In the Separating Equilibrium of the Spence Education Signaling Game

question 18

Multiple Choice

In the separating equilibrium of the Spence education signaling game in which the high type gets an education,which is a true statement about the firm's posterior belief that the worker who shows up with no education is the low type?

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Definitions:

Strictly Convex Preferences

Preferences that demonstrate a consumer's increasing marginal rate of substitution, indicating a strong preference for diversified bundles of goods over homogeneous bundles.

Indifference Curves

Graphs representing different bundles of goods between which a consumer is indifferent, showing the combinations of goods that provide the same level of utility to the consumer.

Marginal Utility

The additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Competitive Equilibrium Price Ratio

The ratio of prices that ensures the equality of supply and demand in a competitive market, often used to observe relative price changes between commodities.