Investment in human capital is very similar to investing in physical capital. True or false? Explain your answer
What will be an ideal response?
They are similar in the sense that rates of return can be calculated for each form of capital so one can compare these and make a choice as to which type of investment to undertake. Rates of return to education are provided in Table 8.1 . Of course, there is a market for physical capital where it can be bought/sold but no market for human capital.
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Little Richie Lemons, a thirteen-year-old former lemonade stand owner, quit the business and now searches for an after-school job. Is he officially unemployed?
A) No, because he was never employed in the first place. B) No, because he is under 16 years old. C) Yes, because he is no longer self-employed. D) Yes, because he is looking for work.
Suppose an economy has the following characteristics: 100 people in the noninstitutional population; 40 people employed; 50 people not in the labor force. How many people are in the economy's labor force?
A) 40 B) 50 C) 90 D) 100