Answered: Education determines the skill of the…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter2: The One Lesson Of Business

Section: Chapter Questions

Problem 2.4IP

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In California, researchers found, it really matters where you live. Residents of Silicon Valley live more than four years longer than the average American, earn nearly double the income, and have nearly triple the number of graduate degrees. Residents of Central Valley live nearly a year less than average American, earn barely more than a poverty-line income, and nearly four in ten failed to graduate from high school.

Explain how the labor markets of California translate education differences into earnings differences.

Education determines the skill of the worker. High-skilled workers _______ compared to low-skilled workers, so the ______ high-skilled workers exceeds that for low-skilled workers.

a. earn a higher wage rate; supply of

b. earn a higher wage rate; demand for

c. have a higher marginal product; demand for

d. have a greater value of marginal product; demand for

e. have a greater value of marginal product; supply of

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