Question 1

Compensating differentials are

Accepted Answer

Compensating differentials are higher wages that compensate workers for unpleasant aspects of a job. For example, a job may require working in dangerous or uncomfortable conditions, or may involve working unusual hours. In order to compensate workers for these negative aspects of the job, employers may offer higher wages. This helps to ensure that the supply of workers willing to perform the job remains sufficient.

Question 2

If the labor demand curve shifts to the left and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The answer of If the labor demand curve shifts to...

Question 3

If the labor supply curve shifts to the left and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The answer of If the labor supply curve shifts to...

Question 4

All else equal, a decrease in the supply of labor will shift the labor supply curve to the left and decrease the equilibrium wage.

Accepted Answer

A decrease in the supply of labor shifts the labor supply curve to the left, but it typically increases the equilibrium wage due to reduced labor availability.

Question 5

If the labor demand curve shifts to the right and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The answer of If the labor demand curve shifts to...

Question 6

Wage differentials between occupations can be explained by all of the following except

Accepted Answer

While factors such as levels of human capital, desirability, demand and supply all play a role in determining wage differentials, the market power of different employers is not a significant factor in explaining wage differentials.

Question 7

During recessions, economics majors earn about 35 percent more than the typical college graduate.

Accepted Answer

This is true according to a study by labor economist Alicia Sasser Modestino. During economic downturns, the skills learned in economics programs such as data analysis, problem-solving, and critical thinking become more in demand, leading to higher salaries for economics majors.

Question 8

Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons?

Accepted Answer

The supply of talented major league baseball players is relatively low compared to the demand for them, resulting in high salaries. On the other hand, there is a larger supply of neurosurgeons compared to their demand, leading to lower salaries. Furthermore, adding another talented baseball player yields significantly more value than adding another neurosurgeon, resulting in higher salaries for baseball players.

Question 9

Some superstar athletes in the sports industry earn very high levels of income relative to other occupations, and over time the wage differential has been increasing.What could have caused this?

Accepted Answer

Technological advances such as cable television and streaming services have increased the demand for sports entertainment, making it a highly profitable industry. As a result, the wages of superstar athletes have increased as they become more valuable to teams and advertisers. Additionally, globalization has expanded the reach of sports, increasing revenue and providing new opportunities for players to earn higher salaries.

Question 10

If the demand for labor is unchanged, population growth will increase the supply of labor and increase the equilibrium wage.

Accepted Answer

Population growth may increase the supply of labor but if the demand for labor remains unchanged, the equilibrium wage will not increase. In fact, it may even decrease due to the increase in competition among workers for limited jobs.

Question 11

Compared to high school graduates, what is likely to happen to employment and wages for college graduates during a recession?

Accepted Answer

The answer of Compared to high school graduates, what is...

Question 12

In recent years, most immigrants to the United States have come from Latin America and Asia.

Accepted Answer

According to data from the U.S. Census Bureau and Pew Research Center, in recent years (from approximately 2010 to 2019), most immigrants to the United States have come from Latin America and Asia.

Question 13

Painters who paint water towers earn higher wages relative to painters who paint houses because

Accepted Answer

Painting water towers involves working at greater heights and under more hazardous conditions, which increases the risk and justifies higher wages compared to painting houses.

Question 14

Since Poland joined the European Union in 2004, many young and educated Poles have emigrated to the United Kingdom.As a result, the labor supply curve in the United Kingdom shifts to the right and the equilibrium wage rises.

Accepted Answer

When the labor supply curve shifts to the right due to an influx of workers, the equilibrium wage typically decreases, not rises, as there is a larger supply of labor available.

Question 15

Consider the market for nurses in a given city.In each of the following cases, explain what happens to the equilibrium wage rate and the quantity of nurses hired.
a.One of the major hospitals in the city closes.
b.A record number of students graduate with bachelor's degrees in nursing.
c.Traditionally, nursing is a field that attracts women.However, changes in access to education and to the labor force participation rate by women have led to a greater demand for the services of women in a wide range of occupations.The demand for nurses, however, does not change.
d.Advances in medical technology reduce the amount of time physicians must spend with patients in intensive care and increase the time that nurses spend with patients.

Accepted Answer

The answer of Consider the market for nurses in a...

Question 16

Consider the market for blackjack dealers in Las Vegas.In each of the following cases, explain what happens to the equilibrium wage rate and the quantity of blackjack dealers hired.
a.Three new large resort casinos open in Las Vegas.
b.Fewer students are attending classes to learn to become blackjack dealers.
c.Traditionally, blackjack dealing is a field that attracts foreign workers.However, changes in immigration laws have made it more difficult for foreign workers to come to Las Vegas to obtain jobs.The demand for blackjack dealers, however, does not change.
d.Advances in technology have increased the popularity of electronic blackjack machines and decreased the popularity of live table games which require the use of a dealer.

Accepted Answer

The answer of Consider the market for blackjack dealers in...

Question 17

If the labor supply curve shifts to the right and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Accepted Answer

The answer of If the labor supply curve shifts to...

Question 18

A study by Price Fishback and Shawn Kantor of the University of Arizona shows that after the passage of workers' compensation laws, wages received by workers in the coal and lumber industries fell.
Source: Price V.Fishback and Shawn Everett Kantor, "Did Workers Pay for the Passage of Workers' Compensation Laws?" Quarterly Journal of Economics, Vol.100, No.3, August 1995, pp.713-742.
Which of the following could explain why passage of workers' compensation laws led to a fall in wages in some industries?

Accepted Answer

The passage of workers' compensation laws allowed employers in hazardous industries to reduce compensating differentials which, in turn, reduce wages. Compensating differentials are the additional wages paid to workers in hazardous industries to compensate them for the additional risk they face. With workers' compensation laws, employers no longer need to pay compensating differentials to cover medical expenses and lost wages due to workplace injuries. Thus, the removal of this compensation mechanism leads to a fall in wages.

Question 19

In 2015, the foreign-born population in the United States was almost half of the total U.S.population.

Accepted Answer

In 2015, the foreign-born population in the United States was about 13.5% of the total U.S. population, not almost half.

Question 20

If the number of employees who quit, are fired, or retire increases while the hiring of new employees declines, this indicates that the

Accepted Answer

If the number of employees who quit, are fired, or retire increases while the hiring of new employees declines, it indicates a decrease in labor supply and an increase in labor demand. This shift in the labor market results in an increase in wages and a decrease in employment levels. Therefore, the labor demand curve is shifting to the left.

Quiz 17: The Markets for Labor and Other Factors of Production

Compensating differentials are

If the labor demand curve shifts to the left and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

If the labor supply curve shifts to the left and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

All else equal, a decrease in the supply of labor will shift the labor supply curve to the left and decrease the equilibrium wage.

If the labor demand curve shifts to the right and the labor supply curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

Wage differentials between occupations can be explained by all of the following except

During recessions, economics majors earn about 35 percent more than the typical college graduate.

Which of the following explains why talented major league baseball players command much higher salaries than neurosurgeons?

Some superstar athletes in the sports industry earn very high levels of income relative to other occupations, and over time the wage differential has been increasing.What could have caused this?

If the demand for labor is unchanged, population growth will increase the supply of labor and increase the equilibrium wage.

Compared to high school graduates, what is likely to happen to employment and wages for college graduates during a recession?

In recent years, most immigrants to the United States have come from Latin America and Asia.

Painters who paint water towers earn higher wages relative to painters who paint houses because

Since Poland joined the European Union in 2004, many young and educated Poles have emigrated to the United Kingdom.As a result, the labor supply curve in the United Kingdom shifts to the right and the equilibrium wage rises.

If the labor supply curve shifts to the right and the labor demand curve remains unchanged, what will happen to the equilibrium wage and the equilibrium level of employment? Illustrate your answer with a graph.

In 2015, the foreign-born population in the United States was almost half of the total U.S.population.

If the number of employees who quit, are fired, or retire increases while the hiring of new employees declines, this indicates that the