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

question 23

Multiple Choice

In a labor-market pooling equilibrium with high-skill and low-skill workers and where a costly educational degree is used as a signaling device,

• A) the high-skill workers' wage is larger than the low-skill workers' wage.
• B) the low-skill workers' wage is zero.
• C) the high- and low-skill workers receive the same wage.
• D) the high-skill workers' wage is equal to the low-skill workers' wage plus the cost of obtaining a degree.

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Definitions:

Custodial Services

Services related to the cleaning and maintenance of buildings and facilities.

Square Feet

A unit of area measurement equivalent to a square that measures one foot on each side.

Direct Method

A way of preparing a cash flow statement where actual cash flow information from the company’s operations is used, directly showing cash receipts and cash disbursements.

Machine Hours

A measure of production output based on the amount of time machinery is operated.