Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 19, Problem 1CQQ
To determine
Example of human capital.
Expert Solution & Answer
Answer to Problem 1CQQ
Option ‘b’ is the correct answer.
Explanation of Solution
Option (b)
Education is an important human capital because it represents an expenditure of resources at one time to raise productivity in the future. Since studying latest developments in computer programming enhanced his productivity that enabled him to attain higher income in future, it is considered A human capital. Thus, option ‘b’ is correct.
Option (a)
Compensating differential is the difference in wages that arise to offset the nonmonetary characteristics of different jobs. So option ‘a’ is incorrect.
Option (c)
Under signaling, the choice of being a math teacher is better than spending time for studying. Hence option ‘c’ is incorrect.
Option (d)
There is no mention about receiving above the equilibrium level wages; option ‘d’ is incorrect.
Economics Concept Introduction
Concept Introduction:
Human capital: It is the accumulations of investments in people in the form of education, on-the-job training, etc.
Compensating differential: It is the difference in wages that arise to offset the nonmonetary characteristics of different jobs.
Efficiency wages: It is the above-equilibrium wages paid by firms to increase worker productivity.
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Chapter 19 Solutions
Principles of Microeconomics
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