Jaeger and Page (1996)show That If Two Individuals Both Have

question 34

Essay

Jaeger and Page (1996)show that if two individuals both have 4 years of college but one doesn't graduate while the other does,the one with a bachelor's degree will earn 25% more,suggesting that the degree signals higher productivity levels for graduates relative to non-graduates.
(a)Assume that students who attend college for four years acquire identical amounts of human capital,regardless of whether they graduate.Why might people who graduate in 4 years be more productive workers than those who attend college for 4 years but do not graduate?
(b)Suggest reasons why the student with the degree might have acquired different human capital in college than the student who attended college for 4 years but did not graduate.

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Definitions:

Cost of Goods

The total expense incurred in acquiring or manufacturing the products sold by a business, typically including raw materials and labor costs.

Job-Order Costing

A costing method used where each job is costed separately and includes all materials, labor, and overhead specific to that job.

Underapplied Overhead

This occurs when the actual manufacturing overhead costs incurred exceed the allocated manufacturing overhead cost.

Cost of Goods

The total cost incurred to manufacture or acquire products sold during a specific period, including direct materials, direct labor, and manufacturing overhead.