1. Describe in your own words the signaling model of education. Specifically, (1) how does education affect worker productivity in this model, and (2) what must be true about the cost of education in order for education to serve as a signal distinguishing high-ability workers from low-ability workers? (15) 2. We discussed "fixed rent farming (in which tenant farmers pay a fixed amount of money per year to rent land) and sharecropping (in which tenant farmers pay a percentage of their crop to the landowner as rent) in terms of how these kinds of pay systems solve the principal-agent" problem. Describe in your own words which system produces stronger work incentives and which exposes the worker (the farmer) to greater risk. (15)