A Necessary Condition for a Separating Equilibrium When Workers Can

question 78

Multiple Choice

A necessary condition for a separating equilibrium when workers can use education as a signal of their ability is

• A) the high-ability wage is larger than the sum of the degree cost plus the low-ability wage.
• B) the cost of a degree is larger than the low-skill wage.
• C) the high-ability wage is smaller than the low-ability wage.
• D) the high-skill wage is equal to the cost of a degree.

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