Suppose That Low-Productivity Workers All Have Marginal Products of 10

question 14

Multiple Choice

Suppose that low-productivity workers all have marginal products of 10 and high-productivity workers all have marginal products of 16.The community has equal numbers of each type of worker.The local community college offers a course in microeconomics.High-productivity workers think taking this course is as bad as a wage cut of $2, and low-productivity workers think it is as bad as a wage cut of $4.

• A)There is a separating equilibrium in which high-productivity workers take the course and are paid $18 and low-productivity workers do not take the course and are paid $10.
• B)There is a separating equilibrium in which high-productivity workers take the course and are paid $16 and low-productivity workers do not take the course and are paid $10.
• C)There is no separating equilibrium and no pooling equilibrium.
• D)There is no separating equilibrium, but there is a pooling equilibrium in which everybody is paid $13.
• E)There is a separating equilibrium in which high-productivity workers take the course and are paid $16 and low-productivity workers are paid $13.

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Definitions:

Postponement

A strategy that involves delaying the final activities in the provision of a product until after receiving a customer order, helping to reduce inventory and improve customization.

Variety of Products

A wide range of different products offered by a company to meet diverse customer needs or preferences.

Dominant Product

A Dominant Product is a key item or service offered by a company that has a significant market share or brand identity compared to its other products.

Optimal Number

The most favorable quantity or amount that yields the best outcome for a specific objective under given conditions.