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

Human capital investments like education raise worker productivity, leading to higher lifetime earnings that compensate for training costs.

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

Crowding women into a narrow set of occupations increases labor supply in those fields, depressing wages below competitive levels.

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

When employers pay wages insufficient for subsistence, workers rely on public transfers, shifting costs to taxpayers — an externality argument for minimum wages.

Question 4

Structural unemployment arises primarily from:

Accepted Answer

A mismatch between workers' skills and available job requirements

Answer

Structural unemployment reflects a persistent mismatch between the skills workers have and the skills employers need, often due to technological change.

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

A monopsonist maximizes profit by hiring where MRP = MCL, which is below the competitive quantity, resulting in a wage below competitive levels.

(CBE) Certified Business Economist Practice Test

(CBE) Certified Business Economist Practice Test

CBE Labor Economics 3