The Fact That Wage Differentials Continue to Exist Across Different

question 65

Multiple Choice

The fact that wage differentials continue to exist across different groups of workers leads economists to believe that

• A) discrimination by customers is the most common type of economic discrimination.
• B) differences in human capital and job characteristics must be important in explaining the differences in wages.
• C) firms apparently are not profit maximizers.
• D) the market has failed to properly allocate wages to different workers.

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Definitions:

Multicollinearity

A situation in regression analysis in which predictor variables are highly correlated, making it difficult to isolate the individual effects of the predictors.

Correlation Matrix

A table showing the correlation coefficients between several variables, which can indicate the strength and direction of the relationship between pairs of variables.

Multicollinearity

A situation in regression analysis where two or more predictor variables are highly correlated, potentially undermining the statistical validity of the analysis.

High Correlation

Indicates a strong statistical relationship between two variables, implying that changes in one variable are closely related to changes in another.