What roles do human capital and compensating differentials play in shaping the wage that a firm will pay a new employee?
What will be an ideal response?
When individuals increase their human capital through acquisition of new skills, they may move into different labor market segments. The wage in each labor market segment will be determined by the firm's demand for these skills and the supply of workers who have those skills. That is, wages for employees, especially new employees, are set in the labor market. When the dot-com boom busted, highly specialized people experienced plummeting wages due to a fall in the demand for computing professionals. Jobs with undesirable characteristics will command higher wages, which are called compensating differentials. The supply of new employees will be lower for these types of positions and thus the equilibrium wages will be higher.
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A draft system, whether in professional sports or the military, enables the people who are hiring to avoid paying their employees
A) a living wage. B) the true value of their labor. C) what others are willing to pay them. D) what they want to be paid.
According to the World Bank, the high-income oil-exporting nations like Libya, Saudi Arabia, Kuwait, and the United Arab Emirates:
a. are considered to be still-developing countries. b. are the major trade partners of the U.S. c. are considered as underdeveloped economies. d. have highly interdependent economies. e. are considered highly-developed countries.
Define the following terms and explain their importance to the study of economics
a. pure monopoly b. barriers to entry c. patent d. natural monopoly e. sunk costs
After the price of smartphone apps falls, Alex buys fewer flash drives but he buys a new smartphone. For Alex
A. smartphone apps and flash drives are complements, and smartphone apps and smartphones are substitutes. B. smartphone apps, flash drives, and smartphones are not all complements. C. smartphone apps, flash drives, and smartphones are all complements. D. smartphone apps and flash drives are substitutes, and smartphone apps and smartphones are complements.