Question

Ability bias can arise when estimating compensating wage differentials associated with various job characteristics. What is ability bias in this context? a. Low-skilled workers are likely to have low wages but good job amenities. O Ь.High-skilled workers are likely to have high wages but poor job amenities O c. High-skilled workers are likely to have lower wages than unskilled workers but to have better job amenities d.High-skilled workers are likely to have higher wages than unskilled workers, but they are also likely to trade some of their higher wages for better job amenities. QUESTION 10 When workers indifference curves are drawn for wage rates versus injury risk Oa. the indifference curves slope downwards because a higher wage is required to accept a higher risk of injury. b.the indifference curves slope upwards because a higher wage is required to accept a higher risk of injury. Oc.utility increases as a worker moves to the right along an indifference curve. d.utility decreases as a worker moves to the right along an indifference curve. QUESTION 11 When we state that compensating wage differentials exist for comparable workers, we do NOT assume that O a.workers have several jobs to choose from. O b.workers maximize utility О с.workers maximize income O d.workers accurately assess the non-pecuniary benefits of jobs. QUESTION 12 If a firm reduces the risk in its workplace, then a.the firm will be able to pay higher wages b.the firm will be able to increase profits. О с.the firm will likely pay lower wages to make up for the cost of increased safety. d.the firm will see a decrease in total costs.

Answer 1

Question 9 : (d) - High skilled workers are likely to have higher wages than unskilled workers, but they are also likely to trade some of their higher wages for better job ammenties.

Question 10 : (b) - The indifference curves slope upwards because a higher wage is required to accept a higher risk of injury.

Question 11 : (a) - Workers have several jobs to choose from.

Question 12 : (c) - The firm will pay lower wages to make up for the cost of increased safety.