Question

1. Which of the following are ways that the government subsidizes higher education

a. Pell grants

b. Regulating access

c. Title IX provisions

d. Providing information on the costs and benefits of a degree

e. All of the above

f. None of the above

2. Which of the following is an example of a potential market failure in higher education

a. College is expensive

b. Housing is expensive

c. Students cannot borrow enough to make it through school

d. Religious studies majors do not make much money

e. All of the above

3. Which of the following is a test to distinguish human capital vs. signaling

a. Measure whether educated people are more productive

b. Measure productivity before and after education

c. Test whether higher ability people get more schooling

d. Find identical people and randomly assign one to go to college. Compare earnings outcomes. e. None of the above

4. Which of the following are arguments that support the signaling model

a. Measured knowledge of things taught in school is low

b. Those with more education earn more

c. Societies with higher education levels are more productive

d. More educated people are healthier

e. None of the above

Answer 1

1. (a) Pell grants.

Pell grants is a subsidy the U.S federal government provides for students who need it to pay for college.

2. (a) College is expensive.

Expensive college is a potential market failure in higher education.

3. (d) . Find identical people and randomly assign one to go to college.

To distinguish between human capital and signalling model ... identical people are found and randomly assign one to go to college.

4. (c) Societies with higher education levels are more productive .

Signalling model helps the employer to measure and distinguish high ability workers and low ability workers.