Suppose That in Enigma, Ohio, Klutzes Have a Productivity of $1,000

question 15

Multiple Choice

Suppose that in Enigma, Ohio, klutzes have a productivity of $1,000 and kandos have a productivity of $4,000 per month. You can't tell klutzes from kandos by looking at them or asking them, and it is too expensive to monitor individual productivity. Kandos, however, have more patience than klutzes. Listening to an hour of dull lectures is as bad as losing $150 for a klutz and $50 for a kando. There will be a separating equilibrium in which anybody who attends a course of H hours of lectures is paid $4,000 per month and anybody who does not is paid $1,000 per month

• A) if 20 < H < 60.
• B) if 20 < H < 120.
• C) only in the limit as H approaches infinity.
• D) for all positive values of H.
• E) if 16.67 < H < 50.

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Definitions:

Skill-Sets

A combination of abilities, techniques, and knowledge that an individual possesses to perform a specific task or job.

High Failure Rate

A situation where a significant proportion of attempts or processes result in unsuccessful outcomes, often used in the context of products, projects, or business ventures.

Fine-tune Organization

The process of making small adjustments to an organization's operations, structure, or strategy to improve efficiency and effectiveness.

Fraud, Deception

Intentional acts of dishonesty carried out to gain unfair or unlawful advantage.