When Employers Sort Employment Applications into High-Ability and Low-Ability People

question 129

Multiple Choice

When employers sort employment applications into high-ability and low-ability people based on whether or not the applicant has a college degree (irrespective of major) , they are providing evidence in support of the

• A)human-capital theory of education.
• B)signaling theory of education.
• C)principle that education reduces marginal productivity.
• D)principle that most business owners are more interested in discriminating against a particular group than in maximizing profits.

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Definitions:

Fixed Costs

Fixed costs are business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Capital

Resources made and used by humans to produce goods and services, including buildings, machinery, and equipment.

Barriers to Entry

Obstacles that prevent new competitors from easily entering an industry or area of business.

Industry Structure

The characteristics that influence the nature of competition and pricing in a particular industry, including the number and size of firms, entry barriers, and product differentiation.