In a labor-market pooling equilibrium with high-skill and low-skill workers and where a costly educational degree is used as a signaling device, all else equal, an increase in the wage differential between high- and low-skill workers leads to
A) an increase in the required minimum share of high-skill workers.
B) a decrease in the required minimum share of high-skill workers.
C) no change in the required minimum share of high-skill workers.
D) None of the above answers are correct.
A
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The concept of limited and bundled choice, as used in public choice theory, refers to the fact that:
A. Politicians may not be objective in evaluating economic policy programs B. Because of the importance of television and other modern communication techniques, the best and brightest candidates may not be selected by voters C. In an election, voters must select a candidate who has various preferences in a wide array of issues D. The most economically efficient public policy programs may not be selected because political leaders do not know enough about economics
A particular brand of red soda was pulled from the market because company executives felt it was not modern enough. Immediately, people began contacting the company asking for the product to return, threatening to quit buying the company’s other products, and expressing their desire to pay a premium for the red soda. As a result, the company put it back on the market. This is an example of ______.
a. production possibilities b. centralized planning c. government bureaucracy d. consumer sovereignty