This question relates to wage contracts and information problems. a) Explain why in the Spence (1973) model of education, high ability workers are paid the same as low ability workers in the absence of education. b) Explain why the firm in the Spence (1973) model will pay more highly educated workers a higher wage relative to less educated workers in this model. c) Does the idea of education as a signal of ability for at least some workers suggest that unobserved heterogeneity will lead to a bias in the estimated return to education in the human capital wage equation? Provide an explanation as part of your