Human capital raises the wages of individuals because:

Question

Quizplus · Accepted Answer

Human capital raises the value of the marginal product of labor, meaning that individuals with higher levels of education and skills contribute more to the production process, producing more output and generating higher revenues for their employers. This increased productivity results in higher wages being paid to these individuals. Hence, option A is the best choice. Option B may be true to some extent, but it only explains one aspect of why human capital raises wages. Option C is not a valid reason for the increase in wages, and option D is incorrect as it suggests that higher wages lead to higher prices, which is not necessarily true in all cases.

Human Capital Raises the Wages of Individuals Because