Lesson 4.1.6.7
4.1.6.7 Discrimination in the labour market Quiz: AQA Economics, Unit 1
20 questions
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Lesson 4.1.6.7, Discrimination in the labour market: 20 multiple choice questions for the AQA Economics (7136), Unit 1: Individuals, firms, markets and market failure, written with Revision Ninja.
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The 20 questions
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Wage discrimination occurs when:
- Workers are paid according to their marginal product, so that each person receives a wage that reflects the output they add to the firm
- All workers in an occupation are paid exactly the same wage
- Employers pay higher wages to workers with more experience
- Workers with the same productivity are paid different wages because of characteristics such as gender or ethnicity
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Conditions necessary for wage discrimination include:
- Perfect competition among employers with perfect information
- Identical preferences across all employers and all workers, so that no one holds prejudices that could affect hiring or pay decisions
- Equal pay enforced by law for all workers, which removes any scope for employers to set different wages for workers doing the same job
- Employers with some market power and the ability to act on prejudice or preferences
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Occupational segregation can contribute to a wage gap because:
- Workers from some groups are concentrated in lower-paid occupations, so average pay for those groups is lower
- Workers are paid the same across all occupations by law
- It means employers pay higher wages to all women
- Segregation raises the average wage of every group
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Which is an example of discrimination in the labour market?
- Paying a woman less than a man for identical work with equal productivity
- Paying workers with more experience a higher wage
- Paying workers less during a recession when firm revenue falls
- Paying a higher wage to workers with a degree, which reflects the qualification that the employer has decided to value in each role
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The impact of discrimination on employment may include:
- Higher employment for every group since competition is reduced
- Permanent equal distribution of jobs across all groups
- Lower employment levels or restricted access to certain jobs for the affected group
- No effect on employment since wages are the only issue
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Employers pay £10 per hour to a group of workers while equally productive workers receive £12. What is the direct cost to the discriminated workers?
- £12 per hour, the full wage of others
- £2 per hour in lost wages for equal work
- £10 per hour, since they are paid the market wage
- £22 per hour in total for both groups
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A firm's profits fall when it discriminates against qualified applicants. What does this suggest?
- Discrimination always raises profits by reducing labour costs
- Discrimination can be costly to employers because it reduces the pool of talent they can hire
- Profits are unrelated to who the firm hires, since the productivity of its staff has no effect on the output or revenue the firm earns
- Discrimination is only costly for workers, not firms, because the employer's profit depends only on sales and not on the staff it hires
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A possible disadvantage of wage discrimination for the economy is:
- Lower unemployment for every group of workers
- Lower overall productivity, because talent is not allocated to the jobs where it is most valuable
- Equal pay for all workers across the economy
- Higher productivity because workers are matched to jobs by group
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Why might competition reduce wage discrimination in the long run?
- Competition has no effect because firms do not compete for labour
- Non-discriminating rivals can hire the talent that discriminating firms overlook, which tends to erode discrimination over time
- Competition makes discrimination legal in every market
- Competition increases the wage gap as firms compete for workers
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Which statement best illustrates a gender pay gap that is not all due to discrimination?
- The whole average gap is caused by discrimination in every case
- Pay gaps are always caused by productivity differences alone, so once productivity is measured no further gap can remain in any market
- Differences in occupation choice and hours worked explain part of the average gap, so not all of it reflects discrimination
- There is no gap in average pay between men and women in any country
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Wage discrimination within an occupation differs from occupational segregation because discrimination within an occupation:
- Means workers choose lower-paid jobs freely
- Means workers in different occupations receive the same pay
- Means equally productive workers in the same job receive different pay for reasons unrelated to productivity
- Affects only employers, not workers
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Assess the claim that ending wage discrimination would have no effect on economic efficiency.
- It would reduce efficiency, since pay discrimination lowers costs for all firms
- It would likely improve efficiency by letting talent be used where its productivity is highest, though the scale of the gain varies
- It has no effect because productivity is unrelated to pay
- It only affects consumers, not firms or workers
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Ethnic discrimination in hiring means equally qualified applicants receive fewer interviews. This mainly affects:
- Only the wages of employers who hire them
- The national minimum wage directly
- Nothing, since interviews are unrelated to employment, and the number of people invited to interview has no bearing on who gets a job
- Employment opportunities for the group, as they are less likely to be hired
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Which of these is a non-productivity factor that might cause wage differences?
- The worker's years of relevant experience
- The worker's qualification relevant to the job
- The gender or ethnicity of the worker, where this is unrelated to productivity
- The worker's measurable output per hour
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Under marginal productivity theory in a competitive market, paying identical workers different wages would be expected to:
- Increase the wage gap, as the lower-paid group becomes more productive over time and so the pay gap grows
- Have no effect on hiring decisions in any case, since employers pay little attention to the wages of the groups they hire in the market
- Shift hiring towards the lower-paid group and gradually reduce the wage gap, unless market power or preferences sustain it
- Raise the lower-paid group's wage above the other group's immediately, because firms rush to hire workers who are cheaper to employ
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Which evaluation best addresses the impact of wage discrimination on the economy as a whole?
- It always increases total output because it reduces wage costs
- It reduces efficiency and can lower total output and tax revenue, though its scale varies across sectors and countries
- It has no effect on tax revenue since wages are unrelated to incomes
- It only harms employers, not the wider economy
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Occupational segregation refers to:
- Government-set pay scales for each occupation
- The concentration of particular groups of workers in particular occupations
- The movement of workers between regions
- An equal distribution of workers across all occupations
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Which real-world evidence would support the existence of wage discrimination?
- Reports that employers never hire from minority groups
- Data showing all workers in an occupation earn identical pay
- Statistics showing productivity is unrelated to pay in every case
- Studies showing equally qualified applicants receive different pay offers based on gender or ethnicity
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Why might wage discrimination persist in a market with imperfect information?
- Imperfect information always eliminates wage discrimination, because once employers know the true productivity of their workers
- Employers and workers may not know true productivity, so prejudice or stereotypes can shape pay decisions
- Discrimination persists only under perfect competition
- Information is perfect in all labour markets with discrimination
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A firm's employment policy reduces the number of women in senior roles. What is the most likely economic consequence?
- A permanent fall in senior pay for all staff
- A larger talent pool that raises productivity
- No consequence, since senior roles are unaffected by gender, so the firm's performance is the same whatever its promotion policy
- A smaller pool of talent in senior roles, which may reduce productivity and firm performance
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