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?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
7
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb739beb-2501-434f-90ed-7069f9541921%2Fc0f0afe6-0c74-4e99-902b-ec33383f4914%2F7zla12mt_processed.jpeg&w=3840&q=75)
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?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcb739beb-2501-434f-90ed-7069f9541921%2Fc0f0afe6-0c74-4e99-902b-ec33383f4914%2F9acgkmoy_processed.jpeg&w=3840&q=75)
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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