Figure 212 Shows the Benefit Functions for Low-Ability Workers and High-Ability

question 2

Multiple Choice

Figure 21.2 shows the benefit functions for low-ability workers and high-ability workers (A and B) ,along with one indifference curve for each worker type (C and D) .The employer cannot observe worker type directly but has created two positions,E and F,as a screening mechanism.Which of the following is true?

• A)High- and low-ability workers will choose position E.
• B)High-ability workers will choose position E and low ability workers will choose position F.
• C)High- and low-ability workers will choose position F.
• D)High-ability workers will choose position F and low ability workers will choose position E.

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