Suppose All Workers in a Certain Labor Market Are of Either

question 65

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 not observable to employers,how many workers of each type do employers hire?

• A) Q_H = 540; Q_L = 480
• B) Q_H = 510; Q_L = 510
• C) Q_H = 680; Q_L = 340
• D) Q_H = 340; Q_L = 680

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