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Unformatted text preview: mination Problems and Applications 4. a. Economics professors may receive higher salaries than professors in some other fields because they have better opportunities outside academia. For example, they could find jobs in the private sector or the government. b. Differences in teaching loads can make up for lower pay. If professors in all fields are paid the same, the pay level is probably below what economics professors could earn elsewhere. To attract economics professors, the university would have to offer them some other compensation, such as a lower teaching load. 5. Under the signaling theory, you would rather have the degree and not attend the university. But under the human-capital theory, you would rather attend, even though doing so would be a secret. 6. The development of recording devices led to a superstar phenomenon in which the best musicians were paid significantly more than average musicians were paid. So the incomes of the musicians were paid significantly more than average musicians were paid....
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