In a Labor-Market Separating Equilibrium with High-Skill and Low-Skill Workers

question 21

Multiple Choice

In a labor-market separating equilibrium with high-skill and low-skill workers and where a costly educational degree is used solely as a signal device,government can increase total social welfare by

• A) subsidizing school for low-skill workers.
• B) subsidizing school for all workers.
• C) eliminating schooling, i.e., banning wasteful signaling.
• D) subsidizing school for high-skill workers.

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Definitions:

Cooling Technology

Innovations and methods developed to remove or reduce heat from various systems or environments, such as electronic devices or buildings.

Producers

Producers are individuals or entities that create or supply goods and services for consumption in the marketplace.

Market Price

The current price at which an asset or service can be bought or sold in a particular marketplace.

Sellers

Individuals or entities that offer goods or services for sale in the market.