1. In each of the following four questions, explain why there is a wage differential (i.e. why one person earns more than another). In each case, assume that both people are working the same job. Amy earns more than Bill because their employer has noticed that, in the past, Amy has been more skilled at the job. What is this an example of?

a.) Human capital

b.) Statistical Discrimination

c.) Compensating Differentials

d.) Taste-based Discrimination

e.) Unions

2. In the box-making industry, each box sells for .5, and the Lth worker hired produces an additional 500-L boxes. What is the equation for labor demand in this industry?

a.) w = .5(500-L)

b.) w = (500-L)/.5

c.) w = .5*500 - L

d.) w = 500 - .5L

3. Continuing from the previous question, if labor supply in the box-making industry is w = 50 + (L/2), then the equilibrium number of people who will be employed in the box industry is ________ , and the wage they will be paid is ____________.