Suppose 40 Percent of All Potential Workers Are Highly Skilled

question 14

Multiple Choice

Suppose 40 percent of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60 percent of potential workers are less-skilled and contribute only $30,000 to the firm each year. Schooling costs a highly skilled worker y per year, while it costs a less-skilled worker 2y per year. What range of y will support a signaling equilibrium?

• A) $0 < y < $50,000
• B) $5,000 < y < $10,000
• C) $5,000 < y < $20,000
• D) $10,000 < y < $20,000
• E) $20,000 < y < $50,000

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Definitions:

Upper Two Quintiles

Refers to the top 40% of the income distribution in a society, often considered the higher income groups.

Line L

A specific reference to a theoretical line or concept, often used in the context of graphs or models in economics or sciences. (If this isn't a real reference, this would be NO.)

Income Received

The total income or earnings received by an individual or entity within a specific period, including all sources.

Middle Three Quintiles

Refers to the second, third, and fourth quintiles of a distribution, often used in economic analysis to describe the middle segment of income earners in a population.