspects, like working in dangerous conditions.

Question 4

In determining wages, ability, effort, and chance
A)probably play no role whatsoever.
B)play a role, but their importance is hard to gauge since ability, effort, and chance are hard to measure.
C)play a role, and that role is fully captured in easy-to-measure factors such as human capital and age.
D)play a role, and it is fully explained within the context of compensating differentials.

Accepted Answer

Ability, effort, and chance are important factors in determining wages, but they are hard to measure and quantify. Therefore, their importance is difficult to gauge accurately. Human capital and age are easier to measure factors that can partially capture these qualities, but they do not account for all aspects of ability, effort, and chance. Compensating differentials also consider non-monetary factors such as working conditions and job risks, but they do not fully explain how ability, effort, and chance affect wages.

Question 5

Which of the following does not affect the wages a worker earns?
A)natural ability
B)effort
C)chance
D)All of the above affect the wages a worker earns.

Accepted Answer

The answer of Which of the following does not affect...

Question 6

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
A)effort and natural ability.
B)natural ability and years of experience.
C)years of experience and job characteristics.
D)race and job characteristics.

Accepted Answer

While natural ability and years of experience are measurable, effort is often difficult to quantify. Race and job characteristics may also be difficult to measure accurately.

Question 7

Which of the following is an economic explanation for the "beauty premium"?
A)Employers pay very attractive women less than average-looking women because they believe them to be less intelligent.
B)Employers pay above-average-looking men more than above-average-looking women.
C)Employers pay above-average-looking women more than average-looking women because customers prefer to deal with better-looking women.
D)Employers pay above-average-looking men more because they signal to the market that they are willing to spend more money on personal grooming, a sign of wealth and stability.

Accepted Answer

This economic explanation for the "beauty premium" suggests that employers pay above-average-looking women more than average-looking women because customers prefer to deal with better-looking women, which can lead to higher sales and profits for the business.

Question 8

Which of the following variables related to a worker's wage are the most difficult to measure?
A)ability, effort, and chance
B)job characteristics, gender, and race
C)gender, race, and geographic location
D)years of schooling, age, and years of experience

Accepted Answer

Ability, effort, and chance are difficult to measure because they are subjective and cannot be easily quantified. Job characteristics, gender, race, years of schooling, age, and years of experience can be measured more objectively. Gender, race, and geographic location may also introduce certain biases or discrimination, but they can still be measured.

Question 9

Tom and Eric went to trade school at the same time. Each graduated with an associate's degree. They have received similar performance evaluations. Eric's employer is not a good business manager, and the sales manager lost a major deal. Because of the decrease in profits, the employees did not receive raises last year. Tom's employer is a savvy business manager and the sales manager is experienced and works hard. If Tom has higher earnings than Eric, the difference is most likely a function of
A)chance.
B)differences in human capital.
C)differences in signaling.
D)discrimination.

Accepted Answer

The answer of Tom and Eric went to trade school...

Question 10

Which of the following does not explain the "beauty premium" differences in wages?
A)Better-looking people are preferred by customers; thus, employers will pay them higher wages than average-looking people.
B)Beauty may be an indirect measure of other abilities that employers value.
C)Average-looking people are preferred by customers; thus, employers will pay them higher wages than better-looking people.
D)Employers discriminate in favor of better-looking people.

Accepted Answer

Option C is not a valid explanation for the "beauty premium" differences in wages, as it contradicts the common perception that people with better looks get paid more. The other options all provide reasons for why better-looking people tend to have higher wages, whether it's due to customer preference, indirect measures of abilities, or employer discrimination.

Question 11

Which of the following helps to explain the differences in earnings in the United States?
A)ability, effort, and chance
B)compensating differentials
C)physical attractiveness
D)All of the above are correct.

Accepted Answer

The answer of Which of the following helps to explain...

Question 12

George and Brad are waiters at a local restaurant. The female customers think that George is better looking than Brad. If George earns more than Brad, this could be an example of each of the following except
A)customer preferences.
B)discrimination.
C)a beauty premium.
D)a compensating differential.

Accepted Answer

The answer of George and Brad are waiters at a...

Question 13

Dan and Dave are both college graduates. Dan is a patrolman and Dave is a detective in the same police precinct. While Dan's job is inherently more dangerous than Dave's, Dave passed a difficult exam to gain promotion to detective. Dave earns more than Dan because
A)Dave's job is less dangerous.
B)of efficiency wages.
C)of education as a signal.
D)Dave has more human capital.

Accepted Answer

Dave's passing of a difficult exam to become a detective indicates that he has more human capital (knowledge, skills, and abilities) than Dan, who is a patrolman. This higher level of human capital allows Dave to perform higher-level job duties and earn a higher salary. The difference in the inherent danger of their jobs is not a relevant factor in this case. The concept of efficiency wages and education as a signal do not apply as strongly to this scenario.

Question 14

Which of the following is not an interpretation of the "beauty premium"?
A)Beautiful workers are not willing to work for lower wages.
B)Good looks are a type of innate ability causing the worker to be more valuable to the firm.
C)The beauty premium is a type of discrimination.
D)Beauty is an indirect measure of other types of ability.

Accepted Answer

The statement that beautiful workers are not willing to work for lower wages is not an interpretation of the "beauty premium." The other choices are all possible interpretations of the phenomenon.

Question 15

A study by labor economists Hamermesh and Biddle found that
A)shorter-than-average men earn more than shorter-than-average women, all else equal.
B)above-average looking people earn more than average-looking people, all else equal.
C)shorter women earn more than taller women, all else equal.
D)All of the above are correct.

Accepted Answer

The study found that above-average looking people earn more than average-looking people, all else equal. Options A and C are incorrect because the study did not find evidence to support these claims. Option D is incorrect because only option B is correct.

Question 16

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?
A)Good looks are an innate ability for some jobs, which results in higher productivity and higher wages.
B)Good looks may be an indirect measure of other types of ability such as attention to detail.
C)If better-looking people earn more than average-looking people, employers may be discriminating based on personal appearance.
D)All of the above could explain the beauty premium.

Accepted Answer

All three options could potentially explain the beauty premium found by Hamermesh and Biddle. Good looks may be an innate ability for some jobs, such as modeling or acting, that results in higher productivity and higher wages. Good looks may also be an indirect measure of other types of ability, such as confidence, social skills, or attention to detail, that are valued in the workplace. Finally, if better-looking people earn more than average-looking people, it is possible that employers are discriminating based on personal appearance.

Question 17

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.
A)elementary school teacher who works 9 months of the year
B)manager in a large firm who earns an annual salary with no potential for bonuses or commissions
C)salesperson who earns a small base salary plus a percentage of the sales he makes
D)local television news anchor who works during the day

Accepted Answer

As a salesperson, Hunter will have the potential to earn a higher wage through commission on the sales he makes. This appeals to his competitive nature and ambition to do well. The other options either have fixed salaries or a limited work schedule, which may not be as financially rewarding in the long run.

Question 18

Christy and Claudia are aspiring models. Talent scouts consider them to be similarly beautiful. Both enter a talent show. Claudia contracts food poisoning the night before the competition and withdraws. Christy wins the competition and signs a multi-million dollar contract. The differences in their earnings likely reflect
A)discrimination.
B)differences in human capital.
C)differences in signaling.
D)chance.

Accepted Answer

The answer of Christy and Claudia are aspiring models. Talent...

Question 19

Which of the following explains the "beauty premium" differences in wages?
A)People who spend time on their personal appearance may send a signal that they are more productive workers.
B)Personal appearance and intelligence are inversely related.
C)The "superstar phenomenon" explains the "beauty premium."
D)Better-looking people are more efficient; thus, they are paid an efficiency wage.

Accepted Answer

People who spend time on their personal appearance may send a signal that they are more productive workers.

Question 20

According to the Hamermesh and Biddle study, people deemed more attractive than average earn
A)30-40 percent more than unattractive people.
B)about 5 percent more than average looking people.
C)the same as average looking people and 15-20 percent more than unattractive people.
D)25 percent more than average looking people and 50 percent more than unattractive people.

Accepted Answer

According to the Hamermesh and Biddle study, people deemed more attractive than average earn about 5 percent more than average looking people.

Quiz 19: Earnings and Discrimination

The "beauty premium" can be explained by the fact that

Studies of wages by labor economists indicate that measurable variables such as age, job characteristics, years of education, and years of experience account for

George and Brad are waiters at a local restaurant. The female customers prefer to be seated at the tables that George waits on because they think George is better looking than Brad. If George earns more than Brad because of his better looks, this is an example of

In determining wages, ability, effort, and chance

Which of the following does not affect the wages a worker earns?

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

Which of the following is an economic explanation for the "beauty premium"?

Which of the following variables related to a worker's wage are the most difficult to measure?

Which of the following does not explain the "beauty premium" differences in wages?

Which of the following helps to explain the differences in earnings in the United States?

George and Brad are waiters at a local restaurant. The female customers think that George is better looking than Brad. If George earns more than Brad, this could be an example of each of the following except

Dan and Dave are both college graduates. Dan is a patrolman and Dave is a detective in the same police precinct. While Dan's job is inherently more dangerous than Dave's, Dave passed a difficult exam to gain promotion to detective. Dave earns more than Dan because

Which of the following is not an interpretation of the "beauty premium"?

A study by labor economists Hamermesh and Biddle found that

Which of the following might explain the beauty premium found by labor economists Hamermesh and Biddle?

Hunter is an ambitious, competitive person who has always tried to be the best at everything he does. Consider the following job options facing Hunter and choose the option that will likely afford him the highest wage.

Which of the following explains the "beauty premium" differences in wages?

According to the Hamermesh and Biddle study, people deemed more attractive than average earn