market
ECO535
TUTORIAL 3 –Chapter 4 –HUMAN CAPITAL INVESTMENT
TRUE & FALSE QUESTIONS (10 MARKS)
ANSWER ALL QUESTIONS
1. General training will be paid for by the employee in the form of a reduced wage
Specific training reduces the worker’s value to the firm, because the worker’s wage rate would have to rise .
2. Specific training reduces the worker’s value to the firm, because the worker’s wage rate would have to rise .
3. A worker who has obtained specific training is more likely to establish a long-term association with an employer because the worker has made an investment he does not wish to lose.
Questions 4 and 5 refer to the following diagram, in which MRPu refers to the marginal revenue product of an untrained worker, while MRPt refers to this worker’s marginal revenue product as a result of a program of on-the-job training.
4. In the case of general training, the wage rate during the training period will be W1 while the post-training wage will be W3.
5. In the case of specific training, the wage rate during the training period will be W2, while the post-training wage will be between W2 to 3.
6. A firm that provides specific training to its workers has a stronger incentive to reduce employee turnover than firms that provide only general training.
7. On-the-Job training is more common at smaller firms than larger ones.
8. Empirical evidence suggests that most training is specific rather than general.
9. The demand for human capital curves slope downward and to the right because the benefits of increased education diminish as schooling continues
10. Other things equal, the lower the cost of a human capital investment other things equal, the lower the cost of a human capital investment.
Questions 11 – 15 are based on the following diagram.
Refer to the diagram and fill in the blanks:
11. If D1 is this individual’s investment demand curve, then the optimal amount of education is _____
12. _______________________will cause a
TUTORIAL 3 –Chapter 4 –HUMAN CAPITAL INVESTMENT
TRUE & FALSE QUESTIONS (10 MARKS)
ANSWER ALL QUESTIONS
1. General training will be paid for by the employee in the form of a reduced wage
Specific training reduces the worker’s value to the firm, because the worker’s wage rate would have to rise .
2. Specific training reduces the worker’s value to the firm, because the worker’s wage rate would have to rise .
3. A worker who has obtained specific training is more likely to establish a long-term association with an employer because the worker has made an investment he does not wish to lose.
Questions 4 and 5 refer to the following diagram, in which MRPu refers to the marginal revenue product of an untrained worker, while MRPt refers to this worker’s marginal revenue product as a result of a program of on-the-job training.
4. In the case of general training, the wage rate during the training period will be W1 while the post-training wage will be W3.
5. In the case of specific training, the wage rate during the training period will be W2, while the post-training wage will be between W2 to 3.
6. A firm that provides specific training to its workers has a stronger incentive to reduce employee turnover than firms that provide only general training.
7. On-the-Job training is more common at smaller firms than larger ones.
8. Empirical evidence suggests that most training is specific rather than general.
9. The demand for human capital curves slope downward and to the right because the benefits of increased education diminish as schooling continues
10. Other things equal, the lower the cost of a human capital investment other things equal, the lower the cost of a human capital investment.
Questions 11 – 15 are based on the following diagram.
Refer to the diagram and fill in the blanks:
11. If D1 is this individual’s investment demand curve, then the optimal amount of education is _____
12. _______________________will cause a