Of the Theories Listed Below, Which Do the Best Job

question 28

Multiple Choice

Of the theories listed below, which do the best job of explaining why educated people are paid more than uneducated people?

• A)human-capital and price-fixing
• B)human-capital and signaling
• C)wage-differential and signaling
• D)wage-differential and compensating-differentials

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Definitions:

Government Subsidies

Financial assistance provided by the government to individuals, organizations, or industries to encourage certain activities or reduce the burden on the recipients.

Repeated Game

A strategic situation where the same game is played multiple times by the same participants, allowing for strategy development based on previous outcomes.

Reciprocity

A mutual exchange of privileges or benefits, such as when two or more countries agree to grant each other equal trading terms or access to markets.

Price War

A competitive situation where businesses continuously lower prices to undercut competitors, potentially at the cost of profit margins.