CHAPTER 19 - Chapter19 EarningsandDiscrimination 1.

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Chapter 19 Earnings and Discrimination 1. A difference in wages that offsets differences in the nonpay features of two jobs is called a. a compensating differential. b. a wage adjustment. c. an efficiency wage. d. a minimum wage. ANSWER: a a compensating differential. SECTION: 1 OBJECTIVE: 1 2. Working in a slaughterhouse is much riskier than working in a bookstore. As a result, we’d expect a  difference in wages between the two jobs, which is known as a. an efficiency wage. b. a compensating differential. c. a wage adjustment. d. a minimum wage. ANSWER: b a compensating differential. SECTION: 1 OBJECTIVE: 1 3. If a worker is indifferent between a job with a wage of $12 per hour and a job with a wage of $15 per hour,  then the a. higher-paying job enjoys a compensating wage differential of $3 per hour. b. higher-paying job enjoys a compensating wage differential of $15 per hour. c. lower-paying job is intrinsically more attractive than the higher-paying job. d. worker’s preferences are not rational. ANSWER: a higher-paying job enjoys a compensating wage differential of $3 per hour. SECTION: 1 OBJECTIVE: 1 4. Patrick is considering two different jobs in the same city – one as a bicycle courier, and the other as a mail  room clerk. Both require equivalent training. He finds neither job very appealing, but, if they pay the same  wage rate, Patrick would prefer to work as a mail room clerk. In order for Patrick to find the two jobs equally  attractive, the a. mail room job must pay a compensating wage differential. b. mail room job must pay an efficiency wage. c. courier job must pay a compensating wage differential. d. courier job must involve longer working hours. ANSWER: c courier job must pay a compensating wage differential. SECTION: 1 OBJECTIVE: 1 111
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112 Chapter 19/Earnings and Discrimination 5. Jobs that require more costly training generally have a. higher wages. b. lower employment levels. c. higher personal risk levels. d. lower wages. ANSWER: a higher wages. SECTION: 1 OBJECTIVE: 2 6. The time spent by students in college a. leads to lower lifetime earnings because opportunity costs are high. b. is an investment in human capital. c. decreases human capital by lowering work experience. d. increases as the low-skilled wage rate rises. ANSWER: b is an investment in human capital. SECTION: 1 OBJECTIVE: 2 7. One reason why individuals with greater ability receive higher wage rates is that they a. face discrimination. b.
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CHAPTER 19 - Chapter19 EarningsandDiscrimination 1.

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