Bob and Rob Are Identical Twins Who Attended Grammar School

question 212

Multiple Choice

Bob and Rob are identical twins who attended grammar school through college together.Bob took a job as an engineer who must travel out of state once a week.Rob took a job as an engineer who does not have to travel out of the state.Bob earns $100,000 a year,and Rob earns $85,000 a year.Select the best explanation for this wage difference.

• A)Rob has more human capital relative to Bob.
• B)Rob has less human capital relative to Bob.
• C)Bob receives a higher wage to compensate for the disagreeable nature of business travel.
• D)Bob's higher salary supports the signaling theory of education.

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Definitions:

Ratio

A quantitative relation between two amounts showing the number of times one value contains or is contained within the other.

Liabilities

Financial obligations a company owes to outside parties, such as loans, accounts payable, and bonds payable.

Stockholders' Equity

The portion of a company's capital that comes from the investment of its shareholders, represented by the shares issued to them.

Profitability

The degree to which a company or business activity makes a profit, typically measured over a specific period of time.