Question

If, as some economists believe, changes in technology over recent decades have brought about changes in labor markets, then those changes likely have resulted in

a.a reduced emphasis on human-capital differences among workers as an explanation for wage differences.

b.reduced emphasis on compensating differentials as an explanation for wage differences

c.a widening of the earnings gap between high-skilled workers and low-skilled workers

d.a narrowing of the earnings gap between high-skilled workers and low-skilled workers.

Normative statements are

a.descriptive, whereas positive statements are prescriptive.

b.forward-looking, whereas positive statements are backward-looking.

c.prescriptive, whereas positive statements are descriptive.

d.backward-looking, whereas positive statements are forward-looking.

When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor, it is

a.guaranteeing that labor costs do not exceed fixed costs.

b.minimizing labor costs.

c.maximizing profit.

d.maximizing the number of workers it can hire and still experience a positive profit

Answer 1

1). c."a widening of the earnings gap between high-skilled workers and low-skilled workers"

The labor market is where people and employers come together to bargain for labor and wages or other forms of compensation. The number of people willing to work is based upon the level of pay that employers are offering. The wage level reaches an equilibrium at the point where the supply of labor equals the demand for labor.

2). c."prescriptive, whereas positive statements are descriptive."

A value judgment is a subjective statement of opinion rather than a fact that can be tested by looking at the available evidence

3). c."maximizing profit."

The marginal revenue productivity theory states that a profit-maximizing firm will hire workers up to the point where the marginal revenue product is equal to the wage rate. The change in output from hiring one more employee is not limited to that directly attributable to the additional worker.