Suppose Workers with a College Degree Are Paid a Lifetime

question 6

Multiple Choice

Suppose workers with a college degree are paid a lifetime income of $500,000 and workers without a college degree are paid $300,000. The cost of obtaining a college degree for high-productivity workers is $100,000. For a college degree to serve as a useful productivity signal, the cost of a college degree for low-productivity workers must be:

• A) greater than $200,000.
• B) less than $200,000.
• C) greater than $100,000.
• D) less than $100,000.

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Definitions:

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