Economics 101 Practice Test: Earnings and Discrimination | Practice Test / Quiz / MCQs

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Economics 101 Practice Test: Earnings and Discrimination

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Economic discrimination is a long-term economic inequality among people based on their gender, ethnicity, or color. It can also be defined as the difference in pay or wage rates for equally productive groups. Economic discrimination can include: job availability, wages, prices and/or availability of goods and services, and the amount of capital investment funding available to minorities for business. Economic discrimination can also include discrimination against workers, consumers, and minority-owned businesses. Earnings discrimination occurs when employees producing work of equal... Show more

Economic discrimination is a long-term economic inequality among people based on their gender, ethnicity, or color. It can also be defined as the difference in pay or wage rates for equally productive groups.

Economic discrimination can include: job availability, wages, prices and/or availability of goods and services, and the amount of capital investment funding available to minorities for business.
Economic discrimination can also include discrimination against workers, consumers, and minority-owned businesses.
Earnings discrimination occurs when employees producing work of equal value are differentially remunerated because of their social group.

Some examples of inequality include:
- Women and children with lack of access to healthcare
- Older persons, migrants, and refugees facing lack of opportunities and discrimination
- Discrimination based on religion, ethnicity, gender, and sexual preference

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Economics 101 Practice Test: Earnings and Discrimination

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1. When differences in average wages occur in a labor market, economists agree that these differences

occur solely because of differences in productivity between genders and races.are exclusively an economic, rather than political, phenomenon.do not alone provide conclusive evidence of discrimination.provide conclusive evidence of broad patterns of discrimination on the basis of gender and race.

2. Economists are skeptical that discrimination is employer driven because

employers are profit maximizers.there is a cost advantage for the non-discriminating firm.if there is no difference in productivity, employers choose to hire the cheapest labor available.All of these are reasons.

3. A natural experiment which allows economists to examine the effect of education on wages and productivity exists because of

anti-discrimination legislation.differences in state laws for school attendance.minimum wage laws.government-subsidized higher education.

4. How does the theory of efficiency wages explain above-equilibrium wages?

Workers get a raise in wage when they prove they are increasing their productivity.Employers give their workers a higher wage in the hopes that it will lead to increased productivity.Workers demand higher wages to compensate for poor fringe benefits.Employers are forced to pay higher wages in efficient markets.

5. The superstar phenomenon occurs in markets

where the ability and effort of market participants are relatively equal.that can limit the supply of participants in the market so that competition is diminished.that make it possible for the best producer to supply every customer at low cost.where technology is not allowed to assist or improve the natural ability of the superstar.

6. The human capital view of education is that it

will decrease job mobility.is a signal of natural intelligence or ability.enhances productivity.can reduce job discrimination.

7. When wage differentials are observed in competitive labor markets, the neoclassical theory of labor markets would predict

that wage differences reflect social status.market discrimination.that wages will converge over time.a difference in the value of marginal product of labor.

8. Streetcar seating that was segregated by race was opposed by firms that ran the streetcars because

segregated seating was less profitable than streetcar seating that didn’t have restrictions.white passengers complained because they were required to sit in the back of the cars.streetcar drivers could not remember who sat where.railroad companies were not required to segregate by race.

9. Racial segregation of streetcars in the southern cities was largely opposed by

government officials.Sherman antitrust laws.streetcar firms.all of these.

10. Studies have documented that the earnings gap between low-skill workers and high-skill workers has

not changed as the wages of both groups have steadily increased.decreased over the past two decades because of lower college enrollments.increased over the past two decades.remained relatively constant over the past two decades.

11. Which of the following statements represents the idea behind signaling in education?

The more naturally productive someone is the more they are inclined to educate themselves.Most college graduates wouldn’t be half as productive if it were not for the years they spend in the classroom.Education can turn an unproductive person into a productive person.all of these

12. Economists would argue that the gender wage gap is narrowing because of

comparable worth legislation.efficiency wages.increased training among women.decreased productivity among male workers.

13. The signaling view of education is that it

alters work ethic.always leads to high-wage jobs.signals natural ability.enhances productivity.

14. The fact that women are more likely to interrupt their careers to raise children reflects

further evidence that labor markets discriminate against women.evidence that society under-values the role of women in the market place.a potential market-based reason why average wages for men exceed those for women.evidence that markets are inefficient at allocating labor resources.

15. Wage differences that exist between well-educated workers and less-educated workers can be thought of as

difficult to explain in a market economy.another form of discrimination in the labor market.a compensating differential for the cost of becoming educated.unfair by most economists.

16. Which of the following statements is NOT true?

The wage for skilled jobs exceeds that for unskilled jobs.The wage for dangerous jobs exceeds that for safe jobs.The wage for fun jobs exceeds that for dull jobs.The wage for difficult jobs exceeds that for easy jobs.

17. According to the human capital view, education

leads to lower lifetime earnings.alters work ethic.is an indicator of raw intellect.enhances productivity.

18. Receptionists generally have low paying jobs because

receptionist jobs are perceived to be relatively easy.receptionists are required to have a college degree.many people perceive the job as having an element of personal satisfaction.receptionist jobs are considered difficult.

19. The statement “the rich get richer and the poor get poorer” is evident in the fact that

the poor must shoulder an increasing amount of the public debt.developing countries do not pay workers the value of their marginal product.developed economies export high-skill jobs to developing countries.the earnings gap between high-skill jobs and low-skill jobs has increased over the last several years.

20. Evidence suggests that business owners are generally

more interested in making a profit than in discriminating against a particular group.interested in profits, only when discrimination is illegal.unable to determine the link between discrimination and profitability.more interested in discrimination than in making a profit.

21. Discriminatory hiring practices can be expected, even if markets are competitive, as a result of

lower costs of hiring.unrestricted entry and exit in markets.a perfectly elastic market demand.customer preferences.

22. Which of the following would NOT explain the “beauty premium?”

Beauty is an indirect measure of other types of ability.Beauty is a type of discrimination.Physical beauty is associated with a worker’s marginal productivity in every occupation.Good looks are useful in any job in which workers present themselves to the public.

23. A recent law school graduate is considering two offers to practice law, one in California and one in Mississippi. Rumor has it that it is very difficult to pass the Mississippi bar exam and meet other certification requirements required by the Mississippi Attorney Association. Assuming all other things are equal, the attorney would expect

to make a higher wage in Mississippi.to be unable to predict the wage difference between Mississippi and California.to make a lower wage in Mississippi.wages in California and Mississippi to be identical.

24. Which of the following scenarios would serve to decrease the demand for unskilled labor in our country?

increased demand for goods produced by unskilled laborincreased supply of migrant workersincreased international trade with countries where unskilled labor is more plentifulincreased productivity gains among the unskilled laborers

25. The job of night watchman at the Punxsutawny Phil Groundhog museum is known to have a high wage. This is likely to be partially explained by the fact that the job

is likely to be incredibly dull.is likely to require specialized skills.provides plenty of time for self-reflection.is likely to be difficult.

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