True or False (Provide a Brief Explanation)

1. Market Competition implies that a single buyer or a single seller controls the market price.

2. One way to check if a market is competitive is to look for a variety of products being bought and sold.

3. Neoclassical predictions in economics is a result of two canonical assumptions of opportunity cost and no free lunch.

4. If the firm hires to a point where the marginal expense of labor is greater than the marginal revenue product of labor, then profits could be increased by increasing employment.

5. Wage discrimination is paying one group less than another, although they have the same productive characteristics.

Multiple Choice

1. A Theory of behavior in which people are typically assumed to respond favorably to benefits and negatively to cost is______.
A) Labor Economics
B) Positive Economics
C) Bounded Rationality Economic Theory
D) Normative Economics

2. In the employer model of discrimination where employers differ in how much they devalue the productivity of women, which of the following will lower the relative wage of women?
A) The fraction of females in the workforce increases and, as a result, employers hire a larger fraction of females.
B) Employers become more driven to maximize profits.
C) Special training raises the productivity of women.
D) More nondiscriminating employers enter the market, lowering the profits made from hiring women.

3. Which of the following is not associated with Opportunity cost
A) Cost of next most valued alternative
B) Diverge across individuals
C) Forces people to value what is foregone when a choice is made
D) The same for all rational individuals

4. Statistical Discrimination
A) associates a cost for a particular cost resulting in lower employment and wages for disadvantage group
B) use average characteristics of a group to make employment and wage decisions
C) is labor market segregation that forces two identical markets out of equilibrium
D) is a result implicit regulation that places quotas on the number of workers from the disadvantaged group in particular labor markets

5. Which is not an exceptions for government intervention in a laissez-faire economy
A) Imperfect Competition
B) Externalities
C) Equity
D) Public Goods

6. If a single small firm's demand for secretaries increases, then
A) its wage rate will increase and its employment level will remain the same.
B) its wage rate will increase and its employment level will increase.
C) its wage rate will remain the same and its employment level will increase.
D) both its wage rate and its employment level will remain the same.

7. Employer discrimination implies that
A) some employers give up profits to avoid hiring one group.
B) if the group discriminated against is small, there will be a wage differential in the market.
C) there will be no market wage differential.
D) co-workers and customers prefer one group of workers over another.

8. Between 1990 and 2010, which group did NOT experience growth in their share of the civilian labor force?
A) women
B) whites
C) Hispanics
D) Asians

9. A study finds that handsome people make more than ugly people in occupations where workers interact with customers. This supports which of these models of discrimination?
A) employer discrimination
B) customer discrimination
C) employee discrimination
D) statistical discrimination

10. Which is not an explanation of inequality of wages according to the Neoclassical viewpoint.
A) Myopic individuals acquire less human capital and therefore have higher wages.

B) Women receive less on the job training due to home production and as a result earn lower earnings relative to men.

C) Social environment for Black males increase the psychic cost of college which is reflected by lower college enrollment and lower wages compared to White males.

D) Men have a desire to work in dangerous jobs and are compensated with higher wages.

Short Answer Questions

1. What does the employment-to-population ratio measure? What has happened to the employment-to-population ratio of Black males over time? Of White males over time? How can this explain the difference in economic outcomes?

2. Suppose that the supply curve for school teachers is L_s = 20,000 + 350W and the demand curve for school teachers is L_d = 100,000 - 150W, where L = the number of teachers and W = the daily wage.

a. Plot the demand and supply curves.
b. What are the equilibrium wage and employment level in this market?
c. Now suppose that at any given wage 20,000 more workers are willing to work as school teachers. Plot the new supply curve and find the new wage and employment level. Why doesn't employment grow by 20,000?

3. In the 1920s South Africa passed laws that effectively prohibited black Africans from working in jobs that required high degrees of skill; skilled jobs were reserved for whites. Analyze the consequences of this law for black and white South African workers.

4. Suppose that MRPL = 20 - 0.5L for left-handed workers, where L = the number of left- handed workers and MRPL is measured in dollars per hour. The going wage for left- handed workers is $10 per hour, but employer A discriminates against these workers and has a discrimination coefficient, D, of $2 per hour.

a. How many left-handed workers does employer A hires? (Show Work)
b. Graph the MRPL curve and show how many left-handed workers employer A hires.
c. If price is $4 and Q = 5L - 1/16L², How much profit does this firm earns?

d. How many left-handed workers does employer A hire if it is nondiscriminatory?

5. Some economist believes cultural differences explain the different economic experiences of various race ethnic groups. If this is true, what effects would you expect from anti- discrimination policies such as affirmative action?