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.The hypothesis of the model is that ________.
A) college graduates will earn about 80 percent more than high school graduates
B) college graduates will earn about 107 percent more than high school graduates
C) college graduates will earn about 200 percent more than high school graduates
D) college graduates will earn about 275 percent more than high school graduates

Question

Quizplus · Accepted Answer

The model assumes each additional year of education increases future wage by 20 percent. Assuming a typical college education is 4 years beyond high school, the cumulative increase in wage would be calculated as (1 + 0.20)^4 - 1 = 1.0748 or approximately 107 percent more than high school graduates.

A Model Is Based on an Assumption That an Additional