Suppose you had the choice of attending two universities. University A pays all of its professors the same wage and awards the same raises. University B pays each professor according to market wages and productivity. Which university would you rather attend and why?
It would appear that the professors at university A have less incentive to provide quality instruction than those at university B. They are rewarded equally, regardless of how well students are educated. If the measure for productivity at university B is how well the students are educated (this may be a heroic assumption), you will be better off there.
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When using panel data and in the presence of endogenous regressors
A) the TSLS does not exist. B) you do not have to worry about the validity of instruments, since there are so many fixed effects. C) the OLS estimator is consistent. D) application of the TSLS estimator is straightforward if you use two time periods and difference the data.
Which statement is true?
A. The lower incomes that women earn relative to those earned by men is explained entirely by employment discrimination. B. Although there are many theories of poverty, few have any validity. C. Much of black poverty is caused by black male joblessness. D. None of these statements are true.
A highly leveraged bank risks ______.
a. missing out on massive profits b. being unable to borrow from the Fed c. going bankrupt if the value of its assets falls d. losing up to the total amount of its initial investment
Which of the following is an example of bypassing the market through regulation to achieve environmental protection?
A. Privatization. B. Pollution fines. C. Green taxes. D. Command-and-control standards.