1. Arguments for public subsidies for education are based upon:

A. the pure signaling model.

B. the existence of positive externalities associated with education.

C. Both of the above are correct.

D. None of the above is correct.

2. The cobweb model of educational attainment is most likely to be applicable when:

A. there is a rapid supply adjustment.

B. there is a lagged supply response.

C. the supply curve is vertical in the short run and the long run.

D. None of the above is correct.