If low-quality workers are unable to obtain a college degree, then a separating equilibrium can occur if
A) the cost of obtaining a degree is less than the wage premium paid to those who have obtained the degree.
B) the cost of obtaining a degree is greater than the wage premium paid to those who have obtained the degree.
C) the cost of obtaining a degree is zero.
D) the wage premium paid to those who have obtained the degree is positive.
A
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In its original role as "lender of last resort" the Fed was supposed to
a. lend money to people in regions without banks. b. lend money to developing nations. c. keep the money supply from drying up during financial panics. d. provide mortgage lending to returning soldiers.
A brand of wine is priced at only $5 per bottle, far below the market price of most high quality wines. Before any reputation exists for the wine, consumers buy very little of this inexpensive wine because they interpret the low price to mean that the wine is of poor quality. The company decides to change the label on the wine to show that it has won awards for quality. This label change is an
example of a. signaling. b. screening. c. selecting. d. All of the above are correct.
One reason customers do not care about the quality of their bank's assets is:
A. most people cannot distinguish an asset from a liability. B. with deposit insurance, there isn't any real reason to care; their deposits are protected even if the bank fails. C. the quality of a bank's assets changes almost daily. D. they assume the bank only has high quality assets.
If the cost efficiency of labor equals 2, then
A. The product price is 200 percent of the wage rate. B. Each extra dollar spent on wages returns 2 units of additional output. C. The wage rate is 100 percent more than the product price. D. Labor costs 100 percent more than the revenue it generates.