Dan and Dave Are Both College Graduates

question 71

Multiple Choice

Dan and Dave are both college graduates. Dan is a patrolman and Dave is a detective in the same police precinct. While Dan's job is inherently more dangerous than Dave's, Dave passed a difficult exam to gain promotion to detective. Dave earns more than Dan because

• A)Dave's job is less dangerous.
• B)of efficiency wages.
• C)of education as a signal.
• D)Dave has more human capital.

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Definitions:

Par Value

The nominal or face value of a security or currency, as stated by the issuer.

Market Rate

The current price or rate at which goods, services, or securities are traded in the open market.

Discount on Bonds Payable

The difference between a bond's face value and its selling price when it is sold for less than its face value.

Contra Liability

An account that offsets a liability account on a company's balance sheet, such as discounts on bonds payable, which reduce the total amount of bonds payable.