ECON 301 FINAL QUESTIONS WITH VERIFIED
ANSWERS
List and describe three reasons that may explain why women are paid less than men -
Answers - Women choose different occupations from men. And there are large and
persistent differences in the earnings of different occupations. Around the world,
occupations like teachers' pay less than occupations like engineers. Women around the
world are also more likely than men to work part-time. According to the ILO, women
account for about 57% of global part-time work, and the earnings gap between
comparable full-time and part-time work is in the order of 10%. There's evidence of a
wage penalty for motherhood: all else being equal, there is a negative relationship
between a woman's wage and the number of children she has.
A recent British study showed that married men earned more than unmarried men, but
only if their wives did not have full time jobs. What is a possible explanation for this?
Explain - Answers - If a man's wife does not have full-time paid employment, she is the
primary caretaker for the child because the opportunity cost of any other activity would
be high. As such, he would take little, if any, time off in order to care for the child and/or
home, leaving him more time to work, thus, netting him more money. if his wife did have
full-time employment, both of their opportunity costs would be high, so they would share
in more of the childcare responsibilities, work less, and make less money
Using a Supply and Demand diagram, explain the policy of having a minimum wage set
above the equilibrium for a certain group of workers. What type of price control is this?
What happens in the market for labor as a result? - Answers - If a minimum wage is
implemented that is above the market equilibrium, some of the individuals who were not
willing to work at the original market equilibrium wage are now willing to work at the
higher wage, i.e., there is an increase in the quantity of labor supplied. Businesses must
now pay their workers more and consequently reduce the quantity of labor demanded
What is a benefit of raising the minimum wage? Why might a raise be justified? -
Answers - A raise in the minimum wage predominantly benefits low-wage workers,
precisely those most likely to put additional income directly back into the economy, kick
starting a virtuous cycle of greater demand for goods and services, job growth, and
increased productivity
One concern about minimum wage increases is that it will raise costs for firms to hire
workers. A second argument is that people will have higher incomes and spend more.
Use a supply and demand diagram to explain one of these outcomes. (Which curve
shifts and why?) How does this potentially cancel out the wage increase received by
workers? - Answers - Generous welfare benefits do nothing to vitiate the truism that the
minimum wage simultaneously raises the incentive to work and cuts the incentive to
hire. And as usual, a deal only happens if both demanders and suppliers consent. The
, market therefore goes to the intersection of quantity demanded and the new minimum
wage, with unemployment shown in red.
If we want to raise the wages of lower income workers, is there a way to do so without
setting the price above equilibrium? (Is there a policy that can allow the labor market to
trade at equilibrium and still achieve a higher minimum?) - Answers - The government
can set a price floor. When the government imposes a minimum wage, the real wage is
determined by the minimum wage divided by the price level, not by the interaction
between labor supply and demand. If there is inflation and a fixed nominal minimum
wage, then the level of employment will increase and the real minimum wage will
decrease
What are three reasons that are contributing factors leading to an increase in obesity in
society? - Answers - Genetics, environment, . Children born after 2001 have a 1/3
chance of developing diabetes. Socioeconomic status plays a big part, the poorer you
are the more likely you are overweight
The video on "The Weight of the Nation" refers to "food deserts". What are food
deserts? - Answers - Geographic areas where fresh, healthy food is impossible to come
by, regardless of how much money you have.
Do people choose unhealthy food because they do not know it is unhealthy? What are
two reasons people choose unhealthy foods? Explain - Answers - Most people know it
is unhealthy, but they choose it because it is cheap, filling, and tastes good. The
affordability of junk food is much higher than healthy foods
In the video, doctor states, "more people benefit when everyone is healthy". What
economic concept does this illustrate? - Answers - Shows the prevalence of
externalities, the positive externality of everyone being healthy leads to cheaper taxes
paid on healthcare
What are two policies being used to help improve food choices in lower income
neighborhoods? - Answers - Making sure supermarkets are available for communities,
and giving permits for street vendors selling healthy foods
What are three markets where cartels have limited competition? Has competition
increased or decreased in these markets over time? - Answers - Spot markets,
oligopolistic competition, and trade/industry associations. In the U.S. cartels are illegal,
but OPEC in the Middle East is thriving. Japanese television cartels are also doing very
well.
1. What are two problems faced by cartels? - Answers - How much each producer will
restrain its output. Individual members could increase its revenue and profits by
charging slightly lower prices.
ANSWERS
List and describe three reasons that may explain why women are paid less than men -
Answers - Women choose different occupations from men. And there are large and
persistent differences in the earnings of different occupations. Around the world,
occupations like teachers' pay less than occupations like engineers. Women around the
world are also more likely than men to work part-time. According to the ILO, women
account for about 57% of global part-time work, and the earnings gap between
comparable full-time and part-time work is in the order of 10%. There's evidence of a
wage penalty for motherhood: all else being equal, there is a negative relationship
between a woman's wage and the number of children she has.
A recent British study showed that married men earned more than unmarried men, but
only if their wives did not have full time jobs. What is a possible explanation for this?
Explain - Answers - If a man's wife does not have full-time paid employment, she is the
primary caretaker for the child because the opportunity cost of any other activity would
be high. As such, he would take little, if any, time off in order to care for the child and/or
home, leaving him more time to work, thus, netting him more money. if his wife did have
full-time employment, both of their opportunity costs would be high, so they would share
in more of the childcare responsibilities, work less, and make less money
Using a Supply and Demand diagram, explain the policy of having a minimum wage set
above the equilibrium for a certain group of workers. What type of price control is this?
What happens in the market for labor as a result? - Answers - If a minimum wage is
implemented that is above the market equilibrium, some of the individuals who were not
willing to work at the original market equilibrium wage are now willing to work at the
higher wage, i.e., there is an increase in the quantity of labor supplied. Businesses must
now pay their workers more and consequently reduce the quantity of labor demanded
What is a benefit of raising the minimum wage? Why might a raise be justified? -
Answers - A raise in the minimum wage predominantly benefits low-wage workers,
precisely those most likely to put additional income directly back into the economy, kick
starting a virtuous cycle of greater demand for goods and services, job growth, and
increased productivity
One concern about minimum wage increases is that it will raise costs for firms to hire
workers. A second argument is that people will have higher incomes and spend more.
Use a supply and demand diagram to explain one of these outcomes. (Which curve
shifts and why?) How does this potentially cancel out the wage increase received by
workers? - Answers - Generous welfare benefits do nothing to vitiate the truism that the
minimum wage simultaneously raises the incentive to work and cuts the incentive to
hire. And as usual, a deal only happens if both demanders and suppliers consent. The
, market therefore goes to the intersection of quantity demanded and the new minimum
wage, with unemployment shown in red.
If we want to raise the wages of lower income workers, is there a way to do so without
setting the price above equilibrium? (Is there a policy that can allow the labor market to
trade at equilibrium and still achieve a higher minimum?) - Answers - The government
can set a price floor. When the government imposes a minimum wage, the real wage is
determined by the minimum wage divided by the price level, not by the interaction
between labor supply and demand. If there is inflation and a fixed nominal minimum
wage, then the level of employment will increase and the real minimum wage will
decrease
What are three reasons that are contributing factors leading to an increase in obesity in
society? - Answers - Genetics, environment, . Children born after 2001 have a 1/3
chance of developing diabetes. Socioeconomic status plays a big part, the poorer you
are the more likely you are overweight
The video on "The Weight of the Nation" refers to "food deserts". What are food
deserts? - Answers - Geographic areas where fresh, healthy food is impossible to come
by, regardless of how much money you have.
Do people choose unhealthy food because they do not know it is unhealthy? What are
two reasons people choose unhealthy foods? Explain - Answers - Most people know it
is unhealthy, but they choose it because it is cheap, filling, and tastes good. The
affordability of junk food is much higher than healthy foods
In the video, doctor states, "more people benefit when everyone is healthy". What
economic concept does this illustrate? - Answers - Shows the prevalence of
externalities, the positive externality of everyone being healthy leads to cheaper taxes
paid on healthcare
What are two policies being used to help improve food choices in lower income
neighborhoods? - Answers - Making sure supermarkets are available for communities,
and giving permits for street vendors selling healthy foods
What are three markets where cartels have limited competition? Has competition
increased or decreased in these markets over time? - Answers - Spot markets,
oligopolistic competition, and trade/industry associations. In the U.S. cartels are illegal,
but OPEC in the Middle East is thriving. Japanese television cartels are also doing very
well.
1. What are two problems faced by cartels? - Answers - How much each producer will
restrain its output. Individual members could increase its revenue and profits by
charging slightly lower prices.
