Which of the following identifies correct reasons for the ...

[frankwu]

Which of the following identifies correct reasons for the sustained growth in the Western world post 19th century?
 
  A) Demographic transition and the American civil war
  B) The American civil war and the Industrial Revolution
  C) The Agricultural Revolution and the Industrial Revolution
  D) Demographic transition and the Industrial Revolution

Question 2

An economic model suggests that an additional year of education increases a student's future wages by 15 percent. Using this model, answer the following questions:
 
  a) Gary completes 8 years of education, and John completes 9 years of education. If Gary earns 20 per hour, how much is John expected to earn?
  b) John completes 9 years of education, and Kevin completes 12 years of education. Given John's earnings as calculated in a), how much is Kevin expected to earn?
  c) Is there any limitation to such a model? Explain your answer.

[iceage]

Answer to Question 1

D

Answer to Question 2

The economic model suggests that an additional year of education increases a student's future wages by 15 percent. Hence an additional year of education will increase the student's per-hour income by 1.15 times.
a) If Gary earns 20 per hour with 8 years of education, John is expected to earn 1.15  20 or 23 per hour.
b) If John earns 23 per hour with 9 years of education, and Kevin completes 3 additional years of education, Kevin is expected to earn 1.15  1.15  1.15  23 or 34.98 per hour.
c) One of the major limitations of models like these is that they are approximations of real-life phenomena. It is unlikely that an additional year of education will create the same wage increment for all individuals. It is also unlikely that the wage increment from an additional year of high school education will be similar to the wage increment from an additional year of college education. Hence, the relationship between education and earnings as established by this model is not exact and is an approximation of the relationship between education and earnings.