Which Theory Is Supportive of the Idea That Increasing Educational

question 357

Multiple Choice

Which theory is supportive of the idea that increasing educational levels for all workers would raise all workers' productivity and therefore their wages?

• A)the theory of compensating differentials
• B)the efficient-market hypothesis
• C)human-capital theory
• D)signaling theory

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Definitions:

Overconfidence Effect

A psychological tendency where a person's personal assurance in their decisions exceeds the actual correctness of those decisions.

Prospect Theory

A behavioral economic theory that describes the way people choose between probabilistic alternatives that involve risk, where the probability of outcomes is uncertain.

Behavioral Economists

Economists who study the effects of psychological, cognitive, emotional, cultural, and social factors on economic decisions of individuals and institutions.

Availability Heuristic

A cognitive bias where people make judgments about the likelihood of an event based on how easily examples come to mind.