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19 - Chapter 19 Earnings and Discrimination MULTIPLE CHOICE...

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Chapter 19 Earnings and Discrimination M ULTIPLE  C HOICE 1 . The basic neoclassical theory of the labor market predicts that a. workers earn a wage equal to the value they contribute to the economy. b. wages are determined entirely by market demand. c. wages are determined entirely by market supply. d. workers are compensated according to their contribution to the social value of society. 2 . When wage differentials are observed in competitive labor markets, the neoclassical theory of labor markets would  predict a. market discrimination. b. that wages will converge over time. c. that wage differences reflect social status. d. a difference in the value of marginal product of labor. 3 . Since a major league baseball player makes more money than a private preschool teacher we can conclude that a. society values the services of a major league baseball player more than the services of a private preschool  teacher. b. a major league baseball player generates more revenue in the economy than a private preschool teacher. c. labor markets are generally inefficient and inequitable. d. None of the above are correct. 4 . Shaquille O’Neal, a famous basketball player, earns more than a university professor. The neoclassical theory of  labor markets would suggest that a. university professors who want to be rich should play basketball. b. Shaquille O’Neal is smarter than a university professor. c. Shaquille O’Neal is the greatest basketball player of all time. d. Shaquille O’Neal contributes more to the economy's production of goods and services than a university  professor. 5 . When competitive labor markets are in equilibrium, the neoclassical theory of labor predicts that a. the distribution of wages across the economy will be "bell-shaped". b. the wage paid to each worker is equal to that worker’s marginal product of labor. c. each worker is paid the value of his/her marginal contribution to the economy. d. wage differentials cannot exist. 6 . In 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 a. risen as the demand for skilled labor has increased relative to the demand for unskilled labor. b. risen as the demand for skilled labor has decreased relative to the demand for unskilled labor. c. fallen as the demand for skilled labor has increased relative to the demand for unskilled labor.
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