A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent.
-Refer to the scenario above.Which of the following statements is true about the model?
A) The model is not based on any assumption.
B) The predictions of the model will hold for every individual.
C) The model describes the economic payoff of more education.
D) The model can be applied for a maximum of 10 years of additional education.

Question

Quizplus · Accepted Answer

The model describes the economic payoff of more education, as it assumes that an additional year of education will increase a student's future wage by 20 percent. However, it does not make any claims about the predictions holding true for every individual (B) or the maximum number of years of education that can be applied (D). It is also based on an assumption (A) that may or may not be true in reality.

A Model Is Based on an Assumption That an Additional