CBE Labor Economics 3

Question 1

Human capital theory predicts that workers who invest in additional education will:

Accepted Answer

Earn higher wages reflecting increased productivity

Answer

Earn lower wages due to signaling costs

Answer

Face higher unemployment rates

Answer

Reduce labor supply in their sector

Question 2

The crowding hypothesis in labor economics argues that occupational segregation by gender causes:

Accepted Answer

Lower wages in occupations where women are concentrated due to excess supply

Answer

Higher wages for women in female-dominated occupations

Answer

Equal wages across all occupations

Answer

Higher productivity in female-dominated sectors

Question 3

Which of the following is an example of a negative externality that might justify minimum wage legislation?

Accepted Answer

Workers receiving wages below subsistence require public assistance, imposing costs on taxpayers

Answer

Higher wages reduce firm profits

Answer

Minimum wages cause unemployment among teenagers

Answer

Workers choose leisure over work at higher wages

Question 4

Structural unemployment arises primarily from:

Accepted Answer

A mismatch between workers' skills and available job requirements

Answer

Seasonal fluctuations in output

Answer

Workers voluntarily searching for better jobs

Answer

Cyclical downturns in aggregate demand

Question 5

Under a monopsony in the labor market, the equilibrium wage compared to a competitive market wage is:

Accepted Answer

Lower, because the monopsonist restricts hiring below the competitive level

Answer

Higher, because monopsonists face upward-sloping supply

Answer

Equal, because market forces still determine wages

Answer

Indeterminate without information on elasticity

Question 6

The backward-bending labor supply curve occurs when:

Accepted Answer

The income effect of a wage increase dominates the substitution effect, reducing hours worked

Answer

Wages fall below the subsistence level

Answer

Workers face a legal cap on weekly hours

Answer

Firms impose mandatory overtime

Question 7

Specific human capital, unlike general human capital, is training that:

Accepted Answer

Raises a worker's productivity only at the current employer

Answer

Raises productivity equally at all firms

Answer

Is paid for exclusively by the government

Answer

Transfers perfectly across industries