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

question 1

Multiple Choice

Suppose that low-productivity workers all have marginal products of 10 and high-productivity workers 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 cut in wages of $4 and low-productivity workers think it is as bad as a wage cut of $8.

• A)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.
• B)There is no separating equilibrium and no pooling equilibrium.
• C)There is no separating equilibrium, but there is a pooling equilibrium in which everybody is paid $13.
• D)There is a separating equilibrium in which high-productivity workers take the course and are paid $20 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 $16 and low-productivity workers are paid $13.

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Definitions:

Transaction Explanation

A description or rationale provided for each transaction within an accounting system, aiding in understanding and verifying the nature of the transaction.

Income Statement

Also known as profit and loss statement, it details a company’s financial performance, including sales, expenses, and profits over a period.

Owner's Equity Statement

An owner's equity statement is a financial document that shows changes in the equity of a company's owners over a period.

Owner's Capital

The amount of equity a business owner has in the company, representing their investment plus any retained earnings or losses.