Supply and Demand of Labor Quick Check

Question

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Question
An employer has narrowed a list of applicants down to two individuals. The two candidates look nearly identical on paper, but one of them has earned a four-year college degree. The employer decides to offer employment to the college graduate. What does this example illustrate?(1 point)
Responses

the substitution effect
the substitution effect

the screening effect
the screening effect

the learning effect
the learning effect

the income effect

Answer 1

The scenario described illustrates the screening effect. This concept refers to the idea that employers use educational qualifications, like a college degree, as a screening mechanism to differentiate between candidates. The employer assumes that the college graduate has certain skills or abilities that make them a more desirable employee, even if the other candidate may have similar qualifications otherwise.