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

question 11

Multiple Choice

Suppose that low-productivity workers all have marginal products of 10 and high-productivity workers all have marginal products of 15.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 $15 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 $12.50.
• 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 $15 and low-productivity workers are paid $12.50.

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Definitions:

Productivity Feedback

The process of providing information to individuals or teams about their performance effectiveness for the purpose of improving work output.

Negative Feedback

Constructive criticism or adverse information communicated to an individual or group to encourage improvement.

Force-Field Analysis

A management technique developed by Kurt Lewin used to plan and implement change, identifying all the factors for and against a decision.

Group Perceptions

Collective beliefs or opinions held by members of a group towards certain issues, events, or situations.