The Value of a Worker's Marginal Product Is $50 Per

question 27

Multiple Choice

The value of a worker's marginal product is $50 per hour for high-ability workers and $15 per hour for low-ability workers.The preferences of high-ability workers correspond to the utility function U_H(E,W) = W - 4E,and the preferences of low-ability workers correspond to the utility function U_L(E,W) = W - 10E.By law,everyone is required to attend at least ten years of school.Three-fifths of the population has low ability,and two-fifths has high ability.What can be said about the educational attainment of each type of worker in a separating equilibrium?

• A) E_L = 10; 13.5 < E_H < 18.75
• B) E_L = 10; E_H = 16.125
• C) E_L = 10; E_H = 10
• D) E_L = 13.5; E_H < 18.75

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Definitions:

Modified Skills

Adapted or improved abilities developed through training or experience.

Personal Goals

Individual objectives or ambitions that a person aims to achieve, which can range from career aspirations to personal development targets.

Career Path

The progression or sequence of job positions through which an individual moves in an organization.

Job

A set of tasks or duties performed by an individual in exchange for payment or other compensation; a position of employment.