When Relatively Few Workers Have High Ability

question 20

Multiple Choice

When relatively few workers have high ability,

• A) they will settle for the average wage.
• B) they will want to signal their ability.
• C) the premium for high ability is less than when most workers have high ability.
• D) they do not need to signal their ability.

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Definitions:

AGI

Adjusted Gross Income, which is gross income minus adjustments; a key measure used to determine tax liabilities and eligibility for credits.

EIC

Earned Income Credit; a refundable tax credit in the U.S. for low to moderate-income working individuals and families, particularly those with children.

Qualifying Children

are dependents who meet certain conditions regarding relationship, age, residency, and support, affecting tax benefits.

AGI

Adjusted Gross Income, which is gross income minus specific deductions, used to calculate an individual's tax liability.