The Costs of Obtaining a College Degree for High-Productivity and Low-Productivity

question 52

Multiple Choice

The costs of obtaining a college degree for high-productivity and low-productivity workers are as follows:
High productivity: C_H = $20,000y
Low productivity: C_L = $40,000y
Where y is years in college. Suppose workers with a college degree are paid a lifetime income of $600,000, and workers without a college degree are paid a lifetime income of $450,000. For low-productivity workers, the net benefit of four years of college is _____, while the net benefit of not going to college is _____.

• A) $500,000; $150,000
• B) $440,000; $450,000
• C) $150,000; $40,000
• D) $600,000; $120,000

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Definitions:

Nonprice Competition

A strategy where businesses compete on factors other than price, such as quality, service, or brand image.

Product Differentiation

A marketing strategy that businesses use to distinguish their products from those of competitors.

Tacit Collusion

A situation where businesses indirectly coordinate actions without explicit agreement, often leading to market prices above competitive levels.

Few Firms

A market situation typically characterized by an oligopoly, where a small number of companies possess the majority of market share.