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.

Understand the role of substitutes and the broadness of market definition on elasticity.

Appreciate the theoretical underpinnings of supply and demand through the lens of elasticity.

Understand the concept of price elasticity of demand and how to calculate it.

Distinguish between elastic, inelastic, and unitary elasticity of demand.

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Definitions:

Oxidation

A chemical reaction that involves the loss of electrons by a molecule, atom, or ion.

Reduction

A chemical reaction that involves the gain of electrons or the decrease in oxidation state by a molecule, atom, or ion.

Oxidizing

Refers to the process of losing electrons or increasing the oxidation state of a molecule, atom, or ion in a chemical reaction.

Primary Alcohol

An alcohol with the -OH group attached to a carbon atom that is itself bonded to no more than one other carbon atom.