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Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200.000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium?

Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200.000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200,000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium? 195.000 P Question 7 Signaling (2 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low- productivity workers willingly choose to go to school for 4 years? O Yes. The benefts of getting the required amourt of eduation outweigh the costs. • No. They would be better oft by not going to school. O No They would be better off by going to school for mare than 4 year
Transcribed Image Text:Signaling (1 of 3) Suppose that 10 percent of workers are low-productivity types and 90 percent of workers are high-productivity types. The present value of lifetime productivity for low-productivity types is $150.000 and the present value of lifetime productivity for high-productivity types is $200,000 The total cost of a year of ecucation for a low-productivity type is $30,000, How much would an employer pay in a pooling equilibrium? 195.000 P Question 7 Signaling (2 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low- productivity workers willingly choose to go to school for 4 years? O Yes. The benefts of getting the required amourt of eduation outweigh the costs. • No. They would be better oft by not going to school. O No They would be better off by going to school for mare than 4 year
Signaling (2 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low- productivity workers willingty choose to go to school for 4 years? O Yes. The benefits of getting the required amount of education outweigh the costs. No. They would be better off by not going to school, O No. They would be better off by going to school for more than 4 years. Question 8 Signaling (3 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. The existence of a separating equilibrium will depend on the cost of education for high-productivity types. In this case, a separating equilbrium will exist if the cost of education for high-productivity types is less than X dollars per year. What is X?
Transcribed Image Text:Signaling (2 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. Would low- productivity workers willingty choose to go to school for 4 years? O Yes. The benefits of getting the required amount of education outweigh the costs. No. They would be better off by not going to school, O No. They would be better off by going to school for more than 4 years. Question 8 Signaling (3 of 3) Suppose that an employer requires 4 years of education as a precondition for the high-productivity wage. The existence of a separating equilibrium will depend on the cost of education for high-productivity types. In this case, a separating equilbrium will exist if the cost of education for high-productivity types is less than X dollars per year. What is X?
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