The Cost,c,of a College Education That Serves Only as a Signal

question 86

Multiple Choice

The cost,c,of a college education that serves only as a signal of a high-quality worker is $10,000.The wage of a known high-quality worker,w_h,is $30,000.The wage for a known low-quality worker,w_l,is $10,000.For what value of the share of the work force that is of high quality,s,is a pooling equilibrium possible?

• A) s > 0.5
• B) s = 0
• C) s = 0.25
• D) s < 0.45

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Definitions:

Enterprise

An organization or business venture, particularly one that is large, complex, or involves substantial resources.

IT

Information Technology, referring to the use of computers, software, and networks for the processing and distribution of data.

ERP Systems

Enterprise Resource Planning systems integrate various functions across an organization into a unified database to streamline processes and information across the organization.

TPSs

Transaction Processing Systems, computerized systems that perform and record the daily routine transactions necessary to the operation of a business.