An economy with competitive markets has 2 kinds of jobs, Routine & Skilled. There are 2 types of workers, Qualified & Unqualified. 60% of workers are Qualified while 40% are unqualified. In a Routine job, both types of workers produce 10 widgets. In a Skilled job, Qualified workers produce 100 widgets each, while Unqualified workers produce 0. Labor markets are competitive, so each worker is paid their marginal product, i.e. how much they produce, in widgets. Everyone looks great in an interview, so companies must hire without knowing the worker's type and must pay the first period's wage without knowing their actual output. However, Qualified workers can signal their qualification by receiving an education. For a Qualified worker, the cost of getting educated to level n is 0.5n2. For an Unqualified worker, it is n2. These costs are also measured in widgets. What is the maximum level of education that Qualified workers will obtain, in a separating

An economy with competitive markets has 2 kinds of jobs, Routine & Skilled. There are 2 types of workers, Qualified & Unqualified. 60% of workers are Qualified while 40% are unqualified. In a Routine job, both types of workers produce 10 widgets. In a Skilled job, Qualified workers produce 100 widgets each, while Unqualified workers produce 0. Labor markets are competitive, so each worker is paid their marginal product, i.e. how much they produce, in widgets. Everyone looks great in an interview, so companies must hire without knowing the worker's type and must pay the first period's wage without knowing their actual output. However, Qualified workers can signal their qualification by receiving an education. For a Qualified worker, the cost of getting educated to level n is 0.5n2. For an Unqualified worker, it is n2. These costs are also measured in widgets. What is the maximum level of education that Qualified workers will obtain, in a separating

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An economy with competitive markets has 2 kinds of jobs, Routine & Skilled. There are 2 types of workers, Qualified & Unqualified. 60% of workers are Qualified while 40% are unqualified. In a Routine job, both types of workers produce 10 widgets. In a Skilled job, Qualified workers produce 100 widgets each, while Unqualified workers produce O. Labor markets are competitive, so each worker is paid their marginal product, i.e. how much they produce, in widgets. Everyone looks great in an interview, so companies must hire without knowing the worker's type and must pay the first period's wage without knowing their actual output. However, Qualified workers can signal their qualification by receiving an education. For a Qualified worker, the cost of getting educated to level n is 0.5n2. For an Unqualified worker, it is n². These costs are also measured in widgets. What is the maximum level of education that Qualified workers will obtain, in a separating equilibrium? 13.5 12 13 10
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