Assume that unskilled workers (no college education) earn $35,000 per year, to b

Question

Assume that unskilled workers (no college education) earn $35,000 per year, to become a skilled worker (college educated) one must invest $150,000; and the return on investments average 10%. If marketing majors earn $60,000 per year, then The supply of marketing majors will increase because they are earning a below average return on their investments in education The supply of marketing majors will decrease because they are earning a below average return on their investments in education The supply of marketing majors will increase because they are earning an above average return on their investments in education. The supply of marketing majors will decrease because they are earning an above average return on their investments in education. The supply of marketing majors will neither increase nor decrease because they are earning an average return on their investments in education

Explanation / Answer

Ans is C

Since the difference between the earning of skilled and unskilled worker is 60000-35000=$25000

And the return gained at 10% is $15000.

Since return on college degree is greater than return from market. Thus supply will increase given initially the cost is different from earlier.

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