ProblemSet6-AK - Economics 3203 Fall 2010 Problem Set # 6:...

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1 Economics 3203 Fall 2010 Problem Set # 6: Human Capital ANSWER KEY 1. (part 1)There is no single right answer here an argument can be made for (a) or (c) . Note, though, that correct answers must address the idea of efficiency. The lottery scheme would just randomly assign students to places. Some students who would have a lot to gain from education would get none, while others who have little to gain would be admitted. This is quite inefficient. The test-score scheme (a) would tend to select those individuals who are best at taking tests. These might be the most productive people, with the most to gain from education, depending on the quality of the test, so one could argue that this may be efficient. The line scheme (c) will select those who are willing to wait longest (since those who start the line earliest will get in). If competition for the places in line is harsh enough (for example, students start camping in front of the office a week ahead of time) then the cost of being in line may be high enough to dissuade any students whose
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This note was uploaded on 06/07/2011 for the course ECP 3202 taught by Professor Hamersma during the Fall '10 term at University of Florida.

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