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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