If a friend told you they would not accept a job after graduating for less than $50,000 per year,they would be demonstrating the _________ theory.
A) human capital
B) reservation wage
C) signaling
D) efficiency

Question

Quizplus · Accepted Answer

The friend is demonstrating the reservation wage theory, which states that an individual will only accept a job offer if the wage offer is at or above a certain minimum level, referred to as their reservation wage. In this case, the friend's reservation wage is $50,000 per year. The human capital theory suggests that education and training increase a worker's productivity and earning potential, but it is not relevant to this scenario. Signaling theory suggests that individuals use certain characteristics, such as education or work experience, to signal their skills to potential employers, but this is also not relevant to the scenario. Efficiency theory suggests that markets will achieve an efficient allocation of resources, but it is not relevant to this scenario.

If a Friend Told You They Would Not Accept a Job