When Applied to the Labour Market, the Adverse Selection Model

question 69

Multiple Choice

When applied to the labour market, the adverse selection model suggests that:

• A) relatively talented workers are more likely to remain with a paiticular tirm if the firm cut: the wages it pays
• B) firms have perfect knowledge about the ability of workers
• C) a firm may choose to pay an above-equilibrium wage to attract a better mix of workers
• D) all workers have identical abilities.

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