Question 1

Which of the following examples best describes the signaling theory of education?
A)The hiring manager offers a job to a recent college graduate because she is more beautiful than the rest of the applicants.
B)The hiring manager offers a job to a recent college graduate because she is expected to be more productive than other applicants due to her educational attainment.
C)The hiring manager offers a job to a recent college graduate because the hiring manager has a bias toward people with college degrees.
D)The hiring manager offers a job to a recent college graduate because education is correlated with natural ability.

Accepted Answer

The answer of Which of the following examples best describes...

Question 2

Which of the following statements represents the idea behind signaling in education?
A)Education can turn an unproductive person into a productive person.
B)Education increases the marginal productivity of naturally productive workers.
C)More productive people are more inclined to educate themselves.
D)All of the above are correct.

Accepted Answer

The answer of Which of the following statements represents the...

Question 3

Which of the following is not an explanation for why better educated workers earn more, on average, than less educated workers?
A)The higher wages may be a compensating differential for the cost of acquiring the education.
B)Workers with a college degree signal their higher abilities to potential employers.
C)Skilled labor is increasingly becoming a substitute for unskilled labor, which raises the earnings of workers with more education.
D)Better educated workers are more productive, on average.

Accepted Answer

This option is an explanation for why better educated workers earn more, on average, than less educated workers. The other three options all offer potential reasons for the wage gap between more and less educated workers.

Question 4

A signaling theory of education suggests that educational attainment
A)is a signal of high marginal productivity.
B)is correlated with natural ability.
C)increases the productivity of low-ability workers.
D)Both a and b are correct.

Accepted Answer

According to signaling theory of education, educational attainment signals high marginal productivity, but it is also correlated with natural ability. Therefore, choice D, which states that both options (a and b) are correct, is the best answer. Choice C is incorrect because signaling theory suggests that education primarily benefits high-ability workers by signaling their abilities to potential employers.

Question 5

Which of the following theories explains why increased education translates into higher wages?
A)human-capital theory
B)the theory of compensating differentials
C)the theory of supply and demand
D)comparative advantage

Accepted Answer

The human-capital theory states that investing in education and training increases an individual's human capital, or their skills, knowledge, and abilities, making them more productive and valuable to employers. This increased productivity and value leads to higher wages.

Question 6

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?
A)human-capital and price-fixing
B)human-capital and signaling
C)wage-differential and signaling
D)wage-differential and compensating-differentials

Accepted Answer

The human-capital theory suggests that education and training increase a worker's productivity, which is why they are paid more. However, the signaling theory argues that education serves as a way for workers to signal their abilities and potential to employers, which can lead to higher wages. The combination of these two theories, human-capital and signaling, best explains why educated people are paid more than uneducated individuals. Wage-differential and compensating-differentials theories focus on the differences in pay for workers in different industries and the additional compensation given for working in risky or unpleasant jobs, respectively, but do not fully explain the wage gap between educated and uneducated workers. Price-fixing, the act of companies colluding to set wages, is illegal and does not align with market forces determining wages in a competitive market.

Question 7

Which of the following statements is not correct?
A)Both the human capital theory and the signaling theory of education could explain why college graduates earn more than high school graduates.
B)The signaling theory of education suggests that the ability to complete a college degree is correlated with the ability to perform well in the labor market.
C)If the human capital theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages.
D)If the signaling theory of education is correct, a government policy that pays for additional schooling for all workers would not increase wages.

Accepted Answer

The human capital theory of education suggests that additional schooling and training increases a worker's productivity and skills, leading to higher wages. Therefore, a government policy that pays for additional schooling for all workers would increase wages if the human capital theory is correct.

Question 8

Suppose that the country of Libraria made a concerted effort to increase the educational level of its people. If this effort had no effect on the wages of its workers, one might consider this as evidence in support of
A)the human-capital view of education.
B)the signaling view of education.
C)both the human-capital and the signaling view of education.
D)neither the human-capital nor the signaling view of education.

Accepted Answer

If increasing the educational level of workers does not increase their wages, it suggests that education is not increasing their productivity or human capital, but rather serving as a signal of their abilities to potential employers. This supports the signaling view of education.

Question 9

Suppose that a college student receives an offer for a summer internship with a stock brokerage firm. Unfortunately for the student, the internship is unpaid. Is it ever economically beneficial to accept an unpaid job?
A)Yes, because the experience gained during the internship would increase the student's human capital.
B)No, because the opportunity cost is too high.
C)No, because the student is signaling to future employers that he or she is willing to accept low wages.
D)Yes, because accepting an unpaid job signals to future employers that the student has stable personal finances.

Accepted Answer

Accepting the unpaid internship would provide the student with valuable experience and skills that would increase their human capital, potentially leading to better job opportunities and higher wages in the future. The opportunity cost of forgoing paid employment during the summer is high, but the long-term benefits of investing in one's human capital can outweigh the short-term costs.

Question 10

According to the signaling view, education
A)has no effect on lifetime earnings.
B)alters work ethic.
C)enhances productivity.
D)is an indicator of natural ability.

Accepted Answer

The signaling view posits that education primarily serves as a signal to employers about an individual's inherent abilities, such as intelligence, diligence, and capability, rather than directly enhancing productivity.

Question 11

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?
A)the theory of compensating differentials
B)the efficient-market hypothesis
C)human-capital theory
D)signaling theory

Accepted Answer

Human-capital theory states that education and training increases an individual's productivity and ability to earn higher wages, which in turn benefits the economy as a whole. This theory suggests that increasing educational levels for all workers would result in higher productivity and wages for everyone.

Question 12

According to the signaling theory of education,
A)schooling sends signals to employers in much the same way that advertising sends signals to consumers.
B)a person becomes more productive by earning a college degree.
C)education is less important than natural ability.
D)All of the above are correct.

Accepted Answer

The signaling theory of education suggests that schooling serves as a signal to employers, similar to how advertising signals to consumers. The degree itself may not necessarily make a person more productive, but it serves as a signal to employers that the individual has certain skills and abilities. The theory does not address the importance of natural ability.

Question 13

The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests
A)schooling acts only as a signal of ability.
B)humans cannot be considered "capital."
C)productivity is not linked to wages.
D)ability, effort, and chance matter more.

Accepted Answer

The theory that suggests schooling acts only as a signal of ability challenges the human-capital theory explanation for why people invest in education. This theory proposes that education does not necessarily increase productivity or skill, but rather serves as a signal to employers of an individual’s inherent ability to learn and acquire knowledge.

Question 14

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the
A)signaling view of education.
B)natural-ability view of education.
C)unmeasured-variables view of education.
D)human-capital view of education.

Accepted Answer

The human-capital view of education is the belief that education increases an individual's productivity and thus raises their wage. This view is based on the idea that education creates a stock of human capital that is useful to employers and leads to higher wages for the individual. The signaling view of education suggests that education is primarily a way for individuals to signal their abilities to potential employers, while the natural-ability view argues that individuals' wages are largely determined by innate abilities. The unmeasured-variables view suggests that there may be other factors beyond education that affect a person's productivity and wage.

Question 15

A college degree makes a person more productive according to
A)both the human-capital and the signaling theories of education.
B)the human-capital but not the signaling theory of education.
C)the signaling but not the human-capital theory of education.
D)neither the human-capital nor the signaling theory of education.

Accepted Answer

The answer of A college degree makes a person more...

Question 16

Which of the following statements is correct?
A)The human-capital theory of education could be called a productivity-enhancing theory.
B)The human-capital theory of education could be called a productivity-revealing theory.
C)The signaling theory of education could be called a productivity-enhancing theory.
D)The signaling theory of education has been disproven by a number of prominent economists.

Accepted Answer

The human-capital theory of education suggests that education increases an individual's productivity and earning potential by enhancing their skills, knowledge, and abilities. Therefore, it can be called a productivity-enhancing theory. Option B is incorrect because productivity-revealing is not a commonly used term in the context of education theories. Option C is incorrect because the signaling theory emphasizes the importance of education as a way to signal one's abilities and potential to potential employers, rather than enhancing productivity directly. Option D is also incorrect as the signaling theory remains a widely accepted theory in the field of economics.

Question 17

According to the human-capital view, education
A)has no effect on lifetime earnings.
B)alters work ethic.
C)enhances productivity.
D)is an indicator of natural ability.

Accepted Answer

According to the human-capital view, education enhances productivity, leading to higher earning potential over a lifetime. Education leads to an increase in human capital, which refers to the knowledge, skills, and abilities that individuals bring to the job market. This increase in human capital increases productivity in the workplace and ultimately leads to higher earnings.

Question 18

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?
A)signaling theory
B)human-capital theory
C)physical-capital theory
D)the efficient-market hypothesis

Accepted Answer

Signaling theory suggests that education is not necessarily a source of productive skills, but rather a way for individuals to signal their intelligence and abilities to potential employers. Therefore, according to this theory, raising all workers' educational levels would not necessarily increase productivity or wages.

Question 19

When employers sort employment applications into high-ability and low-ability people based on whether or not the applicant has a college degree (irrespective of major), they are providing evidence in support of the
A)human-capital theory of education.
B)signaling theory of education.
C)principle that education reduces marginal productivity.
D)principle that most business owners are more interested in discriminating against a particular group than in maximizing profits.

Accepted Answer

Sorting applicants into high- and low-ability based solely on whether or not they have a college degree provides evidence for the signaling theory of education, which suggests that obtaining a degree serves as a signal to employers that the individual possesses certain desirable traits, such as diligence and perseverance, rather than necessarily providing them with specific job skills.

Question 20

Which of the following theories would suggest that attending school does not improve productivity but that high-ability people are more likely to stay in school?
A)physical-capital theory
B)human-capital theory
C)signaling theory
D)neoclassical theory

Accepted Answer

Signaling theory suggests that attending school does not necessarily improve productivity, but acts as a signal to potential employers of an individual's abilities and work ethic. Therefore, high-ability people who are more likely to succeed in the labor market may be more likely to invest in their education and stay in school, regardless of whether or not it directly improves their productivity.

Quiz 19: Earnings and Discrimination

Which of the following examples best describes the signaling theory of education?

Which of the following statements represents the idea behind signaling in education?

Which of the following is not an explanation for why better educated workers earn more, on average, than less educated workers?

A signaling theory of education suggests that educational attainment

Which of the following theories explains why increased education translates into higher wages?

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

Which of the following statements is not correct?

Suppose that the country of Libraria made a concerted effort to increase the educational level of its people. If this effort had no effect on the wages of its workers, one might consider this as evidence in support of

Suppose that a college student receives an offer for a summer internship with a stock brokerage firm. Unfortunately for the student, the internship is unpaid. Is it ever economically beneficial to accept an unpaid job?

According to the signaling view, education

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

According to the signaling theory of education,

The human-capital theory explanation for why people invest in education has been challenged by a theory that suggests

The belief that education makes a person more productive and thereby raises his or her wage is referred to as the

A college degree makes a person more productive according to

Which of the following statements is correct?

According to the human-capital view, education

Which theory would support the idea that education does not enhance productivity and therefore raising all workers' educational levels would not affect wages?

When employers sort employment applications into high-ability and low-ability people based on whether or not the applicant has a college degree (irrespective of major) , they are providing evidence in support of the

Which of the following theories would suggest that attending school does not improve productivity but that high-ability people are more likely to stay in school?