Suppose All Workers in a Certain Labor Market Are of Either

question 17

Multiple Choice

Suppose all workers in a certain labor market are of either high quality or low quality.Potential employers value a high-quality worker at $15,000 per month and a low-quality worker at $7,500 per month.The monthly supply of high-quality workers is Q^s_H = 0.04(W - 1,500) and the supply of low-quality workers is Q^s_L = 0.08(W - 1,500) ,where W is the monthly wage.If workers' abilities are observable to employers,what are the equilibrium wages?

• A) W_H = $15,000; W_L = $7,500
• B) W_H = $7,500; W_L = $7,500
• C) W_H = $12,500; W_L = $12,500
• D) W_H = $5,250; W_L = $4,500

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Definitions:

Machine-Hours

The total hours that machines are in operation during the production process, used as a basis for allocating manufacturing overhead.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as rent and salaries.

Volume Variance

The difference between the budgeted and actual volume of production, affecting the budgeted levels of costs or revenues.

Budgeted

The process of creating a plan for a company's financial operations, encompassing revenue, expenses, and capital usage.