A model is based on an assumption that an additional year of education increases a student's future wage by 20 percent.
-Refer to the scenario above.Which of the following statements is true of the model?
A) The predictions of this model cannot be tested with data.
B) The predictions of this model are accurate and will hold for all individuals.
C) The predictions of this model can be applied to unlimited years of additional education.
D) The model predicts that two additional years of education is likely to increase future earnings by 60 percent.

Question

Quizplus · Accepted Answer

The model assumes a constant percentage increase per year, but it doesn't account for diminishing returns or other factors that might limit the applicability of this assumption over many years.

A Model Is Based on an Assumption That an Additional