The Value of a Worker's Marginal Product Is $40 Per

question 63

Multiple Choice

The value of a worker's marginal product is $40 per hour for high-ability workers and $5 per hour for low-ability workers.The preferences of high-ability workers correspond to the utility function U_H(E,W) = W - 5E,and the preferences of low-ability workers correspond to the utility function U_L(E,W) = W - 8E.By law,everyone is required to attend at least ten years of school.Three-fourths of the population has low ability,and one-fourth has high ability.What can be said about the educational attainment of each type of worker in a separating equilibrium?

• A) E_L = 10; 10 < E_H < 14.375
• B) E_L = 10; E_H < 17
• C) E_L = 10; E_H > 14.375
• D) E_L = 10; 14.375 < E_H < 17

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Definitions:

Elaboration Encoding

A mnemonic device involving the addition of extra information to aid in the memory of something.

Spreading Activation

A method within cognitive science that explains how information is retrieved in the brain, suggesting that the activation of one concept triggers related concepts.

Semantic Network

A cognitive model that represents concepts and ideas as a network of interconnected nodes, where each node represents a concept, and edges represent the relationship or associations between concepts.

Prospective Memory Processes

Cognitive processes involving the ability to remember to perform an intended action in the future, such as remembering to take medication at a certain time.