D. If TB > T₁ then Type B will get more education, otherwise Type A will definitely getmore education. Discuss.E. Assume that the mean wage in Industry 1 is greater than the mean wage in Industry 2,but the variance of wages in Industry 1 is much larger than that in Industry 2. Assumealso that if you get an education you must work in Industry 1(i.e., the human capitalaccumulated is industry specific). What effect (s) might that have on the choices ofType A and Type B individuals regarding their education.F. If aA is much larger than ag, then there is nothing the government can do to induceType B individuals to go to school beyond high school.G. Discuss briefly how your answer to E change if the human capital was not entirelyindustry specific. Assume that there are two types of individuals in the population: Type A and Type B withthe corresponding fractions fi and f2. The levels of ability for the two types are: α andaв, with αA > αB. Suppose also that Type A lives for T₁ years, while Type B lives for TByears.Briefly answer/evaluate FOUR out of the following six statements:A. If the financial resources available for a Type B individual are greater than those avail-able for a Type A individual, it is possible that the former will invest more in his/herhuman capital.B. Suppose that human capital is not productive, which of the two types will get moreinvestment in schooling?C. Suppose that the government provides all wages and sets all wages to be the same.How would that affect the incentives of the two groups to invest in human capital?

Human capital refers to the economic value of an individual's skills, knowledge, health, and other…

Answered: Assume that there are two types of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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D. If TB > T₁ then Type B will get more education, otherwise Type A will definitely get
more education. Discuss.
E. Assume that the mean wage in Industry 1 is greater than the mean wage in Industry 2,
but the variance of wages in Industry 1 is much larger than that in Industry 2. Assume
also that if you get an education you must work in Industry 1(i.e., the human capital
accumulated is industry specific). What effect (s) might that have on the choices of
Type A and Type B individuals regarding their education.
F. If aA is much larger than ag, then there is nothing the government can do to induce
Type B individuals to go to school beyond high school.
G. Discuss briefly how your answer to E change if the human capital was not entirely
industry specific.

Assume that there are two types of individuals in the population: Type A and Type B with
the corresponding fractions fi and f2. The levels of ability for the two types are: α and
aв, with αA > αB. Suppose also that Type A lives for T₁ years, while Type B lives for TB
years.
Briefly answer/evaluate FOUR out of the following six statements:
A. If the financial resources available for a Type B individual are greater than those avail-
able for a Type A individual, it is possible that the former will invest more in his/her
human capital.
B. Suppose that human capital is not productive, which of the two types will get more
investment in schooling?
C. Suppose that the government provides all wages and sets all wages to be the same.
How would that affect the incentives of the two groups to invest in human capital?

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D. If TB > TA then Type B will get more education, otherwise Type A will definitely get
more education. Discuss.
E. Assume that the mean wage in Industry 1 is greater than the mean wage in Industry 2,
but the variance of wages in Industry 1 is much larger than that in Industry 2. Assume
also that if you get an education you must work in Industry 1(i.e., the human capital
accumulated is industry specific). What effect(s) might that have on the choices of
Type A and Type B individuals regarding their education.
F. If αA is much larger than αB, then there is nothing the government can do to induce
Type B individuals to go to school beyond high school.
G. Discuss briefly how your answer to E change if the human capital was not entirely
industry specific.

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