Chapter 19 - Earnings and Discrimination

Question 1

Compensating Differential

Answer 1

• Factor effecting productivity and wages

- a difference in wages that arises to offset the non-monetary characteristics of different jobs

Question 2

Human Capital

Answer 2

• Factor effecting productivity and wages

- the accumulation of investments in people, such as education and on-the-job training

Question 3

Union

Answer 3

• a worker association that bargains with employers over wages and working conditions

Question 4

Strike

Answer 4

• the organized withdrawal of labour from a firm by a union

Question 5

Efficiency Wages

Answer 5

• above equilibrium wages paid by firms in order to increase worker productivity

Question 6

Ability, Effort, and Chance

Answer 6

• Factor Effecting Productivity and Wages
• Greater ability/effort commands higher wage
• Wages effected by chance

Question 7

The Superstar Phenomenon

Answer 7

• Factor Effecting Productivity and Wages
• superstars earn more than average in their fields

Characteristics

• every customer in the market wants to enjoy the good supplied by the best producer
• the good is produced with a technology that allows the best producer to supply every customer at a low cost

Question 8

Where do Above-Equilibrium Wages Come From?

Answer 8

• Minimum Wage Laws
• Unions
• Efficiency Wages