Suppose 10% of All Workers Are of High Ability

question 114

Essay

Suppose 10% of all workers are of high ability.If a firm knows a worker's ability,workers of low ability are paid $20,000 and workers of high ability are paid $30,000.A college degree can signal ability,and the cost of the degree is $11,000.Will there be a pooling equilibrium or a separating equilibrium?

---

Definitions:

Managers

Individuals responsible for directing and overseeing the activities and functions of a group or organization to achieve its objectives.

Quality Advocate

A person or role dedicated to promoting, ensuring, and improving the quality of products, services, or processes within an organization.

Production Manager

A professional responsible for overseeing the production process in a manufacturing facility, ensuring that goods are produced efficiently, on time, and within budget.

Production Line

A manufacturing process in which parts or ingredients are added in sequence until the final product is assembled.