1. If all persons had identical preferences and productivity
factors (ability, skill
level, education, experience, etc.), the highest paying jobs would be the most
d. easily learned.
2. Automated production methods are only attractive when they
a. are undertaken in heavily unionized sectors of the economy.
b. reduce per-unit costs.
c. replace workers.
d. decrease labor productivity.
3. Ceteris paribus, compared to a similar job offering no fringe benefits, a job with
generous benefits will be likely to pay
a. a lower wage rate.
b. a higher wage rate.
c. the same wage rate.
d. twice the wage rate of the job with offering no fringe benefits.
4. Technological progress generally has the effect of
a. creating permanently higher levels of unemployment.
b. freeing resources that can now go to other uses.
c. lowering the national standard of living.
d. All of the above are correct.
5. Wages in the United States are higher than those in India primarily because
a. the weather is better in the United States.
b. a larger proportion of the labor force is unionized in the United States.
c. less capital per employee is required in the United States.
d. the human and physical capital of American workers exceeds that of their Indian
6. Economic theory suggests that the standard of living of American workers would
a. the minimum wage were doubled.
b. automation were outlawed.
c. workers were forced to retire earlier.
d. technological improvements increased output per worker-hour.
7. If the minimum wage is increased and the demand for
low-skill workers is
a. the total wage payment to low-skill workers will rise.
b. the employment of low-skill workers will decline by a larger percent than the
increase in wage.
c. firms will substitute low-skill workers for high-skill workers in order to keep
their average wage bill roughly constant.
d. the training opportunities available to low-skill workers will improve.
8. The earnings of all employees in a competitive economy would be equal if
a. all individuals were homogeneous.
b. all jobs were equally attractive.
c. workers were perfectly mobile among jobs.
d. All of the above would be necessary for equality of earnings.
9. Economic theory suggests that college graduates receive higher wages than those
with only a high school education because
a. college graduates are more productive.
b. college graduates must be paid higher wages because their educational costs
c. college graduates have formed stronger unions.
d. the supply of high school graduates is small relative to the demand for their
10. Which of the following is most likely to improve the productivity of the labor
a. investment in human capital
b. an increase in the minimum wage
c. an increase in the percent of the population that is unionized
d. federal legislation mandating full employment