1. Statistical discrimination is sometimes used by firms even though it is illeg
ID: 1091372 • Letter: 1
Question
1. Statistical discrimination is sometimes used by firms even though it is illegal because
A. It always results in the choice of the best workers for each job
B. Statisticians often use discriminant analysis
C. It reduces hiring and training costs, leading to higher profits.
2. An increase in the mandated overtime premium is expected to cause the number of workers employed to
A. Rise as long as the substitution effect outweighs the scale effect
B. Rise as long as the scale effect outweighs the substitution effect
C. Remain unchanged
D. Fall
3. The substitution effect associated with an increase in the wage is expected to cause the quantity of labor demanded by a typical firm to
A. Increase
B. Decrease
C. Remain constant
D. Change in a manner that cannot be predicted without additional information
4. The scale effect associated with a decrease in the wage is expected to cause the quantity of labor demanded by a typical firm to
A. Increase
B. Decrease
C. Remain constant
D. Change in an unpredictable manner
5. As the wage rate rises
A. The substitution effect reduces the quantity of labor demanded
B. The scale effect reduces the quantity of labor demanded
C. Both are correct
D. Neither is correct
6. Which of the following does not correctly characterize the general trends in the labor force participation rates over the past 50 years?
A. The labor force participation rate has declined for married woman
B. The labor force participation rate has declined for males between the ages of 18-21
C. The labor force participation rate has declined for males age 65+
7. Supposed that a union is able to successfully organize a boycott of products by workers in foreign sweatshops.Will this affect the own-wage elasticity of labor demand for union workers? If so, how? which Hicks-Marshall law applies? Does the boycott affect the substitution effect of the scale effect? Explain.
8. Explain how the introduction of a union will affect total employment under each of the following conditions: a perfectly competitive labor market with all firms becoming unionized, a perfectly competitive labor market with some but not all firms becoming unionized, and a monopsony market.
9. Explain the relationship between the wage rate and the marginal factor cost in a monopsony market. Is the wage rate equal to the marginal factor cost? If so, explain why this is the case. If not, explain why not.
10. Explain the reasons for the increase in female labor force participation rates since the 1940s.
Explanation / Answer
1. Statistical discrimination is sometimes used by firms even though it is illegal because
C. It reduces hiring and training costs, leading to higher profits.
2. An increase in the mandated overtime premium is expected to cause the number of workers employed to
C. Remain unchanged
3. The substitution effect associated with an increase in the wage is expected to cause the quantity of labor demanded by a typical firm to
D. Change in a manner that cannot be predicted without additional information
4. The scale effect associated with a decrease in the wage is expected to cause the quantity of labor demanded by a typical firm to
A. Increase
5. As the wage rate rises
A. The substitution effect reduces the quantity of labor demanded
6. Which of the following does not correctly characterize the general trends in the labor force participation rates over the past 50 years?
C. The labor force participation rate has declined for males age 65+
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