A Certain City Has Two Kinds of Workers, Alphas and Betas.An

question 3

Multiple Choice

A certain city has two kinds of workers, alphas and betas.An alpha can produce $100 worth of output per day working for himself.If he works in the local factory, he produces $120 worth of output a day.A beta produces $60 worth of output per day working for himself, and he produces $80 worth of output per day if he works for the local factory.Workers either work for themselves or work in the factory.The factory owner can't tell alphas from betas.He pays a wage equal to the average product of his labor force and he has at least some alphas working for him.Workers are free to choose to work for themselves or the factory, depending on which offers more money.

• A)At least 5/6 of the factory's employees must be alphas.
• B)At least half of the factory's employees must be betas.
• C)At least half of the factory's employees must be alphas.
• D)None of the factory's employees can be betas.
• E)No more than 5/6 of the betas can work in the factory.

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Definitions:

Market Failure

The inability of a market to bring about the allocation of resources that best satisfies the wants of society; in particular, the overallocation or underallocation of resources to the production of a particular good or service because of externalities or asymmetric information, or because markets fail to provide desired public goods.

Producer

An individual, company, or entity that creates goods or services to satisfy consumer demands.

Consumers

Individuals or entities that purchase goods and services for personal use or consumption.

Pay

Pay denotes the salary or wages received by a worker as compensation for their labor or services to an employer.