Question 26)The regular earnings profile of an individual throughout his or her lifetime is A) the Lorenz curve.

26)The regular earnings profile of an individual throughout his or her lifetime is A) the Lorenz curve.

B) the age-earnings cycle. C) wealth.

D) income-in-kind.

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27)Which of the following statements are correct about the age-earnings cycle? A) Earnings generally increase up till age 30 and then steadily decrease.

B) Earnings increase throughout a prison’s lifetime until they reach retirement.

C) Earnings increase with age because workers become more productive as they age until around 50 years. Around 50 the effects of aging outweighs the further increases in productivity.

D) Since every person is different we can reach no general conclusions about the age-earnings cycle.

28) The earnings of most people

A)increase steadily until retirement.

B)increase with age until around age 50 due to increased experience, training, and hours worked.

C)increase with age until around age 40 due to increased experience and hours worked.

D)increase with age until around age 60 due to increased experience, training, and hours worked, then level off as hours worked levels off.

29)Suppose all people have the same age-earnings profile and the percent of the population in each age category is the same. The distribution of income at any point in time will be

A) equal because all have the same profile.

B) equal because incomes and wealth levels must then be the same. C) unequal because other sources of income will differ.

D) unequal because incomes differ by age.

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30)One reason earnings tend to fall before retirement age is that

A)the experience of people is no longer valuable after they are 50 or 55.

B)people tend to reduce the number of hours they work after age 50.

C)people are retiring earlier.

D)firms discriminate against older workers.

Answer: B

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31)Refer to the above figure. Which of the graphs are consistent with the age-earnings profile? A) Panel A

B) Panel B C) Panel C D) Panel D

32)In a competitive economy, workers will be paid according to their

A)status.

B)age.

C)marginal productivity.

D)need.

33)Which of the following is not a determinant of an individual’s marginal product? A) talent

B) money income C) experience

D) educational level

34)Which of the following sources of productivity is the most difficult to acquire? A) education

B) experience C) talent

D) training

35)The return on human capital

A)tends to be much greater than the return on physical capital.

B)tends to be much lower than the return on physical capital.

C)is similar to the return on physical capital.

D)cannot be related to the return on physical capital since human capital and physical capital are so different.

36) The main cost of a college education is

A)tuition if one goes to a private college and room and board if one goes to a public college.

B)dependent upon whether one’s parents pay for the college or not.

C)the lack of practical experience from spending time in college.

D)the opportunity cost of not working.

37) When measuring the benefits from investing in human capital

A)the only benefits come from the increase in salary because of going to school.

B)in addition to the monetary benefits, the benefit from expanding horizons should be included.

C)we must include the costs of tuition and books but not the money made from part-time jobs.

D)we must include the foregone earnings in the benefit calculation.

38)Inheritance is responsible for about ________ percent of the income inequality in the United States.

A) 10 B) 25 C) 40 D) 60

39)Economic discrimination exists when

A)there is an unequal distribution of income in a country.

B)both income and wealth are unequally distributed in a country.

C)there is unequal access to education.

D)workers with the same marginal revenue products are paid different wages.

40) Economic discrimination against minorities exists when

A)minorities have less education and training than whites.

B)minorities are paid less than whites on average.

C)minorities are paid less than whites with the same education, experience, and training.

D)minorities are in different occupations than whites.

41)Unequal pay that is caused by economic discrimination will be due to A) a noneconomic factor.

B) differences in the marginal revenue product. C) a monopolistic labor market.

D) difference in human capital.

42)Which of the following is a reason for economic discrimination to occur? A) differences in access to education

B) differences in gender

C) differences in the quality of education

D) barriers to entry in higher-paying occupations

43)The age-earnings profile for most people indicates

A)earnings rise continually until a person retires.

B)earnings initially decline and then rise continually until retirement.

C)that when you adjust for inflation, earnings are constant throughout the entire workplace experience.

D)earnings rise until the age of about 50 and then begin to fall until retirement.

44) Which of the following is NOT considered a determinant of income differences?

A)productivity

B)age

C)discrimination

D)equity or fairness

45)Which of the following does NOT contribute to the marginal productivity of workers? A) discrimination

B) talent

C) experience D) education

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