Benjamin and Ian Are Identical Twins Who Attended Elementary School

question 7

Multiple Choice

Benjamin and Ian are identical twins who attended elementary school through high school together. Benjamin got a job after high school, and Ian got a job after graduating from college. Benjamin earns $33,000 a year, and Ian earns $62,000 a year. Select the best explanation for this wage difference.

• A)Benjamin has less human capital than Ian.
• B)Ian has less human capital than Benjamin.
• C)Benjamin has received a compensating differential
• D)Benjamin is a member of a union.

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Definitions:

Constant Returns to Scale

A situation where increasing all inputs by the same proportion results in output increasing by that same proportion, indicating linear scalability of production processes.

Economies of Scale

Refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in the per-unit cost as output increases.