The cost of education at an Ivy League university is over $50,000 per year. At a community college, the cost of education is only a few thousand dollars per year. What economic theory could justify enrolling in an Ivy League school?

Question

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The economic theory that justifies enrolling in an Ivy League school is the "signal" theory. This theory states that attending a prestigious university such as an Ivy League school provides a signal to potential employers that the student is intelligent, hardworking, and possesses desirable qualities that make them a valuable asset to the company. This signal can give them an advantage when applying for jobs and negotiating higher salaries, outweighing the high cost of education.

The Cost of Education at an Ivy League University Is