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?

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Definitions:

Canada

A North American country consisting of ten provinces and three territories, known for its vast landscapes, multicultural heritage, and bilingual status (English and French).

Shrink Wrap

Packaging made of a plastic film that is wrapped around items and then shrunk by heat to form a tight seal.

Electronic Purchase

The process of buying goods or services over the internet through various digital platforms.

Acceptance

An agreement to the terms of an offer, thereby creating a binding contract.