In order to use schooling as a signal,
A. firms must be able to easily verify each worker's amount of schooling.
B. some people must choose to not complete schooling.
C. the signal must be costlier for low-skilled workers than for high-skilled workers.
D. the cost of purchasing the signal must not be so costly that high-skilled workers do not value obtaining it.
E. All of these are required for schooling to serve as a signal.
Answer: E
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What will be an ideal response?
Which of the following is a situation that makes the market behave inefficiently?
a) when consumers do not have enough information to make good choices b) when the producers have the power to find out exactly what to produce c) when both consumers and producers are fully informed about a product d) when the market is in perfect competition and prices are high