An employer faces two types of employees. Regular workers are 70% of the population and generate $100,000 in productivity. Exceptional workers are 30% of the population, and generate $120,000 in productivity. Workers know their value, and reject salaries below their productivity. If the employer offers a salary equal to the average productivity hoping to eliminate adverse selection, what will be the employer’s per-employee profit? Group of answer choices $10,000. $4,000. $0. $-6,000
An employer faces two types of employees. Regular workers are 70% of the population and generate $100,000 in productivity. Exceptional workers are 30% of the population, and generate $120,000 in productivity. Workers know their value, and reject salaries below their productivity. If the employer offers a salary equal to the average productivity hoping to eliminate adverse selection, what will be the employer’s per-employee profit? Group of answer choices $10,000. $4,000. $0. $-6,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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An employer faces two types of employees. Regular workers are 70% of the population and generate $100,000 in productivity. Exceptional workers are 30% of the population, and generate $120,000 in productivity. Workers know their value, and reject salaries below their productivity. If the employer offers a salary equal to the average productivity hoping to eliminate adverse selection, what will be the employer’s per-employee profit?
Group of answer choices
$10,000.
$4,000.
$0.
$-6,000
$-10,000
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