Question 1

What is the stopping rule for choosing one's years of schooling?

Accepted Answer

A)  end one's schooling when the return from more schooling is zero 
B)  end one's schooling when the cost of one more year of schooling is zero 
C)  end one's schooling after college 
D)  end one's schooling when the rate of return to one more year of schooling equals the worker's rate of discount 
E)  end one's schooling when the worker's rate of discount equals zero 
A)  end one's schooling when the return from more schooling is zero 
B)  end one's schooling when the cost of one more year of schooling is zero 
C)  end one's schooling after college 
D)  end one's schooling when the rate of return to one more year of schooling equals the worker's rate of discount 
E)  end one's schooling when the worker's rate of discount equals zero

Question 2

Which of the following has not been identified by research that tries to address the self-selection issue regarding the returns to schooling?

Accepted Answer

A)  When both a high school graduate and a college graduate are placed in the type of job that high school graduates typically fill, the high school graduate would be more productive. 
B)  When both a high school graduate and a college graduate are placed in the type of job that college graduates typically fill, the college graduate would be more productive. 
C)  There are many kinds of ability that are rewarded in the workplace. 
D)  In general, workers appear to choose schooling amounts that maximize lifetime income. 
E)  All of the above have been identified by the research on the returns to schooling. 
A)  When both a high school graduate and a college graduate are placed in the type of job that high school graduates typically fill, the high school graduate would be more productive. 
B)  When both a high school graduate and a college graduate are placed in the type of job that college graduates typically fill, the college graduate would be more productive. 
C)  There are many kinds of ability that are rewarded in the workplace. 
D)  In general, workers appear to choose schooling amounts that maximize lifetime income. 
E)  All of the above have been identified by the research on the returns to schooling.

Question 3

Why might people choose to go to college?

Accepted Answer

A)  A college education signals to firms that the worker is highly motivated. 
B)  A college education increases one's productivity, which will be rewarded in the labor market with higher wages. 
C)  Someone enjoys the process of becoming educated. 
D)  One cannot find employment. 
E)  All of these options are reasons people might choose to go to college. 
A)  A college education signals to firms that the worker is highly motivated. 
B)  A college education increases one's productivity, which will be rewarded in the labor market with higher wages. 
C)  Someone enjoys the process of becoming educated. 
D)  One cannot find employment. 
E)  All of these options are reasons people might choose to go to college.

Question 4

Present value calculations allow one to determine the

Accepted Answer

A)  return to an uncertain asset. 
B)  present-day costs and/or benefits of various options. 
C)  utility value of a particular option. 
D)  social cost of financial calculations. 
E)  real wage. 
A)  return to an uncertain asset. 
B)  present-day costs and/or benefits of various options. 
C)  utility value of a particular option. 
D)  social cost of financial calculations. 
E)  real wage.

Question 5

Paula is considering going to law school. If she does, she will spend $60,000 on tuition and books to get a college education (during the first time period), $120,000 on tuition and books to get a law degree (during the second time period), and her law degree will earn her $620,000 during the remainder of her work-life (during the third time period). Paula's time preference for money is associated with a per-period interest rate of 20 percent. Approximately what is Paula's present value of obtaining a law degree?

Accepted Answer

A)  $100,100 
B)  $210,400 
C)  $270,500 
D)  $440,000 
E)  $621,900 
A)  $100,100 
B)  $210,400 
C)  $270,500 
D)  $440,000 
E)  $621,900

Question 6

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

Accepted Answer

A)  The marginal return to schooling increases as years of schooling increases. 
B)  The marginal return to schooling is positive but falling as years of schooling increases. 
C)  Average wages fall as years of schooling increases. 
D)  The cost of schooling increases but at a decreasing rate. 
E)  The cost of schooling decreases but at an increasing rate. 
A)  The marginal return to schooling increases as years of schooling increases. 
B)  The marginal return to schooling is positive but falling as years of schooling increases. 
C)  Average wages fall as years of schooling increases. 
D)  The cost of schooling increases but at a decreasing rate. 
E)  The cost of schooling decreases but at an increasing rate.

Question 7

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

Accepted Answer

A)  Tuition costs are lower for whites than blacks. 
B)  Whites have access to more financial capital to pay for college than blacks. 
C)  Postcollege wages are higher for whites than for blacks. 
D)  Whites have greater access to higher quality public education at the elementary and secondary level. 
E)  Whites are more able to postpone earnings at age 18 than are blacks. 
A)  Tuition costs are lower for whites than blacks. 
B)  Whites have access to more financial capital to pay for college than blacks. 
C)  Postcollege wages are higher for whites than for blacks. 
D)  Whites have greater access to higher quality public education at the elementary and secondary level. 
E)  Whites are more able to postpone earnings at age 18 than are blacks.

Question 8

Which group tends to have the highest unemployment rate in the United States?

Accepted Answer

A)  men 
B)  women 
C)  Blacks 
D)  Hispanics 
E)  Whites 
A)  men 
B)  women 
C)  Blacks 
D)  Hispanics 
E)  Whites

Question 9

As the interest rate increases,

Accepted Answer

A)  the present value of future benefits increases. 
B)  the present value of future benefits decreases. 
C)  the discount rate decreases. 
D)  the future return to an investment decreases. 
E)  the present value of a future investment increases. 
A)  the present value of future benefits increases. 
B)  the present value of future benefits decreases. 
C)  the discount rate decreases. 
D)  the future return to an investment decreases. 
E)  the present value of a future investment increases.

Question 10

The wage-schooling locus is

Accepted Answer

A)  downward sloping because education is generally productive. 
B)  upward sloping because education is generally productive. 
C)  backward bending. 
D)  horizontal because wages are unrelated to schooling. 
E)  vertical because education is a public good. 
A)  downward sloping because education is generally productive. 
B)  upward sloping because education is generally productive. 
C)  backward bending. 
D)  horizontal because wages are unrelated to schooling. 
E)  vertical because education is a public good.

What is the stopping rule for choosing one's years of schooling?

Which of the following has not been identified by research that tries to address the self-selection issue regarding the returns to schooling?

Why might people choose to go to college?

Present value calculations allow one to determine the

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

Which group tends to have the highest unemployment rate in the United States?

As the interest rate increases,

The wage-schooling locus is

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters

Exam 6: Human Capital

What is the stopping rule for choosing one's years of schooling?

Which of the following has not been identified by research that tries to address the self-selection issue regarding the returns to schooling?

Why might people choose to go to college?

Present value calculations allow one to determine the

What is implied when the wage-schooling profile is drawn as a concave (i.e., increasing at a decreasing rate) function?

Which of the following reasons is not a likely explanation as to why college completion rates are greater, on average, for whites than for blacks?

Which group tends to have the highest unemployment rate in the United States?

As the interest rate increases,

The wage-schooling locus is

Introduction to Labor Economics

Labor Supply

Labor Demand

Labor Market Equilibrium

Compensating Wage Differentials

The Wage Structure

Labor Mobility

Labor Market Discrimination

Labor Unions

Incentive Pay

Unemployment

Filters