1. Everything else being equal, workers with larger endowments of human capital receive higher wages, according to human capital theory because a. they have made a larger investment b. their marginal product is higher. c. they are able to ex ercise market power. d. their marginal product diminishes at a slower rate. 2. An individual continues to invest in human capital as long as a. it will enhance productivity b. the returns are certain c. the expected stream of returns exceeds the expected stream of costs from undertaking the investment d. the investment will pay off within a relatively short time frame 3. Human capital theory departs from the assumptions of the neoclassical theory of perfect competition in that a. labor is NOT homogeneous under human capital theory." b. individual preferences are NOT autonomous under human eapital theory. c. productivity of labor can be enhanced with capital in human capital theory. d. diminishing marginal returns do not set in under human capital theory. 4. Not accounting for risk and uncertainty a. overstates the expected rate of return to human capital investment b. understates the expected rate of return to human capital investment c. is preferable to doing so because we cannot be certain of how to determine them properly. d. will provide the best measure of the expected return to a human capital investment as long as we ex clude it from both the returns and the costs side. 5. The human capital investment process in the free market tends to a. decrease the inequality in the income distribution b. redistribute income to the poorest quintile of the population c. increase the inequality of the income distribution d. eliminate the need for goverment redistribution policy