Education raises wages because the demanders of labor
A)are willing to pay more for highly educated workers who have higher marginal products and the suppliers of labor are willing to pay the cost of becoming educated only if they are rewarded.
B)are willing to pay the cost of becoming educated only if they are rewarded and the suppliers of labor are willing to pay more for highly educated workers who have higher marginal products.
C)require fewer workers if they are highly educated.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

Education raises wages because highly educated workers have higher marginal products, which means they can produce output that is more valuable to their employers. As a result, demanders of labor are willing to pay more money to attract highly educated workers. Additionally, the suppliers of labor (the workers themselves) are willing to pay the cost of becoming educated because they know that they will be rewarded with higher wages. Therefore, education raises wages because it creates a situation where both the demanders and suppliers of labor are willing to pay more for highly educated workers.

Education Raises Wages Because the Demanders of Labor