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

question 16

Multiple Choice

Suppose that low-productivity workers all have marginal products of 10 and high-productivity workers all have marginal products of 12.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 $5, and low-productivity workers think it is as bad as a wage cut of $9.

• A)There is no separating equilibrium, but there is a pooling equilibrium in which everybody is paid $11.
• B)There is a separating equilibrium in which high-productivity workers take the course and are paid $12 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 a separating equilibrium in which high-productivity workers take the course and are paid $17 and low-productivity workers do not take the course and are paid $10.
• E)There is a separating equilibrium in which high-productivity workers take the course and are paid $12 and low-productivity workers are paid $11.

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Definitions:

Fraternity

A group of people sharing common interests, beliefs, or profession, often formed in educational institutions or as part of social or philanthropic objectives.

Supreme Court

The highest judiciary authority in many countries, responsible for interpreting the constitution and laws, and in some cases, determining the legality of executive decisions.

Cohesiveness

A state of being united or working together in an unbreakable bond to achieve common aims within a group or team.

Boundaries

Limits that define individual or group identities, responsibilities, and areas of personal space or organizational territory.