Suppose there are two types of workers. Type 1 workers have a marginal product of labor(MPL) = 1. That is, if a firm hires an extra Type I worker, that worker will produce 1 extra unitof output. Type II workers have a MPL = 2. The firm can sell each extra unit of output for P= $12,000.Firms are unable to identify whether or not a worker is Type I or Type Il unless the workersends a signal of what type they are. The signal that workers can send is a level ofeducation, e. The firm adopts the following hiring strategy:If e >e* then offer the worker a wage rate equal to $24,000.If e < e* then offer the worker a wage rate equal to $12,000.The cost to Type I workers of getting education level e is $4000*e. The cost to Type IIworkers of getting education level e is $2000*e. If the firm sets e* = 8, which of the followingstatements is true?O Type I workers will not get e*, but Type II workers will get e*, which means there is a separatingequilibrium.O Neither type of workers will get e* which means there is a pooling equilibrium.O Both types of workers will get e* which means there is a pooling equilibrium.O Both types of workers will get e* which means there is a separating equilibrium.O Neither type of workers will get e* which means there is a separating equilibrium.

In economics, the concept of signaling has 2 types of equilibrium, one is separating equilibrium in…

The cost to Type I workers of getting education level e is $4000 e. The cost to Type II workers of getting education level e is $2000*e. If the firm sets e* = 8, which of the following statements is true? Type I workers will not get e", but Type Il workers will get e*, which means there is a separating equilibrium. Neither type of workers will get e* which means there is a pooling equilibrium. Both types of workers will get e* which means there is a pooling equilibrium. Both types of workers will get e* which means there is a separating equilibrium. Neither type of workers will get e* which means there is a separating equilibrium.

The cost to Type I workers of getting education level e is $4000 e. The cost to Type II workers of getting education level e is $2000e. If the firm sets e = 8, which of the following statements is true? Type I workers will not get e", but Type Il workers will get e, which means there is a separating equilibrium. Neither type of workers will get e which means there is a pooling equilibrium. Both types of workers will get e* which means there is a pooling equilibrium. Both types of workers will get e* which means there is a separating equilibrium. Neither type of workers will get e* which means there is a separating equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Molly owns a company that gives one-on-one skiing lessons. She is deciding how many ski instructors to hire. The price of a ski class is $100, and the equilibrium wage for a ski instructor is $300 per day. According to the table below and the Rational Rule for Employers, how many ski instructors should Molly hire? Total number of Number of ski ski lessons instructors 1 8 2 14 3 17 4 19 20 A) 1 B) 2 C) 3 D) 4 E) 5
Suppose that Zamboni Enterprises is the only company that sells zambonis (ice resurfacing machines). To produce the machines, the company hires assembly workers. Since these workers can work in many different companies, Zamboni Enterprises must pay them the market wage, which is equal to $6. The number of zambonis that the company produces, which is denoted by y, is proportional to the number of assembly workers that it hires, which are denoted by N; in particular, the production function is given by y=0.76N. The economywide demand for zambonis is given by the following demand function: y=2191-219p, where y is the number of zambonis that consumers are willing to purchase at price p. Given this market structure, how many assembly workers will Zamboni Enterprises choose to hire? How many zambonis will Zamboni Enterprises produce and sell? What will be the price of a zamboni? If the market for zambonis were competitive, how many zambonis would be produced? If the market for…
In a purely competitive labor market (a), market labor supply S and market labor demand D determine the equilibrium wage rate Wc and the equilibrium number of workers Qc . Each individual competitive firm (b) takes this competitive wage Wc as given. Thus, the individual firm’s labor supply curve s = MRC is perfectly elastic at the going wage Wc . Its labor demand curve, d, is its MRP curve (here labeled mrp). The firm maximizes its profit by hiring workers up to where MRP = MRC. Area 0abc represents both the firm’s total revenue and its total cost. The green area is its total wage cost; the blue area is its nonlabor costs, including a normal profit—that is, the firm’s payments to the suppliers of land, capital, and entrepreneurship. This firm’s labor demand curve d in graph (b) slopes downward because: a. the law of diminishing marginal utility applies. b. the law of diminishing returns applies. c. the firm must lower its price to sell additional units of its product. d. the firm is a…
Suppose that Zamboni Enterprises is the only company that sells zambonis (ice resurfacing machines). To produce the machines, the company hires assembly workers. Since these workers can work in many different companies, Zamboni Enterprises must pay them the market wage, which is equal to $6. The number of zambonis that the company produces, which is denoted by y, is proportional to the number of assembly workers that it hires, which are denoted by N; in particular, the production function is given by y=0.76N. The economywide demand for zambonis is given by the following demand function: y=2191-219p, where y is the number of zambonis that consumers are willing to purchase at price p. If the market for zambonis were competitive, how many zambonis would be produced? If the market for zambonis were competitive, how many assembly workers would be hired? If the market for zambonis were competitive, at what price would zambonis be sold?
Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If hiring another worker would increase output by three units per hour, then to maximize profits the firm should Group of answer choices not change the number of workers it currently hires not hire an additional worker. hire another worker. There is not enough information to answer the question.
10. The figure below indicates the production functions and indifference curves in a job market signaling game. The worker has two type, High and Low ability. The receiver is a perfectly competitive market whose profits are driven to zero in equilibrium. Denote the education level choices by the High type by ey and the Low type by er. Let e* (L) and e* (H) be the equilibrium levels of education chosen by the Low type and the High type, respectively, in the full information case. In a separating Perfect Bayesian Equilibrium of this game IH y(H, e) wage y(L, e) education (a) eH = e*(H) and e, = e*(L). (b) en > e*(H) and e, = e*(L). (c) en = e*(H) and er > e*(L). (d) eH < e*(H) and e, < e*(L). 000 DD F4 F5 F6 E7 F8 F9 F $ % & 4 5 6 7 8 9
Asap
0. Radioco manufactures two types of radios. The only scarce resource that is needed toproduce radios is labor. At present, the company has two laborers. Laborer 1 is willing towork up to 40 hours per week and is paid $5 per hour. Laborer 2 will work up to 50 hoursper week for $6 per hour. The price as well as the resources required to build each type ofradio are given in the Table. Letting xi be the number of Type i radios produced each week,Radioco should solve the following LP:a) For what values of the price of a Type 1 radio would the current basis remain optimal?b) For what values of the price of a Type 2 radio would the current basis remain optimal?
Consider a self employed worker who owns a firm that produces output q which sells for a price of p = 1. Output depends on effort, e, so the production function is q = γe, where γ > 0 is a parameter. Effort reduces utility, and the cost of effort is c(e) = 1 2 e2. Note that there is no principal-agent problem here because the worker is the owner of the firm (and therefore has a claim on all profits), in addition to personally incurring the cost of effort. The self employed worker’s utility is a linear function of revenue net of effort costs, U(e) = q− c(e) = γe− 1 2 e2
Suppose the local economy experiences an influx of both skilled and unskilled workers, what will happen to prices of goods and services? Group of answer choices Since this increases the supply of labor, prices and wages both decrease. Since this increases the demand for labor, prices and wages both increase. Since this decreases the supply of labor, prices and wages both decrease. Since this increases the marginal product of labor, prices and wages both decrease. A worker on a Texas oil rig is likely to earn _______ than a reception because _________. Group of answer choices less; the job has unattractive characteristics. more; the job is more fun. more; the job is more prestigious. more; the job is more dangerous. please answer two questions
Suppose a group of high school friends work at the same fast food restaurant. They all dislike the manager because she doesn’t allow them to swap shifts with one another whenever someone has a big exam to study for or a date. One of the friends suggests that they all agree to walk out if the manager doesn’t change her policy. Which of the following is the most likely outcome of such a walkout? multiple choice Wages will remain constant and the workers will be replaced. The workers will all be replaced, but wages will increase to avoid similar problems in the future. Wages will increase due to the unified pressure of all the workers. Wages
In the absence of any legal barriers on immigration from Neolandia to the United Kingdom, the economic conditions in the two countries generate an immigrant flow that is negatively selected. In response, the United Kingdom enacts an immigration policy that restricts entry to Neolandians who are in the top 10 percent of Neolandia’s skill distribution. What type of Neolandian would now migrate to the United Kingdom ?