Social Policy Analysis
Question Bank
Course Introduction
Social Policy Analysis is a course that explores the frameworks, tools, and methodologies used to assess, design, and evaluate social policies in various contexts. Students will examine the development and implementation of policies addressing issues such as healthcare, poverty, education, and welfare, with attention to the roles of government, non-profits, and the private sector. The course emphasizes critical thinking about policy effectiveness, equity, and ethical considerations, and equips students with analytical skills to interpret policy impacts and propose evidence-based recommendations for improvement.
Recommended Textbook
Modern Labor Economics Theory and Public Policy 11th Edition by Ronald G. Ehrenberg
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16 Chapters
594 Verified Questions
594 Flashcards
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Page 2
Chapter 1: Introduction
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Sample Questions
Q1) Which of these is an example of the FAILURE of the market to achieve economic efficiency?
A) Firms and employees successfully achieving all mutually beneficial transactions.
B) Alpha Industries is willing to pay $55,000 per year to hire a computer programmer. Dean, a qualified computer programmer, would gladly give up his job as a waiter for a computer programming job paying at least $45,000, but is unaware of Alpha's opening.
C) Laura refuses to quit smoking even though Marlene offers her $1 per hour to stop.
D) Ace Engineering is willing to pay Diane $11 per hour, but Diane is willing to work for $10 per hour, so Ace hires her for only $10 per hour.
Answer: B
Q2) If all parties gain from a transaction,
A) the government must mandate that transaction.
B) the transaction must be a Pareto improvement.
C) the transaction will not be voluntary for some parties.
D) the transaction will be redistributional.
Answer: B
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Chapter 2: Overview of the Labor Market
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Sample Questions
Q1) It has been said that teaching assistants to professors are underpaid. Which of the following would be evidence (if true) that they are underpaid?
A) There is a surplus of teaching assistants.
B) Teaching assistants are paid far less than professors, even though they are doing similar work.
C) Teaching assistants are made to work more than other workers in their job.
D) Professors have a hard time finding qualified teaching assistants.
Answer: D
Q2) When the price of capital increases, the quantity of ________ demanded will ________, but the effect on ________ is ambiguous.
A) labor; increase; capital
B) labor; decrease; capital
C) capital; increase; labor
D) capital; decrease; labor
Answer: D
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4
Chapter 3: The Demand for Labor
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Sample Questions
Q1) Studies show that most of a payroll tax is paid by workers in the form of lowered wages. If true, these studies imply
A) the supply of labor curve is very steep.
B) the supply of labor curve is very flat.
C) it would be better if employers were made to pay all of the tax.
D) the demand for labor curve is very steep.
Answer: A
Q2) The marginal product of labor tells us
A) which employee is the most productive.
B) the average output produced by each employee.
C) the additional output produced by the last employee hired.
D) how much money the firm can make from hiring each employee.
Answer: C
Q3) If a tax is placed on an employer
A) workers will not have to pay the tax.
B) both wages and employment levels will usually decrease.
C) customers will not have to pay the tax.
D) wages will decrease but employment levels will increase.
Answer: B
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Page 5
Chapter 4: Labor Demand Elasticities
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Sample Questions
Q1) In a simple economy, there are 100 workers. 50 workers produce clothing: one worker produces one unit of clothing. The other 50 workers produce food: one worker produces one unit of food. By trading goods, each person consumes 0.5 unit of clothing and 0.5 unit of food. A technological improvement enables one worker to produce two units of clothing. The results are that 40 workers will be producing 80 units of clothing and 60 workers will be producing food and that each person consumes 0.8 units of clothing and 0.6 units of food. Which of the following is true?
A) Workers in the sewing industry are worse off.
B) Workers in the clothing industry are worse off.
C) The increase in the productivity of clothing workers shifted the demand for clothing workers rightward.
D) The increase in the productivity of clothing workers had a net negative effect on the demand for clothing workers.
Q2) An increase in the minimum wage will decrease employment more when A) the supply of labor is more elastic.
B) the uncovered sector is small.
C) the demand for labor is inelastic.
D) all of the above will cause the minimum wage to decrease employment more.
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Chapter 5: Frictions in the Labor Market
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Sample Questions
Q1) Members of certain groups have the right to sue employers if discriminated against. Other things the same, then according to the model of quasi-fixed costs, this right will tend to
A) reduce their wage.
B) reduce their employment.
C) increase their turnover rate.
D) reduce their unemployment rate.
Q2) Most colleges pay teachers different salaries in different fields. For example, they usually pay science teachers more than English teachers. Public schools pay teachers in different fields the same. As a result, in public schools, if they want to get getter science teachers, they have to raise everyone's wage. Which of the following is a consequence of paying teachers different salaries, as they do in colleges?
A) It raises the cost of hiring a higher quality of teachers.
B) It reduces the cost of getting good teachers in the areas that are in high demand.
C) It results in relatively fewer good teachers being hired in areas of high demand.
D) It results most teachers getting similar pay.
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Chapter 6: Supply of Labor to the Economy: the Decision to Work
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Sample Questions
Q1) A person who receives time-and-a-half overtime for working more than 8 hours per day will have a ________ which is ________ beyond 8 hours of labor.
A) budget constraint; flatter
B) indifference curve; flatter
C) budget constraint; steeper
D) indifference curve; steeper
Q2) If a worker's desired hours of labor do not change after a decrease in his wage rate, then
A) his income effect dominates his substitution effect.
B) his substitution effect dominates his income effect.
C) his income and substitution effects are of equal magnitude.
D) his income and substitution effects are small in absolute value.
Q3) A subsidy to pay for a portion of childcare costs will cause women who are participating in the labor force to work ________ hours.
A) more
B) fewer
C) the same number of D) at least as many
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Chapter
Life Cycle
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Sample Questions
Q1) John, a bachelor, after reading a book on home making, suddenly becomes twice as productive in doing household chores. This will likely make his indifference curves (between income on the vertical axis and household time on the horizontal axis) become
A) flatter.
B) steeper.
C) more bowed in.
D) less bowed in.
Q2) The monetary value of a homemaker's time can NOT be estimated by A) measuring the services in terms of current market prices.
B) comparing the value of the services to the spouse's wage rate.
C) measuring the value of the services by looking at the homemaker's opportunity costs.
D) measuring the marginal value of the services by the homemaker's wage rate received in a part-time job.
Q3) If someone enjoys household production (such as raising children) this A) would be shown by a shift in his budget constraint.
B) will make his household production isoquant curves flatter than otherwise.
C) is the same as being more productive in household production.
D) will make his household production isoquant curves steeper than otherwise.
Page 9
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Chapter 8: Compensating Wage Differentials and Labor
Markets
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Sample Questions
Q1) Workers' indifference curves for wage rates versus benefits will be
A) downward sloping.
B) upward sloping.
C) downward sloping and concave.
D) upward sloping and convex.
Q2) There are 100 jobs in a town and 100 workers. Forty of the jobs are dangerous, 60 are safe. Workers have the following preferences: worker one dislikes danger by $1, worker two dislikes danger by $2, worker three dislikes danger by $3, and so forth (such that worker hundred dislikes danger by $100). Assume workers are mobile and well-informed and the labor market is mobile. Also assume that safe jobs pay $500 a week. Which of the following statements will be true?
A) Dangerous jobs will pay $540 a week.
B) Worker one will earn rents of $39.
C) Worker hundred will earn rents of $60.
D) All of the above are true.
Q3) Along an isoprofit curve
A) the difference between total costs and total revenues is constant.
B) the firm's level of safety is constant.
C) the firm's level of wages is constant.
D) the firm's safety costs are constant.
Page 10
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Chapter 9: Investments in Human Capital: Education and Training
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Sample Questions
Q1) John is trying to decide whether to go to college or to start working right out of high school. College as an investment is most likely justified when ________ is greater than the cost of going to college.
A) the present value of the difference between what John would earn as a college graduate and what he would earn as a high school graduate
B) the present value of what John would earn as a college graduate
C) the sum of lifetime earnings as a college graduate
D) the difference between the sum of lifetime earnings as a college graduate and the sum of lifetime earnings as a high school graduate.
Q2) Fewer women leaving the labor market to raise children has given women the incentive to acquire ________ on-the-job training early in their careers, yielding age-earnings profiles which are ________ than they were about twenty years ago.
A) more; steeper
B) more; flatter
C) less; steeper
D) less; flatter
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11
Chapter 10: Worker Mobility: Migration, Immigration, and Turnover
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Sample Questions
Q1) One model of moving assumes that a family will move when the present value of the wage gains summed over the two spouses exceeds the full cost of moving. Which of the following observations (if true) would give the most support to this model?
A) The higher the observed wage gain of one spouse, the lower is the likely wage gain of the other spouse.
B) The higher the observed wage gain of one spouse, the higher is the likely wage gain of the other spouse.
C) The wage gain of one spouse is not related to the wage gain of the other spouse.
D) A married person and a single person are as equally likely to move when they have the same wage gain from moving.
Q2) If skilled and unskilled labor are gross substitutes and if an influx of unskilled immigrants drives down the wages paid to unskilled workers, it will also
A) increase the wage of skilled workers.
B) decrease the wage of skilled workers.
C) either increase or decrease the wage of skilled workers.
D) cause no change in the wage of skilled workers.
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Page 12
Chapter 11: Pay and Productivity: Wage Determination
Within the Firm
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Sample Questions
Q1) The best way to align the interest of corporate executives and company owners is probably to pay executives
A) based on annual profit.
B) a fixed salary.
C) based on the stock market value of the company.
D) based on sales of the firm.
Q2) Which of the following would NOT (even if true) explain why wages rise with job tenure?
A) Workers become more productive the longer they are with the firm.
B) Over time, the firm is able to dismiss less productive workers.
C) Workers acquire more specific human capital the longer they are with the firm.
D) Starting with a lower wage and then letting wages rise with job tenure reduces the present value of wages paid to a worker by an employer.
Q3) Free rider problems tend to be largest when
A) workers are paid by a piece-rate system.
B) workers are paid by group incentives.
C) workers are paid on commission.
D) firms are very small.
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Chapter 12: Gender, Race, and Ethnicity in the Labor Market
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Sample Questions
Q1) The Equal Pay Act of 1963
A) outlawed sexual discrimination in firing of workers.
B) outlawed sexual discrimination in hiring of workers.
C) outlawed separate pay scales for men and women who perform the same jobs.
D) outlawed racial discrimination in hiring of workers.
Q2) In the employer model of discrimination where employers differ in how much they devalue the productivity of women (in the d), which of the following will lower the relative wage of women?
A) The fraction of females in the workforce increases and, as a result, employers hire a larger fraction of females.
B) Employers become more driven to maximize profits.
C) Special training raises the productivity of women.
D) More nondiscriminating employers enter the market, lowering the profits made from hiring women.
Q3) Comparable worth analysis in Minnesota found that
A) measured worth of most jobs was completely unrelated to pay.
B) a regression of measured worth versus pay yielded a horizontal line.
C) jobs with higher measured worth received higher pay.
D) jobs with higher measured worth received lower pay.
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Page 14
Chapter 13: Unions and the Labor Market
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Sample Questions
Q1) Any point on the contract curve will
A) make the union better off than they would be in monopoly union negotiations.
B) make the firm better off than they would be in monopoly union negotiations.
C) make both the union and the firm at least as well off as they would be in monopoly union negotiations.
D) make both parties worse off than they would be in monopoly union negotiations.
Q2) Suppose all textile workers in the United States formed a union. Which of the following will make it more likely the union will ask for a larger wage increase (assuming the union cares about both higher wages and retaining jobs)?
A) Labor costs represent a large share of textile production costs.
B) Textile firms will not invest in capital substituting for labor in producing textiles because textiles is a declining industry.
C) Labor is a good substitute for capital.
D) Textile buyers consider U.S. textiles a good substitute for non-U.S. made textiles.
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Chapter 14: Unemployment
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Sample Questions
Q1) A nation has full employment when A) wages and prices are stable.
B) unemployment is at its lowest level.
C) unemployment rates are the same across all demographic groups.
D) workers are earning a living wage.
Q2) A worker who has quit one job to have time to search for a similar position is counted as what type of unemployment?
A) frictional
B) occupational
C) regional
D) cyclical
Q3) Suppose that no one enters or leaves the labor force and that the fraction of the unemployed getting a job (in a given period) is 0.10 and the fraction of the employment becoming unemployed is 0.02. What is the approximate unemployment rate when the flows into and out of unemployed are in balance?
A) 9%
B) 10%
C) 17%
D) 22%
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Page 16
Chapter 15: Inequality in Earnings
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Q1) Which of the following best describes the statement "Earnings at the 80th percentile were $20,000"?
A) 80% were earning $20,000 or less
B) 80% were earning $20,000 or more
C) The average earnings of those in the top 80% was $20,000
D) The average earnings of those in the bottom 80% was $20,000
Q2) A decrease in the price of capital will cause the demand for unskilled labor to shift to the left if capital and unskilled labor are
A) gross complements.
B) gross substitutes.
C) gross complements or gross substitutes.
D) complements in production.
Q3) If the fraction of the people in the middle of the income distribution decreases by 20 percent with half of these moving to the lower end and the other half to the upper end, then income inequality will
A) increase.
B) decrease.
C) be unaffected.
D) uncertain.
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Page 17
Chapter 16: The Labor Market Effects of International Trade and
Production Sharing
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Q1) Which of the following is the least Pareto optimal tool for offsetting the job displacement caused by international trade?
A) Place a tariff on imported goods to reduce the job loss.
B) Compensated displaced workers for their losses.
C) Provide cost-effective retraining to workers.
D) Give bonuses to employers hiring the displaced workers.
Q2) With differing comparative advantages, nations who trade (compared to when they did not trade)
A) get more of the good that they have the comparative advantage in but less of other goods.
B) get less of all goods, but are better off because they can get the mix of goods they want.
C) will only be better off if they export more than they import.
D) can get more of all goods.
Q3) Wage convergence is an example of
A) the law of one price.
B) the compression of wage rates across skill levels within a firm.
C) the propensity of wages to converge to marginal productivities.
D) all of the above
Page 18
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